How much does it cost to hire offshore developers? We are getting a lot of such queries from clients.
Offshoring allows businesses to contact potential development teams regardless of where they are located. Do you know that geographic location is the most crucial consideration when determining offshore software development rates by country?
Given the advent of remote work, the market for offshore software development nearly hit $100 billion in 2019 (Source: Statista) and has subsequently increased. Almost 60% of IT organizations outsource at least some of their software development. Most of them—roughly 70%—do so to save money.
It is predicted that between 2023 and 2027, the global revenue in the IT outsourcing market will expand constantly by 66 billion U.S. dollars (+42 percent). In 2027, the revenue is anticipated to reach 223.17 billion dollars.
Offshore software development is an excellent option for companies wishing to reduce custom web application development costs while still receiving top-notch software development services. Finding the best one, however, can take some time because so many nations and their respective vendors are providing top-notch offshore software development services.
However, in order to concentrate your search in an efficient manner, it is crucial to become familiar with the best nation for hiring dedicated developers and offshore software development rates by country.
This blog post will discuss offshore software development rates by country in 2023, which will help you decide where to offshore based on your budget.
Depending on the nation, offshore software development services have considerably different hourly costs. For instance, hourly wages in countries (India) may reach $30–45 in 2023, whereas they may reach $120–250 in North America.
There are differences in the hourly rate in places like India, Colombia, Ukraine, and Poland. Therefore, it’s necessary to go through the primary factors influencing the offshore software developer’s hourly rate by country.
Let’s begin by covering an overview of offshoring before exploring the crucial factors that have been shown to have the most significant impact on determining the hourly rates of developers across the globe.
What is offshoring?
Offshoring is a business practice where a company outsources specific tasks, projects, or processes to a third-party provider located in a different country, often in a region with lower labor costs. This strategy aims to take advantage of cost savings, access specialized skills, and increase efficiency.
Offshoring commonly involves functions such as software development, customer support, data entry, and manufacturing. It differs from outsourcing, including contracting work to external providers within the same country.
Offshoring allows companies to tap into a global talent pool, leverage time zone differences, and access a broader range of expertise while optimizing operational expenses.
Let’s find the offshore software development rates by country around the globe.
Average offshore software development rates by Country
Factors Affecting Offshore Software Development Rates by Country
Offshore software development rates by country vary significantly based on many factors, each rooted in the country’s economic, cultural, and technological landscape. Here’s a more detailed exploration of the key factors affecting offshore software development rates by country:
Cost of Living and Labor Costs
The cost of living directly influences labor costs, which are a major determinant of software development rates. Countries with lower living costs can sustain lower rates due to reduced wage expectations.
Skill and Expertise
The availability of skilled & dedicated developers with expertise in specific technologies significantly impacts rates. Countries with a robust education system and a strong tech-focused curriculum tend to have a higher supply of skilled professionals, which may lead to competitive rates.
The overall economic conditions of a country play a role in determining rates. Countries with stronger economies often command higher rates due to increased demand, while countries with weaker economies may offer more competitive rates to attract business.
Cultural alignment can affect project collaboration and communication. Countries with a similar work culture and communication style may have slightly higher rates due to improved collaboration.
Currency Exchange Rates
Fluctuations in currency exchange rates impact the cost of services for clients in different countries. This can cause rates to fluctuate over time.
Time Zone and Proximity
Geographical proximity to the client’s location affects communication and coordination. Nearshore locations with better time zone alignment may have slightly higher rates due to improved real-time collaboration.
Project Complexity and Technologies Involved
The complexity of the project and the technologies required play a role in determining rates. Projects demanding specialized skills or advanced technologies are likely to have higher rates.
Offshore software development rates by country in 2023-24
Offshore development has become a popular strategy for companies seeking cost-effective solutions, global talent, and quicker project turnaround times. The offshore software development rates by country vary significantly due to differences in labor costs, expertise, economic factors, and all other factors we have covered in the previous section.
As you are aware, the hourly rates of developers impact the offshore software development rates by country. To assist you in making a more educated choice when hiring from abroad, we have provided an overview of regions and offshore software development rates by country based on our significant experience in software outsourcing and thorough research.
Offshore Developer Rates in the USA (United States of America)
The hourly rate for software development in the US is among the highest, ranging from $45 to $75. Web developers in North America and South America draw clients from around the world.
Let’s see how the offshore software development rates by country in North and Latin America are spread.
Offshore Developer Rate in North America
The center of the technological industry, North America, has drawn many big and small firms. Over 4.4 million software developers work in the US. According to studies, North Americans have the highest developer wages worldwide.
You should budget $80-$140 per hour to employ small software development companies in North America. While the leading web development companies may charge up to $250 for the same task. The difference in skill levels and regional pay are cited as the causes of such a large variation in hourly rates.
- Junior developers typically earn $100 per hour.
- Senior specialists charge $160 per hour for their work.
While not traditionally seen as an offshore destination due to its high labor costs, certain regions within the United States have become hubs for specialized tech expertise. Silicon Valley, for instance, offers a concentration of skilled developers but at premium rates. The experienced developers in the US charge from $70-$200 per hour, based on project complexity.
Canada has become a nearshore outsourcing destination, particularly in cities like Toronto, Vancouver, and Montreal. The country offers a skilled English-speaking workforce and competitive rates, making it an appealing choice for many companies. Developers with decent experience and expertise can charge an hourly rate of $50-$180.
The table below shows the average offshore software development rates by country in North America.
|State||Average Salary (Per hour)||Junior Engineer Salary (Per hour)||Senior Engineer Salary (Per hour)|
Offshore Developer Rate in Latin America
The countries in Latin America can be an excellent alternative for businesses wishing to nearshore their software development due to their proximity to one another and similarities in working hours. The typical offshore developer’s hourly rate might range from $4 to $20.
IDC predicts that the Latin American IT sector will expand in 2023 despite political unpredictability and slow economic growth. Moreover, according to IDC, businesses are investing more money in AR/VR, AI, IoT, 3D printing, cloud, security, and robotics technology.
Some stats in support of outsourcing/offshoring developers from Latin America
- According to Statista, in 2021, Latin America experienced a 7.7% growth in the IT industry. It is predicted that it will grow by 6.5% by 2028.
- According to Coursera, Chile and Argentina are among the world’s top 100 Data Science (Machine Learning, Data Management, Data Visualization, Statistical Programming) experts.
- According to the Agile Engine analysis, Argentina is ranked second in the area and 69th among the best countries for software outsourcing. According to the Global Innovation Index 2022, it ranks as the 38th digital nation in the world.
- According to the same survey by Agile Engine, one of the top destinations for software outsourcing in South and Latin America is Brazil. Brazil has the most web developers in the region (over 500,000).
Latin American developers are less expensive to offshore than North American developers, with an hourly rate of $75. In contrast, the same developer would be available in North America for $150 per hour.
Find offshore developer rates by country in Latin America.
|Country||Scope||Average Hourly Rate|
|Mexico||Mexico has emerged as a popular choice for nearshore software development due to its close proximity to the United States, cultural compatibility, and competitive rates.||$30+|
|Brazil||Brazil boasts a thriving IT industry with a range of technical skills and expertise. While rates might not be as low as some other Latin American countries, the quality of work and cultural similarity with North America can make it an attractive option.||$40+|
|Argentina||Argentina offers a highly skilled workforce, particularly in areas like software development and design. However, economic fluctuations can impact rates. Buenos Aires is a key tech hub in the country.||$50+|
|Colombia||Colombia is rapidly becoming a tech hotspot in Latin America. Cities like Medellín and Bogotá are known for their tech talent, and the competitive rates make it an appealing choice for software development.||$45+|
|Chile||Chile provides stable economic conditions and a growing tech ecosystem. Santiago, the capital city, hosts a burgeoning tech community contributing to the country’s software development capabilities.||$55+|
|Peru||Lima, the capital of Peru, is also making strides in the tech industry. While the rates might not be as low as in some neighboring countries, the quality of work and English proficiency can be advantageous.||$40+|
|Uruguay||Uruguay offers a small but highly skilled workforce with a focus on quality. Montevideo, the capital, hosts many tech companies and startups, contributing to the country’s reputation in software development.||$60+|
|Costa Rica||Known for its political stability and investment in education, Costa Rica has a growing tech industry. San Jose, the capital, attracts tech companies seeking skilled developers.||$45+|
Offshore Developer Rate in Europe
Central & Eastern Europe is a feasible alternative for global outsourcing, considering a strong STEM background, several digital hubs, and hundreds of reliable vendors providing recruiting and allocation services,
It is found that outsourcing to Central and Eastern Europe is a smart move when combined with flexible price structures. The area serves as a center for high-end and innovative specialists.
You may hire dedicated developers from smaller organizations for as little as $45 with qualified workers from Poland, Germany, Romania, and Ukraine.
Offshore Developer Rate in Eastern Europe
The hourly cost for software engineering services might vary from $15 to $25. The average annual salary of developers is from $20k to $50k. .
Top reasons to offshore developers from Eastern European countries are as follows-
- Today, the top global software development hubs are located in Eastern European nations like Ukraine, Poland, and Romania.
- In 2022, Romania exported 3.2 billion euros worth of IT, whereas Poland exported 3.74 billion dollars’ worth.
- According to Coursera’s Global Skills Index 2022, which includes Software Engineering, Databases, Security Engineering, Operating Systems, Computer Networking, and Human-Computer Interactions, Ukraine, the Czech Republic, Poland, and Hungary placed first in the world in the Technology category.
- Out of all the Eastern European nations, Poland is one of the most expensive for outsourcing software development. It is also a safe and stable economy, ranking among the best in the region.
- More than 80% of developers, according to the Ukrainian IT Report 2021, speak English at least at an intermediate level.
- There are now 212,000 qualified IT experts working in Ukraine as of the year 2021, a 29K increase from the last year.
Offshore Software Development Rates by Country in Eastern Europe
|Ukraine||Ukraine has become a prominent hub for offshore development. Cities like Kyiv, Lviv, and Kharkiv are known for their large pool of IT professionals.||$25+|
|Poland||Poland is another key player in the Eastern European tech scene. Cities like Warsaw, Krakow, and Wroclaw offer a strong talent pool and a favorable business environment.||$30+|
|Romania||Romania is known for its IT expertise, particularly in fields like software development, QA testing, and more. Cities like Bucharest and Cluj-Napoca are prominent tech hubs.||$50+|
|Hungary||Budapest, the capital of Hungary, hosts a growing tech community. While Hungary might not be the lowest-cost option in Eastern Europe, its skilled workforce and geographical proximity to Western Europe make it an attractive choice.||$45+|
|Bulgaria||Bulgaria offers competitive rates and a burgeoning tech industry. Sofia, the capital, has seen an increase in IT companies and skilled professionals, making it an option for cost-effective software development.||$45+|
|Belarus||Belarus is known for its strong software development skills, particularly in areas like AI and machine learning. Cities like Minsk have a growing tech scene with relatively lower rates compared to Western countries.||$50+|
|Serbia||Serbia’s tech industry is on the rise, and cities like Belgrade offer a blend of affordability and quality. The country’s IT professionals are sought after for their expertise in various software development domains.||$35+|
Offshore Developer Rate in Western Europe
The top offshore software development countries are located in Western Europe. Because of its high cost of living, complicated tax structure, and strict development requirements, this location is almost as expensive as the United States.
The average yearly income for software developers is $60k, with hourly offshore software development rates by country ranging from $35 to $95. You will pay a sizeable sum for allowances that aren’t included in the actual net paycheck because taxes, insurance, and other legal fees total 35% of the total remuneration.
While offshore development in Western Europe may come at a higher cost, the advantages in terms of quality, innovation, and ease of collaboration can outweigh the expenses for specific projects. It’s essential to carefully weigh these factors against your project requirements and budget to make an informed decision.
Why should you offshore developers in western Europe?
- In France, 72,686 people are working in the software development sector as of 2023.
- Another Western European nation with a sizable population of software developers is the UK.
- In terms of value for money, the UK is one of the best locations for software development compared to other Western European nations.
Offshore Software Developer Rate by Countries in Western Europe
|United Kingdom||The UK is a major tech hub, with cities like London and Manchester housing a thriving IT industry. While rates are higher than in other regions, the quality of work and access to cutting-edge technologies can be a draw for certain projects.||$80+|
|Germany||Germany is known for its engineering prowess and technical expertise. Cities like Berlin, Munich, and Frankfurt offer a skilled workforce and high-quality development but with correspondingly higher rates.||$60+|
|France||France has a growing tech scene, particularly in cities like Paris and Lyon. The rates are relatively high due to the country’s developed economy and a strong emphasis on quality.||$50+|
|Netherlands||The Netherlands is home to a vibrant tech community, especially in cities like Amsterdam and Rotterdam. The rates are relatively higher, but the country’s focus on innovation and skilled professionals can justify the investment.||$60+|
|Switzerland||Switzerland is popular for its precision and quality, and this is reflected in its software development rates. Zurich and Geneva, as major financial centers, host tech talent, but the cost of development is notably higher.||$65+|
|Belgium||Belgium offers a range of tech skills, particularly in software development and IT services. Cities like Brussels and Antwerp provide access to a skilled workforce but at higher rates.||$60+|
|Sweden||Sweden’s tech industry is thriving, with cities like Stockholm at the forefront. While the rates might be higher, the country’s reputation for innovation and technical excellence can make it an appealing choice.||$50+|
|Denmark||Denmark boasts a strong IT sector, particularly in areas like software development and design. Copenhagen, the capital, hosts many tech companies, but the rates are likely to be higher due to the country’s standard of living.||$55+|
Offshore Developer Rate in Asia-Pacific
Asia is a leader in the software outsourcing industry and is home to the most offshore software developers than any other region. Asia encompasses numerous nations and offers affordable and pricy offshore locations, providing a range of outsourced development rates.
One of the most popular and economical locations for software development offshoring is India, where you can employ an offshore developer for less than $25 per hour.
Why should you offshore software developers from Asian Countries?
- India is Asia’s largest software outsourcing provider and ranked first in the world for digital innovation in the Global Innovation Index 2022.
- China is a desirable location for offshore development. The top performers across all HackerRank tasks are Chinese developers.
- The Philippines, whose capital, Manila, is the second super metropolis in the world, is ranked 59th among the top digital countries in the Global Innovation Index 2022.
- In the next five years, the software development industry’s total revenue is predicted to increase by 6.7% in China alone, hitting $1.3 trillion.
- One of the most economical outsourcings of web development is provided by Indian software development companies.
- The Chinese government assists the IT sector by funding technology parks where overseas developers can advance their careers and offering financial incentives.
Offshore Software Development Cost by Countries in Asia-Pacific
|Country||Scope||Average Hourly Rate|
|India||India is a global leader in offshore development. Known for its competitive rates, large IT workforce, and diverse skill sets, cities like Bangalore, Mumbai, and Hyderabad are renowned tech hubs.||$20+|
|China||China’s IT industry has been rapidly expanding, with cities like Beijing, Shanghai, and Shenzhen offering a wide range of tech skills. While rates might be slightly higher compared to some other Asian countries, the country’s tech capabilities are substantial.||$30+|
|Philippines||The Philippines is a renowned destination for customer service and support, as well as software development. English proficiency, cultural compatibility, and competitive rates are major draws.||$30+|
|Vietnam||Vietnam has gained traction in recent years due to its young and dynamic workforce. Cities like Ho Chi Minh City and Hanoi offer affordable rates while maintaining good quality work.||$35+|
|Bangladesh||Bangladesh is emerging as a destination for software development outsourcing. The country’s lower labor costs and growing tech talent pool are attractive for cost-sensitive projects.||$30+|
|Indonesia||Indonesia’s tech industry is on the rise, and cities like Jakarta are becoming tech hubs. Rates can be competitive, but they may vary based on project complexity.||$25+|
|Malaysia||Malaysia offers a skilled IT workforce and a range of tech services. Kuala Lumpur and Penang are prominent tech cities with competitive rates.||$35+|
Offshore Developer Rate in Middle East and Africa
Although the market for IT outsourcing in Africa is still in its early stages, it has already shown signs of significant growth and is already luring clients from abroad. The region’s growing young population is expected to increase demand for high-quality service sector jobs, propelling the nation to quickly make the list of the top countries for software developers in 2023.
The web and mobile app development pricing range is fairly affordable compared to US and European rates because the African region is only starting to enter the software development business. However, the range will also shift due to the industry’s quick growth.
In the Middle East and Africa, there are more software developers than ever. A developer can be hired for $20 an hour, with a maximum rate of $50. Additionally, this cost may change depending on the location, talent, project complexity, and technology stack.
Top reasons to offshore developers from African countries
- According to e-Conomy Africa 2020 research, Africa’s IT market is expected to grow to $180 billion by 2025. It will display GDP at 5.2%. The industry is projected to generate $712 billion in sales by the year 2050, or 8.5% of the continent’s GDP.
- The most promising nation’s leading the continent’s IT sector include South Africa, Egypt, Morocco, Tunisia, Kenya, and Nigeria, according to Accelerance.
- Like Brazil, South Africa is one of the 50 countries with the most advanced digital infrastructure.
- North African programmers are knowledgeable in platforms like Python, Ruby, and SQL.
- Java, SQL, and mobile app development are fields in which East African programmers excel.
Offshore Software Development Rate by Country in Africa
|Country||Scope||Average Hourly Rate|
|South Africa||South Africa is a prominent player in Africa’s tech scene. Cities like Cape Town and Johannesburg have skilled developers, English proficiency, and a relatively competitive rate structure.||$20+|
|Egypt||Egypt has a strong IT industry, particularly in cities like Cairo and Alexandria. English proficiency and a growing tech community make it an attractive option for offshore development.||$22+|
|Morocco||Morocco’s tech industry is on the rise, with cities like Casablanca and Rabat showing promise. The country’s proximity to Europe and competitive rates can be advantageous.||$22+|
|Nigeria||Nigeria is emerging as a tech hub in West Africa, with Lagos being a key city for IT talent. While rates vary, the country’s youthful population contributes to a growing tech ecosystem.||$44+|
|Kenya||Kenya has a vibrant tech scene, particularly in Nairobi. The country’s focus on innovation and entrepreneurship drives the growth of its software development capabilities.||$24+|
|Uganda||Uganda is slowly establishing itself in the tech space. While rates might be lower than in other regions, the country’s tech ecosystem is still developing.||$20+|
|Tunisia||Tunisia offers a pool of tech talent, particularly in software development and IT services. Tunis, the capital, hosts a growing tech community.||$25+|
Offshore Developers Rate in Saudi Arabia
Software development is expanding in the Middle East, and there is an increasing need for highly skilled developers in nations like Saudi Arabia. The hourly fee for a developer might range from $15 to $35.
Offshore Developers in UAE
Another well-liked destination for software offshoring is the UAE. The typical pay for software developers in the UAE might range from $50 to $150 per hour. The nations and localities from where you recruit the developers impact this cost.
Finding Total Offshore Software Development Cost
Remember that estimating offshore software development rates by country is a dynamic process that requires careful attention to detail and constant evaluation.
Here’s a step-by-step guide to help you navigate this process effectively:
|STEP 1||Define Project Scope and Requirements||Clearly outline the scope of your project, including features, functionalities, and technical specifications. A detailed understanding of your project’s requirements is essential for accurate cost estimation.|
|STEP 2||Break Down the Project||Divide your project into smaller components, such as modules, features, or tasks. This granularity will help in estimating costs more precisely and allocating resources effectively.|
|STEP 3||Select an Offshore Destination||Research potential offshore destinations based on factors like expertise, cultural compatibility, time zone, and language skills. Each country’s rates can differ, so consider these differences in your estimation.|
|STEP 4||Identify Skill Requirements||Determine the specific skills and expertise needed for each project component. Different tasks might require different levels of proficiency, affecting the overall cost.|
|STEP 5||Calculate Work Effort||Estimate the time required for each task or module. Multiply the effort in hours by the hourly rate to calculate the labor cost for each component.|
|STEP 6||Consider Additional Costs||Besides labor costs, factor in additional expenses like communication tools, project management, testing, and potential revisions. These costs can vary based on project complexity.|
|STEP 7||Account for Project Management and Communication||Effective project management and communication are crucial for successful offshoring. Allocate resources and costs for project management tools, regular meetings, and coordination.|
|STEP 8||Assess Potential Risks and Contingencies||Consider potential risks impacting project timelines and costs, such as scope changes, unexpected challenges, and delays.|
|STEP 9||Calculate Total Cost||Sum up all the estimated costs for labor, additional expenses, project management, and contingencies to arrive at the total offshore development cost.|
|STEP 10||Review and Revise||Review your cost estimation and compare it with the proposals received. Revise your estimation based on the proposals’ insights and any project scope or requirement adjustments.|
Tips to Reduce the Offshore Software Development Cost
- Below are some tried and tested tips from the desk of experts which will help to reduce the cost of your project.
- Define a detailed project scope to avoid scope creep, which can lead to additional costs.
- Maintain open communication with the offshore team to minimize misunderstandings and rework.
- Allocate resources efficiently by matching tasks to the most suitable team members, reducing time waste.
- Adopt agile methodologies for iterative development, enabling flexibility and adjustments as needed.
- Choose an experienced offshore team to minimize errors and ensure efficient development.
- Implement automated testing to catch bugs early, reducing debugging time and costs.
- Encourage code reusability to save development time and effort on repetitive tasks.
- Build a strong partnership with the offshore team for potential discounts on future projects and improved collaboration.
Building a team of software developers for your project can be daunting. Finding ideal people at competitive prices could take a long time. However, you might engage an offshore development team to expedite the process and prevent unforeseen costs.
After reading this blog, you are aware of the offshore software development rates by country. However, firms must consider more than just rates when choosing offshore development locations. Essential elements to take into account include communication skills, cultural compatibility, time zone differences, political stability, legal issues, and the specific expertise needed for the project.
eLuminous Technologies is a one-stop solution for all offshoring requirements. Our vetted developers are available for hire in just a few easy steps with the best market price. Let’s connect to learn more about our offerings!
Frequently Asked Questions
Which is good for my project, outsourcing or offshoring?
The choice between outsourcing and offshoring depends on factors like project complexity, budget, and control. Offshoring to another country might be suitable if you seek cost-effectiveness and specialized skills. If you prefer local expertise and more control, outsourcing within your own country could be a better fit.
How to choose the offshoring location other than rates?
Consider factors like skill availability, language proficiency, cultural compatibility, time zone alignment, legal framework, data security, and infrastructure. These elements ensure effective communication, collaboration, and project success beyond just cost considerations.
How to minimize the offshore software development rate?
To minimize offshore software development rates by country
- Optimize project scope to reduce unnecessary work.
- Choose a cost-effective offshore destination.
- Prioritize tasks to focus on essential features.
- Provide detailed requirements upfront to avoid revisions.
- Implement efficient project management and collaboration practices.
Why is India considered the best offshoring location?
India is a top offshoring destination due to its vast pool of skilled IT professionals, cost-effectiveness, strong English proficiency, cultural compatibility, and established tech infrastructure. It offers various services across various industries, making it a preferred choice for many global companies seeking high-quality offshore solutions.