How much should you pay for offshore software development

Outsourcing offshore software development significantly helps reduce the costs of software development. However, this comes with the challenge of knowing how much you should pay for the best services since lower rates do not always translate into an excellent price-quality ratio. Well, there are many skilled developers in countries with relatively lower living costs, but the challenge is how to find them. Here we look at what you should pay to ensure you reduce software development costs and enjoy quality software development services.

Obviously, offshore software development is one of the latest trends in the development industry that helps multinational companies in countries with high living costs to enjoy the services of skilled developers from countries with the lowest living costs. This allows these companies to minimize costs by outsourcing services from developers that charge less.

However, most of the people who have used offshore software development to outsource IT services have mixed reactions about it. The major reason why past customers have a negative opinion about it is that most companies focus mainly on reducing software development and costs and forget about other things that matter.

While finding the best offshore software developers in countries like Vietnam, Poland and Singapore is much easier, it is advisable to get rid of the attitude of assuming that those who charge the least are always the best. Usually, hiring more expensive developers from such countries offers excellent bargain prices while maintaining quality standards.

Why Do Companies Outsource Software Development?

In the past years, companies had to hire a team of dedicated and skilled developers and offer those benefits, salaries and equipment, and a working place. With the advancement in technology, outsourcing software development has gained a lot of popularity among many people. Offshore software development offers several benefits that cannot be ignored, including allowing you to only pay for the time developers spend on your projects. It also prevents you from having to create a large and costly team when you do not need any in the near future. Moreover, software developers hired through outsourcing take responsibility for all the common tasks in software development. Some of the common tasks include preparing a project specification, project management, software design, quality assurance, and testing.

 What is the Average Cost of Software Development Services?

Outsourcing software development has gained popularity among many companies as it helps save costs, time, and effort on projects. Offshoring software development allows companies to enjoy large talent pools available across the globe due to the modern technologies. However, it is good to mention that the average software development services cost varies from one country to another, mainly due to living costs. The cost of product development may also vary depending on the platform you choose to hire offshore developers.

Below we will share a table with the average offshore development rates using data from reliable sources by regions to help you make informed decisions. These sources include SalaryExpert, PayScale, TopTal, Upwork, and YouTeam, which is a marketplace for remote software engineers.

North America	Eastern Europe	Western Europe	ASIA	Latin America	Africa
$46.35	$32.29	$67.20	$25.83	$45.71	$28.00

Software Development Rates in Western Europe and North America in 2021

As of 2021, the average hourly rate of a software engineer in the US is about $46.32, but the number may vary depending on the location, technology, and experience. This is according to a report by Indeed.com. For instance, the average rates in California, New York, District Columbia, Washington, and Texas are $56.40, $55.94, $49.09, $53.59, and $44.78, respectively. While the hourly rates in France, United Kingdom, Sweden, Germany, and the Netherlands in 2021 are $82, $71, $67, $56, and $60, respectively.

Offshore Software Development Rates in Asia in 2021

Asia has more offshore software developers than any other region across the world. For instance, the number of offshore software developers in India alone in 2018 amounted to about 3 million. On the other hand, China boasts of being one of the most attractive offshore development destinations in the world as the government supports it by providing economic incentives. The Philippines has one of the fastest-growing IT industries globally, and it ranks 5th in the world’s digital stage. The offshore hourly rates in 2021 in Asian countries, including China, Nepal, Bangladesh, Sri Lanka, Malaysia, and the Philippines, are $25, $25, $25, $25, $30, and $25, respectively.

Offshore Software Development Rates in Latin America in 2021

According to a study by Agile Engine, Brazil tops the list of the best software outsourcing countries in South America, followed by Argentina and Panama, respectively. The survey shows that Brazil has the highest number of software engineers with over 400,000 experts. Tholons Services globalization Index 2019 placed the country in the second position of the 50 digital nations’ list. The average hourly rate in Brazil, Bolivia, Argentina, Chile, Peru, Uruguay, Mexico, and Costa Rica in 2021 is $40, $30, $50, $35, $55, $55, and $40, respectively.

Offshore Software Development in Africa in 2021

The IT outsourcing market is in its early stages of development, but the emerging market has experienced rapid growth and great potential that is attracting clients from overseas. With the young population in the region, Africa is expected among the top places to outsource software development in the near future. Some countries in North Africa have already become important outsourcing destinations due to the small time difference between countries like the US and Western Europe. North Africa provides excellent pools of talent with the right skillset in SQL, Ruby, and Python.

In East Africa, Kenya stands out as one of the leading and most promising IT outsourcing destinations due to its excellent infrastructure and young population. The region has great developers who are well-versed in mobile development, SQL, and Java. According to the recent data, the countries’ engineering rate in the region like Kenya, Nigeria, Morocco, South Africa, and Egypt is $20, $40, $20, $40, $20, respectively.

Final Thoughts

In conclusion, the cost of hiring software engineers varies significantly depending on the country that you choose for offshore software development. Usually, the hourly rate in these countries is influenced by the engineer’s level of expertise and the cost of living in the country of residence. This explains why the US, Australia, Canada, and Western European countries have high hourly rates while other regions’ cost is considerably lower.