Remote development teams are often considerably less expensive than hiring local, in-office personnel. Sending work abroad can enable certain businesses to save up to 80% of their costs or more.
Amidst talent shortages in tech, and the recession pushing people to seek new ways to work and hustle, many businesses are now resorting to hiring software developers through a business partnership. Because of a steady supply of software engineers and developers globally, businesses now have a mix of quality and affordability to choose from. Generally, remote development teams are often considerably less expensive than hiring local, in-office personnel. Sending work abroad can enable certain businesses to save up to 80% of their costs or more.
However, this may sometimes have you compromising on quality. So, is it a good idea to hire remote teams? Should you outsource your software development? The answer simply lies in who you hire from. Nowadays, catalyzed by the COVID-19 pandemic, the old model of outsourcing has been replaced by the idea of distributed teams. The woes of business owners associated with outsourcing software development purely on the basis of cost are addressed by these teams and the concept of team augmentation.
According to Gartner, spending on IT is expected to increase by 5.1% in 2023. With the recession expected to continue on for another few months, and competition in the tech sector expected to heat up, it will be no surprise if we see disequilibrium in labor markets again.
US, Western Europe, Eastern Europe, and Asia all have different outsourcing practices for software development. For instance, US salaries may be considered exorbitant by some, whereas some Asian countries might be regarded as more affordable for certain businesses.
However, the choice of the nation to outsource software development to is not just based on salary rates. Competency and level of skill are just as important if not more. If you are looking for a Node.js developer, you won’t hire a Ruby engineer just because the price is lower. Let’s evaluate all the important criteria for hiring good developers and determine which countries are ideal to hire these experts from.
Note that we are using the term ‘outsourcing’ to refer to all means of acquiring remote software developers. It does not refer to the now unpopular practice of hiring developers from countries where relative wages are lower.
The variables that are essential for all businesses must be defined before we can begin our analysis. They will establish the groundwork for the exploration of the top international locations for outsourcing software development.
We’ll be up front about it: one of the most crucial factors when hiring is a software engineer’s hourly rate. Costs range across states and between geographical regions.
Indeed reports that the average compensation for software developers in the US is $43.62. The scenario is different if we look at different regions (states and cities), though. A software developer’s hourly wage in New York, NY, is $52.72. From San Francisco, California, a software engineer will make $62.42 per hour. The same-level specialist in Miami, Florida, will only be paid $37.48.
The hourly wage for a software developer will also rely on their area of expertise. Different programming languages, each with varying levels of complexity, popularity, and demand, are used by programmers.
For instance, in 2021, JavaScript, HTML/CSS, Python, SQL, and Java were the top 5 programming languages. In 2015, things were different, as Java, JavaScript, SQL, C/C++, and C# were the top 5 languages. Lower rates apply to trainees and junior-level specialists. According to studies, a junior software developer in the US can make around $18.38 per hour.
The nation with the highest level of education is always the best choice for outsourcing software development. The skill disparity between countries that offer fundamental and foundational teaching in computer science, information technology and STEM and those that don’t may be of concern to some. While it is true that the former are more inclined towards working with cut-throat tech innovation, it should be remembered that other countries are also catching up through dedicated programming bootcamps and other learning platforms. Individuals have also proven to hone their coding skills to match those of incredibly experienced programmers, even if their formal education in IT was lacking.
So, while one’s schooling is often times a good tool for screening good candidates, it may not always be the case when it comes to software development. Self-taught programmers are equally capable of exemplary work, if not more.
The best places to outsource software engineers are not necessarily always in English-speaking nations. Many companies now do not have an issue with a programmer’s mother language as long as they are proficient in their programming language.
This, however, does not mean that communication skills are not important. Software developers must be able to communicate effectively with both their own team, and the business development teams in their firm. An inability to do so can be extremely unproductive for the team, and at times, quite detrimental to the final deliverables as well.
When dealing regarding team out staffing in the IT business, it is possibly one of the least talked about points. Companies only evaluate engineers’ soft skills when working with internal engineers. However, with outsourcing, that isn’t enough. It would be beneficial if you could be certain that an expert’s mindset and organizational culture fit with yours. Therefore, it will be beneficial for you to communicate effectively on how to approach work.
In addition to the projected 30,000 developers already present there, Estonia anticipates adding another 7,000 IT workers by the year 2027. Similar to this, Clutch lists at least 140 custom software development firms in Estonia. However, the true number would be considerably higher than that: about 6,000 enterprises are functioning in the Estonian ICT area. On GitHub, Estonia has, by far, the biggest number of user accounts per $35 000 GDP; that’s 5,000, more than even top western Europe countries, but below that of most long-time members such as Spain or Italy, etc.
The conscious improvement of IT skills is the main driver of Estonia’s expanding software development ecosystem. Remember that the circumstance that arose in 2022 led to many Ukrainian developers working for themselves in Estonia, expanding the size of the Estonian market (which had expanded by 0.4% in 2022).
Therefore, it is not a stretch to say that Estonia will eventually become Europe’s Silicon Valley. Furthermore, at least five enterprises have their roots in Estonia, and around three of the Global Outsourcing 100 have offices there. All of these factors—including, of course, low offshore software development costs—encourage business executives to outsource their projects to Estonian software development firms.
Developers from Estonia frequently work with businesses with US based headquarters. Therefore, most developers assume that they have a solid understanding of English. More specifically, Estonia is one of the top hubs for software development on the continent due to the cultural overlap between its ideals and those of the rest of Europe.
The average hourly outsourcing rates are:
Junior – $18-25
Mid – $30-45
Senior – $50
There are tens of thousands of developers in Poland, and it is estimated that at least one Polish person out of every 100 works as a software developer or software engineer. As a result, it serves as a thriving center for recruiting software development talent. Poland also has a large number of software development firms. Geographically and culturally, Poland is connected.
Nevertheless, Poland is less technologically advanced than its neighbour. Estonia beats it out in terms of offshore software development rates since the rates there are higher.
It’s fair to assume that Polish developers lack the significant accomplishments and IT sector experience of their Western counterparts.
However, they are very motivated and skilled. Additionally, Poland has already taken the necessary steps to ratify significant laws pertaining to data protection, security, and intellectual property. Such a strategy encourages international workers to propose mutually advantageous collaboration to Polish developers.
The average hourly outsourcing rates are:
Junior – $20-27
Mid – $35-50
Senior – $65+
India
India has over 5.2 million coders. Up to 2.6 million software engineers are produced in the nation each year. These figures show how the nation’s software development industry is expanding.
There is proof that India is, in general, a tech and engineering powerhouse. For instance, according to UNESCO, India generated over 2.7 million STEM graduates in 2018, the most of any nation in the world. The largest concentration of IT expertise, including software developers, is undoubtedly found in India. Bangalore, Hyderabad, Mumbai, and Chennai are among the leading tech hubs in India. More than 3,800 Indian software development companies are listed on clutch.co.
In fact, recent studies by KPMG and McKinsey Global Institute (MGI) predict that by 2022, India would surpass the United States as the world’s largest market for IT services, accounting for close to 30% of all IT service revenues worldwide.
Numerous agreements and contracts attest to their involvement in global offshore employment. India is hence deserving of its position as one of the biggest and best nations for software engineers.
In addition, English is a widely spoken language in India. Building effective and fruitful partnerships between business entrepreneurs from the United States, Great Britain, the European Union, and other nations is quite helpful.
However, you should be aware that there are two different categories of software outsourcing specialists in India. A major project is definitely more likely to encounter issues in the first category, which consists of less experienced but cheaper developers.
The abilities in the second group are highly sought-after but difficult to find. Due to the size of the Indian market, it is getting more and harder to locate highly skilled individuals who aren’t also prohibitively expensive to hire.
The average hourly outsourcing rates are:
Junior – $15-20
Mid – $25-40
Senior – $50+
Singapore came in second place for the percentage rise in contributors on Github’s platform, according to the company’s State of Octoverse Report for 2019. With 376,249 contributors, it came in second place in the 2020 edition of that same study regarding the increase of contributors to open source projects. The number increased by more than 40% in 2021 to 527,746.
ICT employment in Singapore is around 200,000, according to the Ministry of Manpower. At least 160 Singaporean software development companies are listed on Clutch.co. These are astounding numbers that reflect the calibre of talent being developed in Singapore for a nation with a population of less than 6 million.
Although a large portion of the population works in IT, the resources are scarce. This might make a project more difficult. Not to add that adapting to the differences between Asian and Western cultures may be difficult.
The average hourly outsourcing rates are:
Junior – $25-30
Mid – $35-50
Senior – $55+
Canada has established itself as a popular outsourcing destination, as seen by the 909 software development companies listed on Clutch. There are a few causes for it:
In comparison to other western countries, it has a relatively low cost of living.
Canada is a wonderful location to outsource software development because of its low taxes and stable currency. Canada also provides a number of tax incentives that might assist businesses save money on their initiatives.
Do you need some proof of it? In 2022, Canadian software development generated US$17.38 billion in revenue. It will only continue to expand, with a predicted annual growth rate of 6.81% to reach US$24.16 billion by 2027.
The prices listed below are for offshore software development services offered to small businesses and enterprises across Canada by skilled Canadian IT companies that specialize in web development, mobile app development, e-commerce solutions, custom software development, and software testing services.
The average hourly outsourcing rates are:
Junior – $15-20
Mid – $25-30
Senior – $45+
On Clutch.co, there are more than 200 software development companies from Brazil. It should come as no surprise that Brazil has Latin America’s largest technological ecosystem. For example, its IT market expanded by 12.2% in 2020, more than doubling the predicted growth rate of 4.1%. According to the Brazilian Software Market – Panorama and Trends 2022, the industry expanded by 17% in 2021, more than double the global average of 11.2% for the same time period. Market expansion accelerated to a record 23.4% in 2022.
Brazil also has more than 500,000 software developers. Brazil thus ranks as one of the most significant technology-focused regions in the world, accounting for 1.8% of the worldwide IT market and 40.7% of the Latin American market. It also has low offshore developer rates, as is clear from the chart below, nevertheless.
The average hourly outsourcing rates are:
Junior – $10-20
Mid – $25-30
Senior – $35+
Business executives need to know what to anticipate when outsourcing a project when looking at offshore software development rates by nation. This section discusses project cost-affecting variables, cost-saving strategies, and cost-effective project implementation, as well as how to pick the best vendor and nation.
It’s crucial to compare offshore software development prices before choosing where to outsource. However, just like the cost of anything else, the cost of software development varies greatly depending on a variety of factors. So, from the more obvious to the less obvious, we’ll examine the variables that affect prices.
This is undoubtedly the most important factor that influences the cost of employing software developers. Undoubtedly, a junior developer cannot expect earning the same amount as an experienced offshore developer. A senior developer will not accept payment at the level of a mid-level developer, either.
This is context-specific, therefore keep in mind that a mid-level professional’s offshore developer rates in some places might be comparable to or even lower than those of a junior developer elsewhere. For instance, the junior US developer’s hourly rate might be comparable to or even lower than that of the middle-level Central European developer. The important thing to remember is that, like all other professionals, software engineers are compensated for their knowledge and experience in situations like these.
Programming languages come in numerous varieties, each with differing levels of acceptability. Because of this, even while the gap is shrinking, there is still a clear skills shortage in the software development sector. Some languages, however, are still developing, thus there aren’t many programmers who can write code in that language just yet.
Additionally, some specialized skills, such as the tasks and responsibilities of a business intelligence developer, may cost more than you anticipate. Comparisons of offshore software development rates are impacted by these factors, however in the upcoming years, we can anticipate some improvement.
This is especially true of projects under contracts. You will be charged more for a project the more complex it is to accomplish. When a project is complex, many people opt to outsource the whole thing to software development companies.
With the offshore outstaffing model, the agency bills the customer and is solely in charge of paying individual developers. As a result, you can spend less on exceptionally difficult assignments.
The cost of the service is significantly influenced by the outsourcing company’s location. For instance, you might anticipate lower costs if you choose a supplier based in China or India rather than one based in Australia or the US. Some people believe that offshore developer rates are lower in some places simply because such developers are of poorer caliber. That is untrue. This is due to labor costs in China and India are far lower than those in other nations due to lower levels of pay and living conditions.
Although there are a lot of options available, you should keep in mind that hiring a professional developer who can assist you in producing a high-quality product still takes time and money.
For instance, Eastern Europe offers some of the most affordable prices for offshore developers, but it is still regarded as one of the top locations for outsourcing software development jobs. The cost of living is typically the cause of this variance. Developers charge less when the cost of living is low in regions like Albania, Croatia, etc. since they can still meet their customers’ needs.
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