If you’re planning to build software, it can be tempting to lower your budget. However, it’s difficult to predict the exact cost of offshore software development. To help you understand what factors affect the final price, we’ve compiled a checklist of things to consider.
This article will present you with the average offshore software development rates by country and provide you with useful tips on reducing costs. Let’s start!
Table of Contents
How Does Knowing The Average Offshore Software Development Rates Help You Build A Profitable Startup?
A startup budget is a crucial tool for determining how to allocate funds to cover rising business costs, which applies to pre-revenue and later-stage companies.
The startup budget will determine the amount of money you will need to get through the initial few weeks or months. It’s essential that your startup budget is based on market research and provides a realistic forecast of your expenses (even if you calculated all costs to hire offshore software developer).
If you plan to outsource part of your product development, offshore rates for software development will be included in that expense line in your budget. However, the numbers you put in that line can differ significantly. Therefore, you should know the offshore software development rates by country, contractor rates, freelance developer rates, and average offshore software development rates.
Understanding offshore software development rates is not just about knowing the numbers; it’s about the potential for significant cost savings and making wise business investment decisions. Consider hiring a team with a lower hourly rate to reduce employee salary expenses and optimize your business operations. This understanding can lead to finding a top offshore software development company with the best quality/price ratio, ultimately building a more profitable business.
What Makes Up Offshore Software Development Rates: 5 Key Factors
If you have researched offshore software development rates, you might have noticed that they vary greatly. The final cost depends on several factors. Let’s explore the factors contributing to offshore developer rates.
Location
The cost of offshore software development depends on several factors, including the location of the offshore outsourcing software development company. Different countries offer different rates for software development services, which can be attributed to various factors, such as the cost of living and the level of expertise of the developers. For instance, Ukrainian developers have lower hourly rates than those in the US or Canada. At the same time, other countries such as China, the Philippines, India, Poland, Argentina, and Brazil are known for offering competitive rates for an offshore PHP developer or other specialists.
Moreover, within a country, the rates for hiring an offshore web developer can vary. In most cases, large cities tend to have higher rates compared to smaller towns. The cost of living, availability of resources, and the competition among software development companies in a particular location are some factors that influence the rates. Therefore, when choosing an offshore software development team, you should consider various factors to ensure the best time-to-money ratio.
Company’s Profile
Various factors can impact offshore software development rates, and one of them is the company’s profile. By “company’s profile,” we mean their past projects, clients, portfolio, and rating on platforms like Clutch. An offshore software development company with a good reputation and an impressive portfolio may charge higher rates.
Tech Expertise
Regarding offshore software development, the programming languages, and tech stack used can significantly impact the hourly rates developers charge. An offshore web developer with expertise in more niche programming languages often requires higher rates than specialists with more general skills. Therefore, an offshore wind developer or an offshore hybrid blockchain developer will be more costly than an offshore net developer.
Moreover, specific technologies or platforms may require specialized knowledge and experience, leading to increased rates. For instance, if you’re developing a logistics solution, you can hire developer offshore with additional expertise in security practices, which will likely be necessary and will come at a higher cost. Remember these factors when planning your software development project and ensure your budget aligns with your needs.
Taxes
Taxes can play a vital role in defining offshore software development rates. Depending on the country where the software development service is being provided, additional taxes, such as value-added tax (VAT), might significantly hike the overall cost of hiring an offshore PHP developer. To better understand how VAT and other taxes impact offshore software development rates, let’s look closely at some top offshore destinations.
- In Ukraine, the standard VAT rate is 20%. However, IT services are exempt from VAT, making Ukraine a tax-friendly destination for offshore software development.
- In India, the tax rate for software development services is 18%.
- In Poland, the standard VAT rate is 23%. However, small IT businesses can get a reduced VAT rate of 5%.
- In the Philippines, the standard value-added tax (VAT) rate is 12%.
- In China, foreign companies may face additional taxes and regulations in addition to the 6% VAT rate for software development services, making it a more challenging location for offshoring.
Type Of Cooperation
The cooperation model you select can significantly impact the cost. Various cooperation models are available, including time and materials, fixed price, and dedicated team. Let’s review them.
- Time and material. In this model, you pay for the actual hours worked by the team and the resources utilized for the project. The time and material model is a project management approach suitable for projects with dynamic scopes, where changes are expected to occur frequently throughout development. While this model offers a great deal of flexibility, accurately estimating the final cost can be challenging due to the potential for frequent changes to the project’s scope.
- Fixed price. Here, you and your service provider establish an agreed-upon price for the entire project. This pricing model best suits projects with a clearly defined scope, enabling you to assess the costs accurately beforehand. However, any modifications to the project scope could result in additional expenses, which both parties should discuss and agree upon.
- Dedicated team. This model involves hiring a skilled offshore software developer from overseas to work exclusively on your project. It is ideal for projects requiring a longer duration and offers advantages such as better cost management, increased flexibility, and access to talented developers. However, a dedicated team model also requires a higher level of management and communication from your end to ensure a successful outcome.
IT Outsourcing Market Rates
Let’s look at the most popular location for offshore software development services.
Software Development Outsourcing Rates in Eastern Europe
The IT outsourcing industry in Central and Eastern Europe is experiencing significant growth, with its revenue increasing four to five times higher than the global average. Specifically, the industry is growing at 20-25% per year, compared to the global rate of 5% per year.
If you are interested in hiring developers in Eastern Europe, the prices will depend on the destination you choose. For instance, hiring developers in Ukraine will lead to lower rates than developers in Poland or Czechia. The average rate for a developer offshore is approximately $30 for a junior-level specialist and $50 or more for a senior-level programmer.
The Best Countries for Software Development Outsourcing
- Ukraine
- Poland
- Hungary
- Czech Republic
- Croatia
- Romania
- Bulgaria
The Eastern European region possesses all the essential traits to become the top destination for hiring an offshore software product development company. The region’s IT industry is growing at an unprecedented pace, thanks to its ever-increasing pool of highly skilled professionals. It has resulted in the emergence of a thriving hub for cutting-edge technologies and innovative solutions, making it an exciting and dynamic place for anyone interested in IT.
The presence of numerous technical universities coupled with favorable business conditions has further bolstered the industry’s growth. Among the fastest-growing cities in this region is Kyiv, Ukraine, which is expected to have over 100,000 software development specialists by the end of 2023. Therefore, finding an offshore software development services company is a piece of cake.
Software Development Rates by Country
To give you an idea of the outsourcing rates to hire offshore developer in Eastern Europe, we have provided a table below that includes software development rates by country and outsourcing rates in Ukraine.
Pros and Cons of Cooperation with Software Engineers from Eastern Europe
Let’s look at the advantages and disadvantages of hiring an offshore software development outsourcing company from Eastern Europe.
| Pros | Cons |
|---|---|
| Advanced skills at favorable prices | Obscure taxation |
| Convenient time zones | Increased amount of communication time |
| Vast pool of IT talents | |
| Convenient location | |
| Transparent regulations | |
| English proficiency | |
| Fast and cheap Internet access |
Software Offshore Development Rates in Latin America
Latin American countries have recently become popular destinations for seeking an offshore software development outsourcing company. The proximity of these countries to the United States, and minimal difference in time zones, make them a prime choice for customers from the US.
If you are looking to hire a junior offshore software engineer from countries like Brazil, Argentina, or Mexico, you can expect to pay around $30 per hour. On the other hand, a senior offshore software developer from these countries may cost you around $50 per hour. While some developers offer their services at lower rates ranging from $15-$20 per hour, you should remember that the quality of the results may not always be up to the mark.
Pros and Cons of Cooperation with Programmers from Latin America
The data mentioned above looks promising, but what about the benefits and drawbacks of working with Latin American programmers?
| Pros | Cons |
|---|---|
| Convenient time zones | High market price |
| Suitable business environment | Hidden unexpected costs |
| Fast-growing outsourcing market | Lack of familiarity with your home country’s legislation |
| Decent English knowledge | Security risks |
| Cultural compatibility |
Average Software Development Hourly Rate in Africa
The hourly rates for outsourcing junior development specialists in Africa are nearly $20 in the year 2024. This data is comparatively higher than in other world regions due to a limited talent pool of software engineers in African countries. This data is true if you are looking for even more particular specialists (for instance, if you want to hire offshore Magento developer).
Specialists from South Africa, Morocco, and Kenya charge a much more reasonable rate. The average hourly rate for a senior offshore developer in these countries is approximately $40, considerably lower than what programmers in more developed countries charge for the same services.
Pros and Cons of Cooperation with Software Engineers from Africa
The rates of software development services in Africa are decent, but will they affect the quality? Let’s compare the pros and cons of cooperation with an offshore software development services company.
| Pros | Cons |
|---|---|
| Low software outsourcing rates | Low number of IT specialists |
| High development speed | Technological stack |
| Lack of privacy and security laws | |
| Increased amount of communication time |
Related articles:
- Best Countries To Outsource Software Development
- Most Effective Ways to Extend Your Software Development Team
- Cost to Hire Talent: Staff Augmentation vs In-House Recruitment
- Nearshoring vs. Offshoring vs. Onshoring. Any Difference for IT?
- IT Talent Sourcing in Ukraine: Best Hiring Strategies
Software Developer Rates in the Best Outsourcing Countries All Over the World
After analyzing the global situation with offshore developer rates, you may want to look at pricing for particular specialist services. Well, let’s look at software developer rates in the world’s best outsourcing countries.
Average Hourly Software Development Rates by Technology
We have gathered data from around 300 outsourcing vendors worldwide to create an hourly offshore software development rates list. It considers specific technologies used and provides a more detailed understanding of outsourcing software development costs.
.NET
.NET is a versatile technology used to create robust cross-platform applications. It offers a comprehensive suite of tools and libraries. Each offshore .NET developer is in high demand, earning an average hourly rate of $36.
Java
The hourly rate for an offshore Java developer varies significantly depending on the region and the developer’s experience level. In Eastern Europe, for example, you can expect to pay anywhere from $20 to $50 per hour for a middle to senior-level offshore Java developer. In Ukraine, rates for Java developers range from $35 for junior developers to $65 for senior developers. These rates reflect a wide range of global options, allowing you to choose a region that best fits your budget and quality requirements if you want to hire offshore Java developer.
JavaScript
JavaScript is a versatile programming language that professionals widely use to create interactive and dynamic web content. It is the most popular programming language in the world, with over 60% of all developers using it in 2021. With JavaScript, you can hire offshore web developer to create products ranging from basic web pages to complex browser-based applications. On average, hiring a skilled JS developer costs around $45 per hour.
Node.js
Node.js is a popular technology used for developing traditional websites and back-end API services. What makes Node.js particularly powerful is that it is designed with real-time architects in mind. This approach means that it is capable of handling large amounts of data and delivering updates in real time. If you are looking to hire offshore NodeJS developer, you can expect to pay an average hourly rate of $48 based on our analysis.
PHP
The hourly rate of an offshore PHP developer can vary widely depending on various factors, such as the region and the developer’s level of experience. Junior PHP developers typically charge between $40 and $60 per hour, while middle-level developers might command rates between $60 and $100 per hour. On the other hand, if you want to hire offshore Laravel developer, it would cost from $100 to $150 per hour. In some regions, the rates may differ significantly from the global average. For instance, in Eastern Europe, you might find PHP developers charging anywhere from $25 to $45 per hour, depending on their experience and project complexity.
Python
Python, the world’s third most popular computer programming language, is a powerhouse in the development world. Its applications range from website and software development to task automation and data analysis. This versatility makes Python a reliable choice for a wide range of projects. If you want to hire offshore Python developer, they will charge $51 per hour, reflecting the high demand and trust in this language.
React Native
React Native, an open-source JavaScript framework, is a powerful tool for developing software and web applications across multiple platforms, including iOS and Android. Its foundation in React and focus on mobile application development make it an efficient choice for such projects. If you want to hire an offshore React Native developer, the average price is $47 per hour, a testament to the value and potential of this technology.
Angular.js
Angular.JS is an open-source JavaScript library that is highly sought after for its ability to create dynamic, single-page user interfaces easily. Its popularity stems from the fact that it offers the ability to create reusable interface components, which can significantly reduce development time. Based on our research, you should expect to pay an average hourly rate of $47 when hiring offshore Angularjs developer.
Mobile Technologies
The hourly rate to hire offshore Android developer varies by region. In Eastern Europe, rates range from $25 to $50 per hour. In South and Southeast Asia, rates are generally lower, ranging from $20 to $40 per hour. The cost to hire offshore iOS developer is comparable to Android programmers in the same regions.
How To Estimate Offshore Software Development Costs For Your Project
Startups often fail due to a lack of funds when they face unexpected problems. To avoid this, you should accurately calculate expenses and estimate offshore software development costs to hire offshore web developer for your project. Here are some tips to help you better understand the final rates.
Define Your Project Scope
To accurately estimate the cost of offshore software development, defining the project scope first is essential. This approach involves identifying the specific features and functionalities you want to include in your product. Once you have a clear understanding of what you want to build, you can collaborate with your offshore outsourcing software development company to determine the cost and timeline of your project. By providing a detailed project scope, you can ensure that the development team has a clear idea of your requirements, which will help them estimate the project’s cost and timeline accurately.
Consider Your Development Partner’s Experience
When choosing a offshore software development company, consider their experience and expertise. A partner with more years of experience in your industry and relevant cases will understand your business needs and is more likely to provide a better solution but get ready that the average hourly rate for an offshore software developer in this offshoring company can be higher. You get what you pay for.
Look Beyond Hourly Rates
Hourly rates are an important factor when estimating offshore software development costs, but they’re not the only factor. Although a lower hourly rate for a project may initially be a cost-saving measure, you should consider the potential consequences. If the project takes longer to complete due to lower quality work or the end result is not up to par, you may find yourself paying more in the long run. Consider factors like the team’s experience, the quality of their work, and communication skills when deciding to hire offshore dedicated developer.
Use Agile Development
Agile development, a highly effective project management methodology, leverages the expertise of specialized professionals, such as an offshore Java developer, to assist you in estimating offshore software development costs with greater accuracy. This approach involves breaking down your project into smaller and more manageable tasks, which are then worked on in short sprints. This methodology allows you to make necessary adjustments to your project scope and budget as you progress, based on feedback from your customers and your own experiences.
At IntelliSoft, we firmly believe that Agile development is the most suitable option for startups due to its flexibility and cost-effectiveness. It provides ample room for maneuvering and allows us to build product development most efficiently.
Consider The Cost Of Communication
Effective communication is an indispensable element in offshore software development projects. It is crucial to have a well-thought-out plan for keeping in touch with your offshore outsourcing software development company and to consider the communication costs while estimating the project budget. You can explore various communication channels, such as video conferencing tools, instant messaging, and project management software to facilitate seamless communication with your team. These tools can help you stay informed about the project’s progress, discuss any issues, and ensure everyone is on the same page.
Consider The Cooperation Model
We mentioned earlier that the type of cooperation model you select for your offshore software development project can impact the cost. The price you pay can vary based on whether you choose a time and material, fixed price, or dedicated team model. Remember that not all outsourcing companies provide all three options, so be sure to keep that in mind when making your choice.
Summary
Small businesses and startups always look for ways to save time and money. Offshore programmers have become increasingly popular for those seeking reliable, affordable software development solutions. However, before searching for offshore specialists, you should know more about different options and offshore developer rates in various regions. Remembering the potential challenges that may arise during collaboration is also essential.
At IntelliSoft, we understand the significance of offshore development and the importance of finding the best offshore software development company that understands the needs of your business. Our specialists have over 15 years of experience working with global clients from different industries. By the way, our dedicated professionals are proficient in English, ensuring the high-level communication.
We believe that offshore development is more than just finding a workforce. It’s about finding a talented and dedicated team committed to delivering high-quality work, even under challenging deadlines. Contact us today, and our team, driven by a passion for excellence, will guide you in choosing professionals who can meet your business needs.
