Outsourcing software development is no more some undiscovered way to structure business processes, but rather a well-accepted and beneficial model. Yet, you'll be impressed how greatly offshore software development rates may differ by their location. Thus, average cost of software development in Ukraine will cost you around $25-45 per hour, while in the USA you'll pay as much as $100-150 for the same service.
So, what are these affordable costs? Let's have a look.
In 2019, the IT outsourcing market generated almost 67 billion dollars. Today, there are hundreds of IT outsourcing hubs all over the world. They all differ. By their rates, development quality, culture, expertise, time differences and much more. So, to hire a remote development team, you should keep in mind the entire scope of these characteristics, analyze them, and choose the best option for you. Talking about rates, we can identify two big pools of outsourcing destinations:
Countries/regions with high-quality life standards and stable economy. Among them are the US, Australia, Western Europe, Israel, UAE etc. IT outsourcing rates are higher there generally varying from $50 to $150.
Regions with less developed local markets such as Latin America, Afrika, Asia and Eastern Europe. They are often characterized by lower development rates and high quantity of specialists.
It is the regions with less developed economies that have become real players on the arena of global IT outsourcing. They have turned into reliable and productive IT hubs which produce a significant part of mobile and web solutions. So, let’s start our overview of them.
In the past years, Eastern Europe has turned to one of the biggest IT outsourcing centres hosting about 1 million of well-qualified developers. Its main outsourcing hubs include Ukraine, Poland, Romania, Belarus with average development rates ranging from $20 to $50.
While the development costs are quite acceptable in the Eastern part of Europe, its quality is also well-promising. Being rich in technical educational institutions, this region offers a solid and proven by years expertise in IT. Another positive factor is pretty high language proficiency — most vendors here are English-speaking.
Rates: $25-45 Popular tech stack: Python, Java, Ruby IT hubs: Kyiv, Lviv, Odesa, Kharkiv, Dnipro
Ukraine has gained a leading position among IT outsourcing destinations not only in Eastern Europe but also worldwide. How is it? To summarize in one sentence: high-quality development for a reasonable price. Which is on average $25-45 (while some junior developer rates can be as low as $18).
Kyiv, Odesa, Lviv, Kharkiv. These are only a few of Ukrainian IT hubs which play an important role on the global arena with 21 of Ukrainian companies being ranked among the best 100 IT outsourcing firms worldwide. IT potential there is really impressive. Thus, last year the Ukrainian IT industry set a new record — it received astounding $510 million of investments.
Its talent pool is also out of the discussion. Ukraine is a home for 192,000 developers. Most of whom are well-educated and skilled. And these are only data for 2019. What can we expect of 2020? Strong expertise and solid tech education are what makes this destination so attractive. The country has around 50,000 tech graduates yearly. Being proficient at most of the programming languages, Ukrainian developers are in high demand far outside its borders.
Rates: $35-55 Popular tech stack: Java, SQL, Python, C++ IT hubs: Warsaw, Krakow, Wroclaw, Lodz In Poland, developer cost per hour is little higher than in neighbouring Ukraine — somewhere around $35-55. Yet, such high rates can be explained by the excellent tech education in the country and higher living standards. Being one of the most developed IT industries, Polish outsourcing is also rich in both freelance specialists and established companies.
IT outsourcing market in Latin America should also be considered and reviewed while choosing a destination to hire a remote development team. For, it offers competitive talents, relatively good rates, and a convenient outsourcing location.
If you decide to outsource your development to South America, be ready to pay $30 for a junior specialist, while a senior developer’s hour could cost around $50. Seems like a fair price.
Latin America as an offshore development hub has been recognized only recently. Much due to the efforts of the local government. With all the economic instability and political insecurity, such countries as Argentina, Colombia, Brazil needed new ways of financing. Thus, national governments started to make big investments in tech education and IT infrastructure to develop the industry. The results are pretty good: right now these countries have lots of highly skilled talents who cooperate mostly with US companies.
Rates: $35-55 Tech stack: Java, Python, SQL IT hubs: Buenos Aires Argentina is one of the most advanced IT outsourcing markets in Latin America. It offers quite a wide pool of technical-savvy talents who are popular within Western Europe. Growing economically and culturally close to European countries, Argentina has marked a strong presence on global IT arena. Offshore development rates here range from $35 for a junior programmer to $55 for a senior one.
Rates: $35-55 Tech stack: Node.js IT hubs: Lima
At Peru Service Summit 2019, it was stated that the country gained $85 millions of global revenue. Expanding presence of IT outsourcing market enables Peru to build and solidify its economy and better life standards. With average software development rates of $35-55, Peruvian developers are technically educated, fluent in English and well aware of the US business processes.
Rates: $30-50 Tech stack: Java, Python, SQL IT hubs: Rio de Janeiro, Porto Alegre, Curitiba, Blumenau and Londrina In Brazil, average developer cost per hour goes around $30-50. The country is one of the leading IT outsourcing hubs in the world. In 2019, Tholons Services Globalization Index included Brazil in top 50 IT nations. This region is also renowned by a high number of technical engineers: yearly Brazil has around 15,000 tech graduates.
Until recently, Africa hasn’t been among popular offshore development destinations. After Microsoft invested $100 million in continent’s developers in 2019, African IT outsourcing market started to grow rapidly. Key IT hubs here are Kenya, South Africa, Morocco, Egypt and Nigeria. Rates usually vary from $20 to $45.
Rates: $20-45 Tech stack: Java, Python IT hubs: Western Cape, Gauteng, Durban South Africa leads continent’s IT industry. In 2019, the country was included in top 50 digital nations. The location also contributes to region’s growing IT market — South Africa's time zones overlay with most of the European countries.
Rates: $20-45 Tech stack: PHP, Python IT hubs: Morocco, Egypt As well as South Africa, the Northern part of the continent also shares time zone with most European countries. Rates here don’t differ from the rest of the continent. Key IT outsourcing countries are Morocco and Egypt. Some of the biggest global telecommunication providers even placed their R&D centers in Egypt (Vodafone, Intel etc.).
Rates: $20-45 Tech stack: SQL, Java, Python IT hubs: Lagos For West Africa, the top region for offshore development would be Nigeria. Country’s IT market is only evolving but has a great potential and talent pool. Understanding benefits of an advanced local IT industry, Nigerian government actively invests in developing the market and educate developers.
The biggest competitive advantage of this region is its low offshore software development rates which sometimes range from $18 to $45. With its 10 million tech specialists, Asia has lots to offer. Yet, affordable development costs and wide talent pool are sometimes achieved at the expense of proper product quality, great cultural and time differences. The biggest IT outsourcing hubs in Asia are China, India, Vietnam, Malaysia, Indonesia, the Philippines and Bangladesh.
Rates: $25-$50 Tech stack: Java, C++, Python IT hubs: Bangalore, Chennai, Mumbai, Kolkata India is recognized as one of the biggest and most affordable IT outsourcing markets in the world. Its offshore development rates usually range from $25 to $50. English is widely spoken around the country which is a big advantage while choosing destination to outsource software development. Yet, the final product quality can be an issue. There is no legal system to control quality standards in the country, so it totally depends on whether you’re lucky enough to find responsible and reliable developers.
Rates: $30-60 Tech stack: Python, Algorithm and Functional Development IT hubs: Beijing, Shanghai, Shenzhen The region boasts with a rich talent pool of skilled developers, obviously. Chinese development rates are little higher than in other Asian countries — $30-60. This price is caused by more advanced local economy and expertised specialists. Language barrier is among main concerns for the companies looking for outsourcing in China. So, having recognized poor English proficiency throughout the country, Chinese government started to invest in numerous initiatives to educate the local population.
Rates: $25-50 Tech stack: PHP, ASP.NET, Ruby on Rails, ASP.NET Core IT hubs: Manila The country’s developers have pretty good level of English, strong tech foundation and an elaborated IT infrastructure. Besides, stable political and economical situation in the country adds up to its popularity among IT outsourcing seekers.
Rates: $20-40 Tech stack: Java, PHP, and .NET IT hubs: Hanoi, Ho Chi Minh City For Vietnam, average offshore development costs are $20-40. The country has been regularly ranked among top global outsourcing destinations. Vietnam can be characterized by deep expertise, numerous technical specialists and high language proficiency.
The thing which unites these at first completely different countries are relatively high rates for offshore software development. Average developer costs per hour in these regions reach up to $50-100. These numbers result from elaborated economies, high life quality standards and well-developed internal markets in the chosen destinations.
The US annually ranks among top digitally competitive countries in the world. Yet, the specifics of its national market, economy and taxation system make the region one of the most expensive IT outsourcing destinations. Average rates for software development in the US may range from $70 to $150.
This region’s rates can be explained by the stable economy, advanced taxation system and high standards of living European countries provide. In Germany, France, Netherlands offshore developer rates may range from $50 to $100, while in Switzerland or Scandinavia the same services may cost you up to $100-200.
The Australian IT market is growing rapidly right now. Yet, there are some barriers which hold it from becoming one of the top offshore development hubs: high rates, remote location and significant time difference. Average developer’s costs per hour can be as high as $100-150 in Australia.
Software development rates in Israel are pretty high. Let’s just compare: average developer salary in Ukraine is about $1,500, while in Israel a specialist junior will get $5,500 for the same work. Such striking difference results from the lack of tech expertise in the country and, of course, more stable economic situation in Israel.
There should be clear reasons why more and more businesses are turning to outsource. Surely, there are. Offshore software development is beneficial in lots of ways. Some of the crucial ones are:
Outsourcing saves your money, since it provides more affordable options for businesses. That’s probably the prime reason why so many companies start to prefer this cooperation model. Why lower rates? As a rule, the average cost of software development in a region or a country depends on the stability of its economy, currency, and local market situation. Apparently, some states such as the US, Singapore, Australia, Western Europe have much more secure economic situation and, consequently, higher rates. At the same time, most of the developing countries (let's take Ukraine, Brazil, India, Algeria, Russia) with low income per person offer more affordable prices due to their less elaborated economy.
Yet, cheaper does not mean worse. Although we used to think that cheaper things result in worse quality, it’s not always an issue for IT outsourcing. In some countries, such as Ukraine or Poland, development quality is pretty high and supported by an extensive educational background.
Outsourcing is not always about just hiring developers, it’s also about obtaining proper & deeper tech expertise. As experienced as it can be, your in-house team would never provide such a wide perspective as developers who work offshore.
Their key advantage is their diversified portfolio. While working in outsource, developers deal with numerous databases, dozens of languages and tackle hundreds of totally different business problems. That’s what makes the offshore team so precious. Having worked on the projects similar to yours, an outsourcing company can refine your idea while avoiding mistakes you could have done.
Offshore development is also time-saving. Hiring a remote development team you free yourself from wasting time and money on resource-consuming HR and admin processes: candidates interviews, recruiting procedures, onboarding, risks of quitting, pages of internal documentation and on and on. Your outsourcing partner is now responsible for all these ‘headaches’, while you can go directly to development.
Having a business idea or a project in mind, it’s super important to discuss and analyze it with a professional team who will give you fair and qualitative feedback. That’s where outsourcing may come in handy, too.
Offshore software development means to pass your project to a whole team of professionals including business analysts, marketing specialists, UI/UX designers and project managers. They can give you a fresh perspective on your business idea, outline some ways to optimize it if necessary, find your strong and weak points.
The time difference is generally considered as a negative factor in the development process. Yet, sometimes it can play in your favor. Consider time shift as a bonus which allows you to see the results of your late evening comments early in the morning. While you’re sleeping, your outsourcing partner is working to make your app slick.
Software rates differ from region to region. But why? Obviously, you are aware of some basic price-constituting factors, but still, let’s quickly overview them.
Technology stack: the rarer and more complex stack you need for your project, the higher developer skills you require. Consequently, the developer’s rate per hour will go up. If necessary, you can always get rough estimates for your web or mobile application development using various free online app calculators.
Outsourcing destination: as we have mentioned before, the region’s specifics define the development costs. Countries with higher living standards set bigger rates respectively.
Experience & reputation: the more experienced team you choose, the higher fares they charge. The same goes with the reputation. Basically, you pay more for security and reliability of your project’s results.
Team size: you pay for every specialist engaged in your project. The bigger scope of works and roles — the higher cost.
Cooperation model: in general, outsourcing can be split into two basic options — IT outsourcing as it is or IT outstaffing.
Outstaffing presupposes that every member of your team is hired specifically for your project. So, all HR and administration processes are done by the vendor, while you have to manage a development process. With this model, you primarily save money by doing project management yourself. With IT outsourcing, you hire the in-house team of another company. In this case, project management is on the side of the outsourcing partner. While such a model may cost more, it puts the responsibility for achieving your project goals on the partner and enables you to concentrate on some strategic activities. Besides, outsourcing also offers various payment models: dedicated teams, time & material and fixed price.
This guide provides a detailed rates comparison in the main IT outsourcing hubs around the world. All of them are worth of your attention. Some offer lower rates, others — better quality or smooth communication. Yet, the final decision is always up to you. At Fulcrum, we believe that IT outsourcing is not about just finding a work labor, it’s about much more. About finding a reliable technical partner. About strengthening your project with the expertise of professionals. Sharing common goals and fighting for the success.
So, all you need is to focus on your business goals. With a team which will root for your project. Will help to turn it into success. Will be reliable, experienced, and always there for you. We have already done it for our numerous clients. We are here for you, too. Just find time to tell us more about your project.