IT Outsourcing is gaining momentum and will continue to grow in the coming years. It is just no longer the game to save the cost but to stay competitive. It is the new strategic tool that is empowering the century. More and more businesses are opting for this approach, as per a study by Clutch 37% of small businesses have outsourced their work to the offshore team, due to its cost compression and ability to reach the large pool of tech specialists within the budget.
By cutting the expenses and optimizing the workflow, organizations can reach global talent and delegate software application development to overseas software agencies at minimal costs. App development has gained a lot of momentum in recent years with the evolution of entrepreneurs working on startup App ideas this has become one of the largest services to work with offshore teams.
If your organization is looking to cut down on costs or hire developers, this article lays a comparison of hourly rates and quality around the world.
Software Development Outsourcing Rates From Across the Globe
Software developer rates are different across the globe. Geo-Location plays a vital role in deciding the labor cost, based on the countries Avg. salary, the hourly rates are decided. For e.g., junior developers in Latin America may cost you around $30 while a senior developer may cost you 50$ per hour. Similarly, In Eastern Europe, an hourly rate of a junior offshore developer is around 25$ while it is 50$ per hour for a senior developer.
If you talk about Asia, Offshore developer hourly rate starts at 18$ for junior and 40$ per hour for a senior developer. In Africa, the developers charge between 20$ and 40$ per hour depending on the developer’s skill set.
Outsourcing Rates by Countries
We have done a research on over 100 IT agencies offering offshore solution from across 20 countries which are considered to be the hottest location for IT outsourcing, and collected the data of pricing and engagement models. Based on the study we have mentioned the hourly cost and Pros & Cons of these locations.
Software Development Rates in Eastern Europe
The rapid growth of the IT industry in Eastern Europe has brought around 1 million software developers, which makes it a good outsourcing destination. However, the offshore development rates may differ from country to country in this region. For example, the outsourcing rates in Ukraine can be lower than in Poland.
While you are looking for a junior developer, it may cost you around $25 per hour and around $50 for a senior developer. On the other hand, if you choose to go for an offshore model and select a mix of Jr. and Sr. developers, it may only cost you an Avg. of $35 per hour. In this region, you can find quality developers with low rates without compromising on the quality.
Some of the best offshore software development countries in Eastern Europe where you can hire software developers include Ukraine, Russia, Hungary, Romania, Bulgaria, Latvia, Slovakia, Poland, Belarus, and Estonia.
Software Development Rates in Asian Countries
As compared to Eastern Europe, the offshore development rates are lower in Asian countries and higher in the number of developers. The hourly rates are around $18 for a junior developer while $40 for an expert senior developer. For a team of mix resources, the average rate comes around $25-$30 in this region.
India and China are among the Asian countries which are considered to be a tech hub with a huge number of skilled software engineers with nearly 5 million developers in each country. However, due to Chinese governments policies in data management, it has lost a huge reputation score. Other Asian countries like Vietnam, Indonesia, and Malaysia are also growing IT hubs and offering software development services. India itself is the largest source for Software developers and some of the CEO’s of the giant tech hubs are from Indian Origin.
The lower labour cost with a high level of skilled resources makes this location the most preferred location for the offshore team. India is the largest supplier of skilled software developers with Banglore as the most considerable city in the world for software developers.
Related: Everything that you need to know about Uber for X Ideas for your next startup.
Offshore Developer Rates in Latin America
In Latin America, you can find a junior offshore developer at around $30 per hour in countries like Brazil, Argentina, and Mexico. When looking for a senior developer with skills and expertise, it would cost you around $50 per hour. The team set up with a mixture of Sr. and Jr. developers the Avg cost would be $35-$40 per hour.
As there is an almost a negligible time difference, several US companies reach Latin American software development companies. Some of the major outsourcing countries include Mexico, Colombia, Chile, Argentina, Colombia, Brazil, Peru and Panama. The total number of resources is less compared to other locations so a huge talent pool is less likely to be available.
Software Development Hourly Rates in Africa
Hiring a junior offshore software developer from Africa can cost you about $20 per hour which can go up to approx $35 per hour for a Sr. resource. A team with a range of experienced developers can cost around $30 per hour. Egypt, Morocco, and Kenya are the major hubs for software developers, with a mix blend of availability they all stand at around $30 per hour. The availability of quality resource is less compared to other countries.
How to Choose an Offshore Development Location?
When you are looking for an offshore development country there are certain factors you must consider. You must pay attention to these key factors including average developer rates, how developed is the tech industry, time difference, culture fit, etc.
Compare the Offshore Software Development Rates:
Among the several countries, there is always some rate difference for software development services. As indicated by several reports, more than 50% of the tech companies choose to outsource to reduce their development costs. Though quality is at the top priority the cost also matters a lot. For major outsourcing countries, you should look at the average development rates and choose your country accordingly.
Consider the time difference:
Also mentioned earlier, time difference plays an important role in managing your project. Some companies prepare to work with countries that have an 8-hour time difference as it brings more efficiency to daily work. Such a time difference can also cut down your time to market by following a “follow the sun” development model in which two teams work on different time zones taking twice less than a country with only 1-2 hours difference.
Check the developers in the country who know your tech stack:
You must find a country with a large number of developers who specialize in your tech stack. This will ensure that you have a huge availability of developers and you can hire them quickly. Also, when there are so many developers available in the country, the offshore developer rates are low. Developers specialising in popular languages like Java, C++, etc are comparatively easy to find. On the other hand, if you want your developer to work on lesser-known technologies, it may require you to explore more. In countries like India, you can easily find developers catering to all niches.
Conclusion on Software Development Outsourcing destination?
Looking at the data from the above chart, it is evident that Asian countries have the least software development outsourcing rates compared to others with a huge talent pool. Outsourcing your software development to Asian countries will not just ensure that you save big bucks on your developing budget but will also ensure that you get access to a large talent pool without compromising on the quality of your development product.
Among all these Asian countries, India is one of the largest IT hub in the world, with over 100,000 corporates registered on the business platform and over 5 Million Software developers. With a great talent pool, almost every country of the world employs Indian developers in their team. Even the countries of Asia hire developers from India for their project. Majority of IT Companies have an offshore team in India which helps them focus on core business growth.
The Time zone of India allows every region of the world an overlap in working hours which makes it a perfect destination for any organisation in the world to set up an offshore team. Apart from Cost and high skilled developers, there are several other factors which makes India a great destination for hiring offshore developers. We have listed a few.
Other Location For IT Outsourcing in Asia
Some of the IT outsourcing countries in Asia with a vast tech talent pool are:
India:
Being one of the largest IT outsourcing markets in the world, the country holds around 55% of the global IT outsourcing share. As per a survey done by Statista in 2019, the Indian IT sector annual revenue reached around 180 billion U.S. dollars. With over 4 million tech specialists, Indian IT outsourcing companies can produce you flexible solutions for any of your IT projects. Some of the biggest IT hubs in India include Bangalore, Mumbai, Chennai, Hyderabad, and Delhi.
Over the past decades, It has also been among the top 5 priority industries to the Indian government. This results in lower IT taxes, improved schemes for companies, fewer legal issues, better security, and more!
The average rate of the developers varies from $18-25, making it the most cost-effective outsourcing destinations in the world. Some of the companies may find issues with digital technologies adoption compared to other European countries, however, if you approach a reputable company, you can be assured to get cost-effective services without compromising on the quality of development as they have great infrastructure making use of the latest technology.
Vietnam:
If you are looking for a cheaper alternative, Vietnam is a good option for IT development. The Asian market like China has started to raise taxes on foreign enterprises, which does not make it a good outsourcing target. However, this is not the case with Vietnam. The state tax policy may support you, however, compared to India and Philippines you will not find all the developers speaking in clear English.
Philippines:
The Philippines is also one of the popular outsourcing destinations in continent Asia. It has managed to establish itself as a trusted outsourcing partner providing services in software development. Here, you can be sure to find young technical experts who can speak fluent English. With over 400 software development companies with a capacity of around 2,00,000 developers, you can find the developer of your choice. The average hourly rate here for software development lies between 20$-28$. The consistent improvement in the IT sector and economic growth in the Philippines has resulted in a huge competition which ultimately gives to skilled professionals to choose from.
Reasons why one should consider India
- Government Policies: – There has been significant support from government bodies to support IT infrastructure to tech companies which are directly affecting the rates and ease of doing business. Dedicated IT parks, Tax Holidays and several other supports have made it really a great destination for Global companies to set up offshore teams here in India.
- Effective Communication: – Every relation begins with effective communication and when English is the language, India is called as the largest English speaking country. This has given a huge moment to Global companies to think over other countries when it comes to communication.
- High-End Experience: – India has been a favorite destination for IT projects for years, this gives an option to hire developers with relevant experience in the industry that you work in. The great benefit to deal in a market place is you get good resource with a great experience.
Challenges that might need attention.
- Right Partner: – Finding the right partner is a task, there is a detailed checklist for finding the right partner for setting up an offshore team. If this is worked out, you all are set.
- Time Zone Difference: – India is ahead of European countries, US & Canada Time zones, this can become a challenge, though there would be overlap, however, with effective strategy this challenge can be taken care of.
- Business Analysis: – Gathering requirement and understanding the scope of work at times can become a challenge because of not being physically available in the office, however, with online meetings and at times visiting on client-side makes it accessible for the workforce.
In Asia, almost 95% of the respondents change $30 per hour or less for their services and almost 83% of the professionals charge $20 per hour or less. In countries like India, there are about 100,000 IT specialists who speak the English language and also agree to charge $20 per hour or even less, that seems to be a lucrative deal for several businesses looking forward to outsourcing.
Long term benefits of outsourcing to India
India being the world’s top outsourcing location, here developers are preferred by the entire world for their cost-effective and high-quality outputs. Few organizations have seen tremendous benefits which are considered to be one of the best strategies for long term growth. Some of the major benefits associated with outsourcing to India are:
Cost-effectiveness:
As indicated by several reports and research, you can see that the average offshore development rates are lower than offshore development rates in Eastern Europe and Latin America. This will reduce your development costs considerably. Without having to spend much, you can get a team of proficient developers for any of your IT projects.
For Every Jr Developer developer that you hire at an offshore location in India, you save almost $2500, and for every Sr. Developer it is $3500, so if a team of 10 developers is hired you save almost half a million a year, and this added capital can be reinvested in marketing and sales to enhance the market reach.
Quality:
As India is an international market of developers, a lot of organization from across the various industry come and work with the team. This process has given an opportunity for developers to experience complex projects. This is a very crucial thing which you won’t find in several countries which acts as a USP for India. For some of the software language, India acts as the largest source for the developers.
Time management:
The time zone differences between the countries may cause difficulty in working. However, you can turn this into an advantage. As you contact an offshore company, you will be sleeping when your team would be working in some other country and then you can provide them feedback or check your current project state during the day when they are not active, and can implement the changes when you are probably sleeping. This way you will have control over the whole process and manage the time. So it would be a 24 X 5 process for you.
Availability:
As outsourcing to Asia has become extremely popular in recent times and so with such fierce competition in the market, you can easily find developers who can handle your project. With such a huge market available, you will be able to find several outsourcing companies available immediately after placing a query.
Why India Has Become the Premiere IT Outsourcing Destination of the World?
India is the top country to hire an offshore developer for any of your software development project. The study conducted by Delloite claims that there are more than 59% of businesses are outsourcing their products to India and around 22% are planning to outsource to India in the near future. India, having the largest pool of expert developers is what makes it a preferred outsourcing country in the world.
With more than 4 million IT professionals working in Indian companies and around 10 million professionals working indirectly in the industry. Every year more than 200000 IT graduates add to the IT workforce. All these reasons together constitute strong reasons for you to start outsourcing IT services to India. If you are still looking for some fore reasons, here they are:
Massive Software Industry size:
Having the world’s second-largest population, the country also has a big size of the software industry which is even bigger than entire Europe! In the financial year 2019, the Indian IT industry generated a revenue of around 180 billion US dollars. These stats clearly indicate the massive size of the Indian IT sector and thus, Software outsourcing in India is prominent. Several It companies have mastered the software development skills and are successfully delivering projects to the world.
Skilled workforce and great companies:
Another strong reason to outsource in India is that many tech giants like Google, Microsoft, Walmart, IBM, Accenture, Infosys, TCS, among others have offices in India. This clearly depicts that the talent pool in the country is skilled and proficient, having proven capabilities & experience of collaboration across the globe.
Round the clock services available:
India, being one of the preferred outsourcing destinations, provide round-the-clock-services. Companies work in two shifts. Their in-house team works during the day while the offshore team works when the office hours are over (U.S. shifts). This way, these companies can speed up their work process and can manage projects at any time of the day. So while you are outsourcing to India, you need not worry about the time differences.
Cost-effective solutions:
Cost is the main reason for you to outsource a project, isn’t it? As mentioned earlier in this post, India has a pool of talented developers at minimal costs. Hiring a developer from the U.S. would cost you around $80 per hour while an Indian developer would cost you only 20$ per hour. Thus, if you choose to outsource your software development to India, it can reduce your costs substantially. It will also surprise you to know that India has the highest number of ISO-certified firms in the world, which further makes it a great destination for outsourcing.
Great support from the Indian Government:
As mentioned earlier, It is among the top 5 priorities of the Indian government. The fact that this industry receives immense support from the government also means that the companies have to pay fewer taxes have had several schemes to help them grow and prosper. The favorable environment for the IT hub in India makes it a great outsourcing destination. IT Act & Indian Contract Act are the important Acts in legislation to outsourcing firms.
How to Choose an Offshore Development Company?
Now that when you have decided on your outsourcing destination, the next step is to find the most appropriate software development vendor for your product.
As the development team plays a vital role in deciding the fate of your project, having the right development team by your side can make a difference! So before you finalize your development company, here are is a checklist that you should consider:
Choose your Cooperation Model as per your requirement:
You must pay attention to the cooperation models of your vendor. For example, if you already have tech expertise on your side, you can go ahead with out staffing model, where you can hire a remote development team for your specific development requirement. On the other hand, you do not have a team on your side, you can outsource the entire project to the vendor. Whatever be your requirement, make sure that your vendor is ready to take the full responsibility of managing and developing your project.
Focus on Value Instead of Cost:
Though cost plays an important part in selecting your outsourcing vendor, however, it should not be the only factor that determines which company you should go with. If you want your end-result worth the investment, it is recommended that you pay attention to the quality of work you get from the development team. Thus, before finalizing the company, make sure to check the past work of the company and pay attention to reviews and feedback from their clients. Better quality code will surely have long-term benefits for your business even if you pay a little more. Consequently, investing in a reliable company will result in a more appealing product in the long run.
Focus on transparent cost structure:
While looking at the outsourcing models, you should ensure that there are no hidden costs included. Several companies may include their costs of business manager, business analysts, cover time for developers, etc. You must clear this in advance and make sure that the vendor charges for the hours the developers work directly for you and have a transparent cost structure.
If your fee is fixed, you will always know how much you have to pay at the end of the month. It will also ensure the stability and predictability of your expenses and work results. However, if you change your requirements during the development, you will be charged for the extra working hours of the developers. On the other hand, you can also go for a model in which you only have to pay for the time of developers working on your project. You can discuss your budget and work accordingly.
Wrapping Up with some words for the wise.
There is a long list of services that you can outsource to India which primarily includes web development, mobile app development, digital marketing, enterprise solutions, product development, etc. Their teams also allow you to avail the best services and customized web or app solutions based on your business requirement for which you can hire PHP developers, hire iOS developers, hire Node.Js developers, hire Angular.js developers, etc. quality assurance, India is undoubtedly one of the best countries to choose for all your outsourcing services and thus, its the diverse pool of talent is attracting different companies from all around the world to avail services.
We also advise to go for an agency instead of a freelancer, there are several long term benefits attached to it, companies always have a certain level of values, with freelancers your luck should really be strong to get a good one by your side.
“It is not the strongest or the most intelligent who will survive, but those who can best manage change.”Leon C. MegginsonTweet
