Custom HR Software Development Cost

HR software often lies at the core of the business. The bigger the enterprise than higher it relies on human resource management systems. In this article, we are going to show you how much does HR software development cost as well timeline for such project and what resources you’re going to need for the system development that truly empowers your human resources management.

List of the Content

• Types of HR software
• Purpose and main features of HR software
• HR software modules
• How to start custom HR software development
• Cost of HR software development
• Analysis of HR development cost in different locations
• Conclusion

TYPES OF HR SOFTWARE

HR software is a digital solution designed to streamline and improve the human resources processes of a company, allowing HR staff and managers to focus on more strategic and valuable tasks. It helps to manage and automate routine HR tasks such as employee data management, recruitment, benefits administration, and performance appraisal and enables organizations to allocate their time and resources better. 

First of all, let’s deal with the types of HR systems and how in general, such solutions are used. HR software can be used as a separate system and as a part of the complex ERP solution that controls all aspects of the organization’s everyday operations. Nevertheless, it is not that important whether these solutions are linked to the bigger system or not because linked and standalone applications have the same feature set.

HRIS (Human Resource Information System) is a type of software that is used to store and manage employee data, such as personal information, job history, and payroll information. HRIS systems are typically used to automate HR processes, such as record-keeping and reporting. They can also be used to track employee performance and provide tools for managing employee benefits. Some common features of HRIS systems include:

• Employee self-service portals
• Payroll and benefits management
• Time and attendance tracking
• Recruiting and onboarding tools

HCM (Human Capital Management) is a type of software that is used to manage all aspects of an employee’s lifecycle within an organization. This includes recruiting, hiring, performance management, and succession planning. HCM systems provide an integrated platform for managing employee data, as well as tools for managing talent acquisition, development, and retention. For instance, we can mention such solutions as Workday and SAP ERP HCM. Some common features of HCM systems include:

• Applicant tracking and onboarding
• Performance management and goal-setting
• Learning and development management
• Succession planning

HRMS (Human Resource Management System) is a type of software that is used to automate HR processes, such as recruiting, hiring, and performance management. HRMS systems are typically used to store and manage employee data, as well as to provide tools for managing employee benefits and payroll. For example, one of the known representatives is BambooHR. Some common features of HRMS systems include:

• Employee self-service portals
• Payroll and benefits management
• Time and attendance tracking
• Recruiting and onboarding tools

It’s worth noting that these three types of software are not mutually exclusive and often overlap in functionality. Some vendors may use one term over the other, or may use all three terms to describe their product. In general, HRIS is more focused on data management and administration, HCM is more focused on talent management, and HRMS is more focused on automating HR processes. We’re going to focus on an all-encompassing human resource information system which is given in our article as an example of HR software development cost.

HR SOFTWARE DEVELOPMENT: FEATURES AND FUNCTIONS TO IMPLEMENT

The success of a company relies on its human resources and its capabilities. Human resources are at the core of every business. If a business is successful, it owes it to its employees. Besides, running a successful business means having well-designed processes. Well-designed and well-managed processes rely on tools that ensure that everyone within a company has the right information and is working with the right information. The human resource management system has evolved, and companies are now able to tailor the software to their needs and their culture.

This solution has made management simpler, employees and companies more organized. Aware of the importance of HR tools, many solutions are made available to satisfy the organization’s needs. Currently, many providers are engaged in HR software development. Their solutions are marketed and benefit from the undeniable need of companies to manage their human resources more effectively. Even though these applications were part of a big revolution, they are becoming increasingly limited as HR culture and the way the company is addressing human resources management is changing fast. The first limitation comes from license costs. Acquiring this type of software may appear to be a good investment in the beginning, but then comes the cost related to the license. Besides license costs, such programs lack flexibility; they aim to serve a general purpose and become very limited when there is a need for customization. Each company has its processes and workflow, and it is impossible to have it manage every process.

Building custom HR software enables the development of an application that fits their needs and frees them from the price of a license that eventually becomes very costly.  This solution offers a number of advantages. Moreover, it allows a company to define the functionalities it needs, and each organization can identify and design each feature according to its processes.

In general, the most popular features cover the following:

• Payroll Management
• Hiring and Recruitment management
• Talent and career management
• Wellness and rewards management
• Time management

In the following section, we are going to see in more detail each one of these functionalities.

DESCRIPTION OF CUSTOM HR SOFTWARE MODULES

Payroll management

This is undoubtedly one of  the most popular HR software modules as it manages several financial aspects of a business:

• Salary payment: employees take for granted the fact of receiving their wages within a defined period each month. This regularity influences the confidence of employees in the solvency of their employer. If the employer does not have the necessary tool to automate the payment, it may create a sense of uncertainty and instability for the employee. This feature allows each organization to automate the payment process and reduces paperwork considerably. The salary payments module enables an organization to pay their employees using their preferred methods on time and instantly.
• Taxes: depending on the states and countries, each business may have to keep records of its financial status for several years. Maintaining a paper version of these records can be cumbersome and difficult for the organization. Moreover, the company pays taxes according to its income. This feature allows an organization to store its financial records in one place to handle its taxes automatically.
• Bonuses payment: Apart from salary, a company may also have to pay bonuses to its employees depending on the applied policy. This module allows a business to manage this payment and decide when employees will get paid.

Payroll software developers implement complex processes related to payroll, like computing gross and net pay, applying tax regulations, etc.

Hiring and recruiting management

Hiring processes have evolved a lot these past few decades. Today, the recruitment management system allows the HR department to:

• Manage job posting: companies can advertise the job anywhere, and the application will be received in one place.
• Manage applicants and applications: recruiters can look into their database pools when looking for the right candidates. Information about potential candidates is saved in one place and can be browsed whenever necessary.
• Manage recruitment processes: the hiring process varies from one business to another, this feature allows an organization to define its hiring process.

This module helps to hire faster and with more efficiency. The organization doesn’t start from scratch when initiating the recruitment process.

Talent and career management

This is an essential module of custom HR software. Human resources are at the heart of every business; managing talent gives the organization a competitive advantage. This module depends on the short-term and long-term goals of the business. In this module, we implement the following:

• Organization’s process to evaluate and attract the right and best talents (skills)
• Manage skills development
• Manage employees’ replacement. This is complementary to the hiring management module
• Manage employees loyalty

A well-designed talent and career management help the company retain its best employees and attract excellent candidates.

Wellness and rewards management

This module is complementary to the talent management module. This module allows the company to manage and study different ways to improve employees’ experience within a company. Wellness and rewards may differ from one organization to another.

In this module, the following features can be implemented:

• Performance management
• Incentive management
• Social activity management

Time Management module

This module allows to:

• Manage requests for leave
• Manage assignments according to employees’ availability
• Manage time and control time spent on each project or assignment

The time management module enables the organization to have better control over its production and resource optimization. Time management can also help anticipate the needs in terms of recruitment, budget, etc.

These modules aim at different but complementary goals, from these modules, we can identify the following advantages:

• Reduced time in processes: by automating the most repetitive tasks, an organization becomes more efficient, and processes take less time to complete.
• Centralized information: it becomes much easier to find information as it is stored in one place.
• Accuracy: automation helps reduce errors and offers much more reliable processes.
• Data security: since information is stored in a database, only the right persons with the proper credentials can have access to critical and personal information about employees, such as their salary, their bank account, their address, etc.
• Better fit for business:  since custom HR software is built according to the organization’s process, it is more suitable and optimized.
• Enhanced employees loyalty

Now that we understand the HR software modules, let’s discuss the process and cost of building such a product.

HOW TO START CUSTOM HR SOFTWARE DEVELOPMENT

HR departments play a critical role in any organization as they are responsible for managing the organization’s most valuable asset: people. To ensure the smooth functioning of HR processes, organizations often rely on HR software. However, when off-the-shelf HR systems don’t meet the specific needs of your organization, custom HR software development is the solution. Let’s take a deep dive into the steps involved in custom HR software development.

Identifying business needs and goals

The initial step in custom HR software development is to identify the specific needs and goals of your organization. This includes understanding the current HR processes and identifying areas where automation or streamlining can improve efficiency and effectiveness. It also includes identifying any unique requirements that cannot be met by off-the-shelf HR software.

It is essential to involve key stakeholders from different departments in this process, as they will have valuable insights into the specific needs of their respective teams. Once the needs and goals have been identified, they should be clearly defined and documented to ensure that the final product meets these requirements. This documentation will also serve as a reference point throughout the development process.

Planning and Design

The next step is to plan and design the custom HR software. It includes creating a detailed project plan, outlining the scope of the project, and identifying the resources required. The design process involves creating a user interface (UI) that is intuitive and easy to use, as well as a database structure that can store and retrieve the required data efficiently.

The main goal of the design process is to ensure that the final product meets needs and is user-friendly. Additionally, it is essential to consider scalability and the ability to integrate with other systems in the organization. This ensures that the custom HR software is built to last and can grow with the organization.

Development and Testing

Once the planning and design phase is complete, the next step is to develop and test the custom HR software. The development phase involves writing the code for the software and testing it to meet the defined requirements and functions as expected.

It is important to use a software development methodology that ensures that the development process is well-structured and that the software is developed in an organized and efficient manner. Agile development methodologies, like Scrum or Kanban, are particularly well-suited for custom HR software development. Testing should be conducted at different stages of the development process to ensure that any issues are identified and resolved early on. This includes unit testing, integration testing, and acceptance testing.

Implementation and Maintenance

Provided that the custom HR software has been developed and tested, the next step is to implement it within the organization. That includes installing the software, training users on how to use it, and providing ongoing support and maintenance.

The team has to provide a thorough testing and training plan in place before implementing the software to ensure that it is fully functional and that users are able to use it effectively. Ongoing maintenance and support are also crucial to ensure that the software continues to meet the needs of the organization and that any issues are resolved quickly. This includes regular software updates, bug fixes, and security patches.

Custom HR software development can be a complex and time-consuming process, but it is an investment that can bring significant benefits to your organization.

HR SOFTWARE DEVELOPMENT COST

Now that we have defined the modules to include in the human resource management system and the overall software development process, we are going to estimate its development cost. Since it is a web application or a mobile application, or both, the HR software development process is exactly like any other web application or mobile application approach. The development methodology and the cost estimation technique used are similar to those used for web application development.

To sum up, during this cost estimation, we are going to consider the system with the following modules:

• Payroll management module
• Hiring management module
• Talent management module
• Wellness and rewards management module
• Time management module

Let’s first define the IT specialists needed to build this application. For the web app, we will need:

• A project manager
• Backend and Front-end developer: these developer roles include payroll software developers
• QA engineer
• System Administrator

Today, the way employees interact with their work has changed, more and more employees have access to their work and information related to their work through a mobile device. A mobile version of HR software can be useful. To develop an application with mobile compatibility, we will need the following:

• Mobile developer: iOS and Android developers

The product we are going to estimate is comprehensive. But what about more exact numbers? For these cost estimations, we will take average hourly rates for the development services in an offshore location, Easter Europe, to be more specific. Also, in this article, you will find a comparison of the HR system development cost in Western Europe, Eastern Europe, and Northern America. So, here is an approximate cost estimation of the time, resources, and money you’re going to need to develop a human resource management system by an offshore software development company:

• 2 back-end developers working full time for 6 months charging $25/hr.= $73 380
• 1 front-end developer working full-time for 6 months charging $30/hr. = $36 690
• 2 QA engineers working full-time for 5 months charging $20/hr. = $61 600
• 1 Project manager who manages the project from design to project closure for 6 months charging $30/hr. = $36 690
• 1 System administrator working full-time for one week charging $25/hr. = $1 400

Additionally, for the mobile application part:

• 1 iOS developer working full time for 6 months charging $31/hr. = $36 690
• 1 Android developer working full-time for 6 months charging $30/hr. = $36 690

The overall HR software cost will be approximately $190 000.

Whether it is a small, medium, or large business, this system is necessary to run internal processes smoothly. For small businesses, one single person generally runs all the operations, automating processes through HR management software for small businesses can be useful and helpful in managing processes more efficiently. A few decades ago, on-premise HR software would have been the only solution, and today cloud computing offers another possibility that can be a better fit for businesses.

On-premise HR software would run on internal software, which requires an investment in hardware and hardware maintenance. Thanks to cloud computing and the SaaS concept, businesses can pay only for services they need by deploying a cloud-based product. Consequently, the cost of building and hosting HR software becomes more interesting. Companies only pay for hosting as their data grows.

HOW MUCH DOES HR SOFTWARE DEVELOPMENT COST IN VARIOUS LOCATIONS

Quality comes at a price, but it is not necessary to pay the highest possible cost to get reliable human resource management solutions with rich functionality for small businesses or enterprises. In this section, we are going to compare the cost of HR software development in Northern America, Western, and Eastern Europe to give you a comprehensive picture of the budget required to complete such projects in different locations.

IN CONCLUSION

Building custom HR software offers several benefits to an organization, whether it is personnel management system software for small businesses or large enterprises. Opting for a proprietary solution has the advantage of immediate use. However, a proprietary HR solution is insufficient. Investing in a personalized solution that is suitable for internal processes becomes very fast and profitable, it is a solution that is more adapted to the needs of the company since it is tailor-made for the company. It is a secure, optimal solution and streamlines the processes of a company, the investment may seem important at the beginning, but the company has a flexible solution, and the cost takes place only during the implementation. This solution also responds to the scalability of the business processes, and each module can be readjusted as the needs evolve. One crucial aspect the organization may want to consider is cloud-based HR software. This solution will help the organization have better control over cost related to building custom HR software.

HR software development will make your operations better or become a popular product among human resource management professionals is not the simplest task but it is totally achievable with the well-designed product specifications document and clearly outlined HR software requirements. The rough cost estimation given in this article is based on our own experience with HR software development.