So, you discovered the pros of offshore software development and decided to outsource your next project.
But how much does it cost to hire offshore software developers from another country?
The answer is not so straightforward, as offshore software development rates vary by country, skill level, and other factors. Not to mention, different companies may have different pricing models and structures.
To help you navigate through the world of offshore software development rates, we’ve put together this guide to outsourcing costs by country.
6 Factors that Affect the Rates of Offshore Software Development Services
Before examining specific rates by country, you must understand the different factors that shape offshore software development rates.
Some of these factors can either increase or decrease the rates, which is why you need to know which factor you can compromise to match the rates with your budget.
For instance, a country with lower hourly rates may have fewer experienced developers, while a country with higher hourly rates may have a more advanced technology infrastructure.
Below are the primary factors that affect offshore software development rates:
Outsourcing destination
The geographic location of the outsourcing company plays a crucial role in determining offshore software development rates. Remember this: countries with a lower cost of living and weaker currency offer more budget-friendly rates compared to developed nations.
For instance, Ukrainian developers offer hourly rates that won’t break the bank compared to the US or Canada. You can also find competitive rates in countries like China, the Philippines, India, Poland, Argentina, and Brazil.
[Also read: What are the Best Countries for Outsourcing Software Development in 2023?]
Cooperation model
In the realm of software outsourcing, three key cooperation models reign supreme: time and material, fixed price, and dedicated team. Each model brings its unique blend of pros and cons, shaping the rates in play.
Here’s a simple explanation of each model:
- Time and material: This model is based on the actual time spent on your project, plus any additional expenses incurred. It’s best suited for projects with changing requirements or untested technologies.
- Fixed price: As the name suggests, this model works on a set price for a project’s agreed-upon scope and timeline. It’s a good fit for projects with clear scopes, as you can predict the cost upfront. However, keep in mind that altering the scope might lead to extra charges.
- Dedicated team: This model provides you with a dedicated team of developers, designers, and project managers working exclusively on your project. You pay a fixed rate for each member’s time, plus any expenses incurred related to their work.
Company profile
Another factor that can impact offshore software development rates is the company’s profile. When we talk about the company’s profile, we delve into various aspects. This includes examining the company’s portfolio – the range of projects they have undertaken, the diversity of clients they have served, and their overall rating on platforms such as Clutch.
Remember that a company that boasts a robust portfolio and a stellar reputation tends to command higher software development hourly rates. This is often a reflection of their extensive experience, expertise, and the quality they bring to the table.
Tech expertise and specialization
The choice of programming languages and tech stack in software development isn’t just about code – it impacts the software development hourly rate you’ll pay. Of course, developers fluent in cutting-edge tech or specialized languages often give higher rates, but you pay for the quality that comes with it.
Some of the most in-demand tech stacks include Java, Python, C#, JavaScript, PHP, and Ruby on Rails. Developers with additional expertise in areas like AI, blockchain, and cloud computing also tend to charge higher rates.
English proficiency
If you choose to hire an offshore software development company, chances are you’ll need to communicate with them in English. This makes the level of English proficiency a crucial factor in determining hourly rates.
Countries with higher English proficiency, such as the Philippines and Poland, can offer more competitive rates due to better communication skills. Although developing countries like India and China have lower hourly rates, they may not have the same level of proficiency in English.
Taxes
Taxes can play a role in offshore software development rates. In certain countries, software services may be hit with value-added tax (VAT), leading to a bump in the total cost.
Here’s a look at how VAT and other taxes influence offshore software dev rates in popular offshore spots:
- Ukraine has the usual VAT rate of 20%. But IT services like software development are VAT exempt, making it a tax-friendly spot for offshore software projects.
- The Philippines has a standard VAT rate of 12%.
- India has the GST rate for software development services set at 18%.
- The standard VAT rate in Poland is 23%. But, Poland provides a 5% reduced VAT rate for IT services by small businesses.
- China has a 6% VAT rate for software development services, but foreign companies may face extra taxes and regulations, which can pose challenges for offshore software development.
Offshore Software Development Rates
Offshore software development companies are scattered worldwide, making it quite a task to locate the perfect match for your project and budget.
To save you some time, we’ve compiled hourly rates for offshore software development in regions and countries. This way, you can easily compare and contrast rates and make an informed decision.
Asia
Offshore development in Asian countries is a popular choice due to its affordable rates. The average hourly rates for software development in Asian countries range from $18 to $45.
The Asia-Pacific (APAC) countries are holding up nicely in the 2023 Global Services Location Index (GSLI). Even though the affordable offshore software development costs and abundant talent pool are attractive, there’s a trade-off between product quality and handling cultural and time differences at times.
As the name suggests, this model works on a set price for a project’s agreed-upon scope and timeline. It’s a good fit for projects with clear scopes, as you can predict the cost upfront. However
The Philippines
Rates: $25-50
The Philippines is one of the top offshore destinations for IT services in Asia. Key cities such as Manila and Cebu are vibrant hubs of outsourcing software development companies.
The Philippines boasts a vibrant community of skilled developers excelling in Java, Python, PHP, and JavaScript. Plus, their strong English proficiency fosters seamless communication. This prowess shines through in the country’s BPO sector, consistently dominating the global outsourcing arena for years.
For a freelancer software developer in the Philippines, it can start at $15 per hour and reach up to $30. But, a team of developers in the Philippines starts at more or less $25 per hour. Some companies may ask for $50 above per hour.
If you want to connect to an excellent outsourcing partner, contact StarTechUP – a software development company based in Cebu, Philippines.
India
Rates: $25-$50
India is also a top contender for offshore software development. With 5.2 million software developers by the start of 2024, it is the fastest-growing IT industry globally.
Offshore developer rates typically fall between $25 to $50, varying based on project complexity and tech stack. English is commonly used nationwide, which is a big plus for outsourcing software development.
However, even with affordable prices, there might be concerns about the final product quality.
Quality standards lack legal oversight in India, so finding trustworthy professional developers is a matter of luck. Also, there might be a steep learning curve before understanding Indian business culture.
China
Rates: $50-80
Among Asian countries, China stands out in terms of the highest offshore software development cost. Skilled developers in China typically charge between $50 to $80 per hour. This is influenced by the presence of more advanced local economies and specialized professionals.
Beijing, Shanghai, and Shenzhen stand out as the go-to cities to outsource software development. Plus, there are a bunch of well-known IT outsourcing companies across different sectors like finance, healthcare, and e-commerce.
Besides the high rates, there are hurdles like language, cultural gaps, and government rules. So, consider these factors before considering China as your offshore software development destination.
Eastern Europe
Eastern Europe has turned into a major hub for outsourcing, home to over 1 million skilled professionals and providing cost-effective web development in recent years. Key outsourcing spots like Ukraine, Poland, and Romania offer competitive rates that make them a go-to choice for offshore development.
While the costs are reasonable, the quality in Eastern Europe is top-notch, backed by solid expertise and years of experience. Another perk of IT outsourcing in this region is the high level of language proficiency—most vendors here speak English fluently.
Ukraine
Rates: $30-55
Ukraine stands out as a top IT outsourcing hub in Eastern Europe and globally. It ranks among the best for offshore software development, offering high-quality services at competitive outsourcing rates. With over 250,000 skilled developers, the country’s talent pool is unmatched. International companies favor Ukraine for its well-educated and experienced software development teams.
Kyiv, Odesa, Lviv, and Kharkiv are key Ukrainian IT hubs, with 18 companies among the top 100 global IT outsourcing firms. Ukraine’s offshore development potential is impressive, as shown by the record $571 million in investments in the Ukrainian IT industry in 2020.
Poland
Rates: $35-55
Neighboring Ukraine, Poland, has higher software development hourly rates mainly due to the country’s strong economic growth. Warsaw and Krakow are the primary hubs for offshore development in Poland.
Yet, the high software development cost per hour makes sense thanks to the country’s top-notch tech education and better living standards. Polish outsourcing is also full of freelance pros and well-known companies.
And if you are looking for a secure and reliable tech partner, many Polish developers have worked with clients worldwide, offering top-notch services.
Romania
Rates: $25-45
Although not as popular as the top two, Romania is gradually emerging as a great destination for IT outsourcing. The country’s offshore development rates are lower than its counterparts, and the quality of services is equally remarkable.
Romanian developers are proficient in the most complex databases, languages, and algorithms. Besides, the price range of $25-45 per hour is quite impressive for a country with a skilled talent pool of tech specialists.
Latin America
Latin America offers a significant competitive advantage compared to South America. Thanks to the geographic proximity, it reduces travel costs and ensures a better cultural fit, although the time zone might be an issue.
Latin America has emerged as a hotspot for offshore software development rather recently, thanks in large part to local government initiatives. With economic ups and downs and political uncertainties, countries like Argentina, Colombia, and Brazil have sought alternative financing options.
Brazil
Rates: $30-55
Brazil is a top choice for outsourcing destinations.
Here, developers typically charge between $30 to $50 per hour. The value you receive matches what you pay for. Brazil’s ranking in the top 50 IT nations in 2021, as per the Tholons Services Globalization Index, is solid evidence. Additionally, Brazil is renowned for its abundance of highly skilled technical engineers.
Argentina
Rates: $30-55
Argentina stands out as one of the top offshore development countries in Latin America. It is known for its tech-savvy talent pool, which is highly sought after in Western Europe.
Argentina, with its economic and cultural connections to European nations, is set to lead the pack among Latin American countries in IT spending growth in 2023 at a solid seven percent. Offshore junior developer rates start at around $30 and go up to $55 for senior programmers.
Peru
Rates: $30-50
Peru has a lot of potential, though it’s not as widely recognized as other countries in the region. The country is making strides to become more appealing to offshore development companies.
Although Peru may not be the typical choice for outsourcing, Peruvian developers stand out with their strong technical education, fluency in English, and deep understanding of US business practices. Offering rates from $30-50 per hour, it presents a compelling and reliable choice for offshore software development.
Colombia
Rates: $30-50
The average software development rates in Colombia align with those of other Latin American countries. However, factors such as education levels and language proficiency affect their rates.
Despite a decent tech talent pool, Colombia faces challenges like its complex criminal situation and limited English proficiency, which impact its appeal as an IT outsourcing hub. Yet, with rates ranging from $30-50 per hour, Colombia remains a viable location to hire developers.
Africa
Until recently, Africa was overlooked as an offshore development hub. But in 2019, everything changed when Microsoft poured $100 million into the continent’s developers.
The impact? There is explosive growth in the African IT outsourcing market!
South Africa
Rates: $20-50
South Africa’s thriving economy and business-friendly policies make it a popular destination for offshore software development. Moreover, its GMT+2 time zone is convenient for European companies.
In 2021, Tholons recognized the country among the top 50 digital nations. The country has worked hard to build an impressive talent pool of software engineers, with $20-50 per hour as the average software development rate.
East Africa
Rates: $20-50
Kenya stands as the largest outsourcing tech hub in East Africa. Beyond its competitive rates, here’s an added bonusVwhen you hire offshore developers from Kenya, English proficiency is a given.
This advantage is owed to the country’s policy of making English an official language. With an hourly rate of $20-50, coupled with the time zone convenient for European clients, Kenya is a solid choice for offshore software development.
North Africa
Rates: $20-50
In the Northern part of the continent, the time zone aligns with most European countries, fostering collaboration and innovation. Offshore developer rates here remain competitive, mirroring the continent’s standards.
Notably, Morocco and Egypt stand out as key players in IT outsourcing. Egypt, in particular, hosts R&D centers for major global telecommunication giants like Vodafone and Intel, adding to its allure as a hub for tech advancement.
Western Africa
Rates: $20-50
In West Africa, Nigeria shines as the prime hub to look for an outsourcing partner. With a rapidly evolving IT market brimming with potential and talent, the country is on the brink of tech greatness.
The Nigerian government’s proactive approach to investing in market growth and developer education underscores the promising future of the local IT industry. With average offshore rates ranging from $20-50 per hour, Nigeria is poised to become a major player in the global IT landscape.
Outsource Software Development from StarTechUP!
Whether you’re in need of skilled developers at competitive rates or seeking a cultural fit, there is a remote development team that can fulfill your requirements.
At StarTechUP, we understand that hiring an offshore software development team is a major decision. That’s why we strive to provide top-quality services tailored to your specific needs.
Contact us today to find out more about our services and how we can help you achieve your business goals!
