What are the Best Countries for Outsourcing Software Development in 2023?

April 18, 2023

What are the Best Countries for Outsourcing Software Development in 2023

Outsourcing is when companies hand over some of their work and projects to other people outside their company. It’s become an increasingly popular option among businesses, and in 2023, the world of software development outsourcing is expected to be thriving.

The challenge is: what is the best country to outsource software development?

The answer depends on several factors, but we’re here to give you an overview of the countries that are anticipated to offer great outsourcing opportunities in 2023.

Why do Companies Choose Software Outsourcing?

The Deloitte Global Outsourcing Survey 2020 revealed that 70% of surveyed executives saw cost reduction as the primary motivator for outsourcing. With that in mind, it’s understandable why many businesses search far and wide to find the most cost-effective solutions for their projects.

But that’s not the only reason. Businesses also outsource to:

  • Access to specialized skills and expertise that may not be available in-house
  • Save costs due to lower labor costs in certain regions of the world
  • Gain flexibility to scale resources up or down depending on project needs
  • Focus on core business activities while outsourcing non-core functions
  • Markey their products faster due to access to a larger pool of talent and resources
  • Mitigate risks associated with project failures by partnering with experienced outsourcing providers
  • Improve innovation and competitiveness by leveraging new technologies and approaches brought by outsourcing partners.

The IT industry is no stranger to software development outsourcing, and the majority of businesses are already taking advantage of this cost-effective and efficient solution. As such, it’s only natural for them to be looking for the top countries for software development outsourcing in 2023!

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Key Factors to Consider When Choosing a Country for Outsourcing

Outsourcing companies can promise you a successful software project, but the country you choose for software development can have a huge impact on its success.

Before making your decision, consider these factors:

Cost of Labor

While the outsourcing market is growing yearly, the software development market rate differs from country to country.

Prices are influenced by the cost of living, local wages, and economic status. For example, while India and China offer relatively low rates, they aren’t always the most cost-effective option.

Relevance of the Experience of Workers

Software development is a highly specialized field with very specific skills and knowledge. Therefore, when outsourcing, it’s important to make sure that your software engineers are well-versed in the most up-to-date technology.

Knowing the tech stack of your project before outsourcing is essential to ensure that the team you hire has the right skill set and experience.

Working in Different Time Zones

Offshore outsourcing can be beneficial when working with teams in different time zones because it allows for round-the-clock development.

However, communication between the two teams can be difficult, especially if there is a major time difference. Consider your team’s working hours and the time zone of the outsourcing countries before committing to an agreement.

Multilingual Capabilities

Language may be a deal-breaker if you’re outsourcing in Asian countries. Naturally, if there is a language barrier, it can create communication issues and can lead to misunderstandings.

Therefore, make sure that the countries you are considering offer multilingual capabilities, especially English. This will ensure smoother communication and enable your team to understand the project’s requirements better.

Cultural Differences

Even the best countries to outsource to can pose cultural challenges. Different countries have different laws, regulations, holidays, and lifestyle habits.

To ensure successful cooperation between both parties, it’s important to take cultural differences into account. This includes taking the time to learn about the country’s culture and habits before engaging in business with them.

With these factors in mind, let’s take a look at the top countries for software development outsourcing in 2023!

Top 10 Countries for Software Development Outsourcing

Whether you want to hire a freelance software developer or a whole team, you can find the perfect outsourcing partner in any of these countries:

1. Ukraine

Despite facing the Russian invasion and military conflict, Ukraine is still one of the hottest spots for software development in Eastern Europe. They’ve got a deep talent pool and a supportive investment climate that has led to a flourishing tech ecosystem.

One of the best things about outsourcing to Ukraine is that they’re in a similar time zone to other European countries. No more late-night calls to India, China, or Vietnam! And while English isn’t super widespread among the general population, about 85% of their IT community speaks it, so communication barriers aren’t really an issue.

Plus, there are other advantages to outsourcing to Ukraine, like a time zone that partially overlaps with the US and UK and a working culture that loves a good challenge and competition.

Despite the tough circumstances they’ve faced, Ukraine’s IT outsourcing industry has not only survived but also provided economic support for the state. All in all, Ukraine is a top outsourcing destination for software development.

Average cost:

Ukrainian developers earn depending on the city and technology, and the most popular range is from $800 to $4000 as of 2022. These numbers will still depend on the developer’s skills and experience levels.

The Philippines favorable tax laws quote

2. The Philippines

Globally recognized as the Business Process Outsourcing (BPO) capital of the world, the Philippines is definitely one of the best countries in Asia for outsourcing services.

Aside from having a large talent pool, Filipinos have a high level of English fluency among Filipinos. They are ranked 22nd in the 2022 European Fellowship’s English Proficiency Index and boast an impressive literacy rate to boot. This makes them perfect for customer service jobs, especially for businesses with English-speaking customers.

Another great thing about outsourcing to the Philippines is the favorable tax laws. The government has introduced the Philippine Economic Zone Authority to help businesses receive tax exemptions, making it an attractive option for outsourcing tech companies.

Moreover, let us not disregard the location! The Philippines is conveniently situated at the intersection of Eastern and Western cultures. Due to its history as an American colony, Filipinos also maintain a profound knowledge of Western customs.

If you’re leaning toward software outsourcing in the Philippines, the cities of Manila and Cebu are renowned for their technical proficiency in areas like healthcare, fintech, robotic process automation, and artificial intelligence.

Average cost:

Filipino software developers earn about $25-49, according to Clutch. Rates depend on the expertise, type of project, and location.

If you’re looking to outsource software development in Cebu, choose StarTechUP!

3. India

India is one of the top countries for outsourcing tech jobs, and it’s not hard to see why. The low prices for software development are seriously competitive and attract companies from all over the world.

India has been a hub for offshore outsourcing since the 80s, but things really took off in the mid-90s when the Information Technology (IT) sector boom hit. Companies from the West started moving their production to India to save money, and it’s been a win-win ever since.

The software development market in India has been growing like crazy for the past 30 years, with exports going to nearly 100 countries. Plus, IT services in India are a fraction of the cost (about 20%) in comparison to those offered in the United States, making it one of the top outsourcing countries in the world.

India’s higher education system is all about science and tech, and they produce over 2.6 million STEM grads every year! That’s why they have a huge talent pool for outsourcing software developers. The most popular services to outsource to India include software development, engineering, and BPO services.

Average cost:

Like any other outsourcing country, rates would vary on the amount of skill you require. Usually, Indian offshore developers cost roughly $19 to $40 per hour.

4. Mexico

For US-based companies, Mexico stands out as a top nearshoring destination for its affordability and convenience. As part of Latin America country, it offers a broad talent pool, cost-efficiency, and shorter time difference.

Mexico was pretty late to the IT party, but it’s now turning heads in the tech world. North American companies are quickly becoming major players in the global tech outsourcing industry. It wasn’t until the government prioritized tech in 2006 that things took off, and now the industry is booming!

Mexican learners are renowned for their tech education. The 2021 Coursera Global Skills Report indicates that they excel in cloud computing, web and mobile development, software engineering, data management, and statistical programming.

Lastly, the country has several powerful tech hubs and fluent English-speaking tech talent, making it convenient for clients in Silicon Valley and the East Coast to work with them. This has resulted in American firms looking to Mexico for top-notch professionals at an affordable price.

Average cost:

According to Clutch’s 2023 review of top outsourcing companies in Mexico, software development costs an average of $25 to $49 per hour. Your project’s complexity, the team members needed, and the duration of work will determine your exact cost.

5. Poland

When it comes to having a skilled tech sector, Poland lands at the top. Located in Eastern Europe, it has a long history of producing some of the most brilliant tech talents in the world.

Polish programmers are some of the most skilled in the world, with an impressive 98% score on HackerRank. They’re experienced in the latest tech trends, including virtual reality, e-commerce, mobile, and video game development. Plus, they know popular programming languages like JavaScript, Java, and Python. Polish developers are also proficient in other technical skills like TypeScript, PHP, Kotlin, and C++/C#.

Top-notch security is another major plus. Poland heavily invests in security technologies, has a reliable telecoms infrastructure, and abides by strict EU data regulations like GDPR for IP protection and data security.

For Western developers, communication won’t be a problem with Polish software engineers, as 30% of the population speaks English as a second language. Though North American companies may need to adjust to time zones, there’s still enough overlap for smooth collaboration and live meetings.

Average cost:

Data from Clutch in 2023 reveals the average cost of hiring a Polish software developer ranges from $50 to $99. Of course, the cost may vary depending on your project’s requirements and development time.

Furthermore, if you outsource to a Polish IT company, you’ll benefit from their Corporate Income Tax (CIT) rate of only 19%. This means you’ll get to keep more of your hard-earned money! 

6. China

Boasting low labor costs and an immense reservoir of talent, China has earned its place among Asian countries as one of the most sought-after for outsourcing software development.

Over the years, China has become one of the largest technology hubs in the world. But there are a couple of things to consider before you outsource your software development project to the country.

First off, only a small portion of China’s massive population of 1.3 billion people can speak English fluently. That can be a significant issue for businesses looking to communicate with their Chinese third-party company.

Another concern is that China doesn’t have the strongest track record when it comes to enforcing Intellectual Property (IP) laws. However, that can be mitigated by hiring a trustworthy outsourcing agency and setting clear guidelines before beginning any work together.

Average cost:

Software development services cost per hour in China will be around $18- $40. But again, the exact cost of your project will depend on its complexity and duration.

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7. Czech Republic

The Czech Republic has become a hot spot for programming outsourcing, with over 105,000 skilled developers and big names like IBM, Honeywell, and Google setting up shop there. Plus, the country is where the popular Avast antivirus system was born.

From a global business perspective, the Czech Republic is emerging as a promising outsourcing country this 2023. It has a vibrant tech scene with a high concentration of developers and strong ties to international markets.

Lots of small companies also have offices in the Czech Republic, and it ranks 23 out of 111 countries for English proficiency—just behind the Philippines. This means that companies can take advantage of the country’s skilled and English-speaking workforce and their quality standards.

Czech developers are experts in all major programming languages and frameworks like CSS, JavaScript, HTML, SQL, C#, and Python. Outsourcing to the Czech Republic not only offers cost-effectiveness and time but also offers many other benefits.

Average cost:

If you’re outsourcing software development in the Czech Republic, prepare to spend $30 to $50 per hour rates for a developer. But it highly depends on project requirements and other aspects of your project.

8. Romania

In 2023, Romania will rise as a great place to outsource software development, just like Ukraine. It has a booming IT industry with a growth rate of 14.3%, which is expected to double by 2025.

Although Romania’s software outsourcing market is smaller than that of Poland or Ukraine, the offshore software development rates are more attractive than Poland or the Czech Republic.

Most of the software services in Romania are fintech, software development, and web development. The software developers there are skilled in various programming languages such as C++, .NET, Java, PHP, and JavaScript.

Romanian developers are highly qualified and fluent in English, which is ranked 17 out of 111 in the EF English Proficiency Index. The government supports the software industry, and many international companies like IBM, Microsoft, and Dell have their offices there. Romania is a member of the European Union, meeting international standards in the IT field.

Average cost:

A Romanian software developer gets paid from $18 to $50 per hour, depending on the engagement model and project complexity. This is very reasonable for offshore software development projects.

9. Brazil

Brazil is one of the top countries in Latin America for outsourcing. They have skilled workers and advanced technology infrastructure.

However, their IT community is young, and their programmers score an average of 71.3% on HackerRank assessments. With 38.18% of the population under 24 years old, Brazil is an up-and-coming country for outsourcing software development. This makes Brazil a great place for hiring junior developers, but you may want to consider other countries in this list for more advanced projects.

Additionally, Brazilian outsourcing software development companies are great with the English language, making it easy to communicate and get work done. Many workers are also fluent in French or Spanish, and almost everyone is bilingual or multilingual.

Concerns about time zones and working hours are valid, as Brazil is four to five hours behind the United States. To counter this, many companies introduce flexible work arrangements so that both parties can be productive.

Average cost:

The average software developer in Brazil can expect to earn a salary reflective of the cost of living in whichever city they may find themselves living in. But, on average, they can earn up to $50 to $99 per hour.

10. Vietnam

Vietnam is a pretty sweet spot where you can outsource software development projects, ranking sixth globally in the software services and Global Services Location Index. It shows how the country’s economy is rapidly growing and transitioning from low-tech manufacturing to a service-oriented economy.

The Vietnamese government is really into STEM education and has invested heavily in developing a skilled workforce of software developers. They’ve come a long way in just over 20 years and are now one of the best places to go for offshore development.

One thing to keep in mind is that communication can sometimes be a challenge when outsourcing to Vietnam. Being situated in Asia, time zones can also be a problem. The solution is to set up a clear communication system with your team and make sure everyone understands the process they need to follow.

Despite all of these, Vietnam is a top-notch outsourcing destination that should definitely be on your radar.

Average cost:

The hourly wage for software development services ranges from $18 to $40, which makes the fees per hour starting from just $20 for experienced engineers with top-notch quality!

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Final Words: What Is the Best Country to Outsource Software Development for You?

Among these best countries for outsourcing software development, the country you choose is highly dependent on the type of software project you need.

All options deserve your consideration. Other countries may offer cost savings, whereas others provide superior quality service. To ensure that you make the right decision on which software vendor to choose and establish a long-term working relationship with, it is necessary to do further research and consult with your business team before committing.

If the Philippines is on your list of considerations, then you’ve come to the right place. StarTechUP is a software development company in Cebu with years of experience in developing and deploying various software solutions.

We are your trusted partner for end-to-end software outsourcing services. Contact us today to get started and see how we can help you bring your business ideas to life!

About the author: Andrea Jacinto - Content Writer

A content writer with a strong SEO background, Andrea has been working with digital marketers from different fields to create optimized articles which are informative, digestible, and fun to read. Now, she's writing for StarTechUP to deliver the latest developments in tech to readers around the world. View on Linkedin