Wondering how much it costs to outsource software development? Developer rates vary a great deal depending on the region. For instance, Asia and Africa have the lowest offshore software development rates that range between $18–$40 per hour. In Eastern Europe, the average offshore software development rates are $25–$50. If you’re thinking about outsourcing software development to Central and Latin America, prepare to spend from $30 to $50 per hour.
We made this offshore developer rates guide to help you find the answers to the following frequently occurring questions:
- How Cooperation Models Influence Offshore Developer Rates?
- Software Development Rates in Eastern Europe
- Developer Rate Per Hour in Asia
- Offshore Developer Rates in Latin America
- Software Development Hourly Rates in Africa
- How to Choose an Offshore Development Country?
- How to Choose an Offshore Development Company?
- Why Is Ukraine the Best Offshore Development Destination?
There are two major outsourcing models your vendor can use — IT outsourcing or IT outstaffing. On average, offshore developer rates within the IT outsourcing model are around 20% higher than within the IT outstaffing model.
Within the outsourcing model, the vendor provides the client with members of their existing in-house team and manages product development on their side.
Meanwhile, in the outstaffing model, each developer is hired exclusively for your project, and you’re the one managing the software engineers directly.
Study the table below to find out the structure of software developer rates per hour.
How Does IT Outstaffing Optimize Development Cost?
Apart from the cooperation model, offshore rates depend on the IT outsourcing destination, time zone and the size of the talent pool.
*The ranges provided below are a rough guideline as they ignore the differences between various cooperation models. To find out what the real outsourcing rates are, you’ll need to communicate with vendors directly.
Offshore Software Development Cost by Region
Offshore Software Development by Region
Offshore development rates in Eastern Europe vary from country to country. For instance, outsourcing rates in Ukraine are lower than those in Poland. Yet, on average, software developer cost per hour will be around $25 for a junior software developer and up to $50 for a senior software engineer. But if you use the outstaffing model and select junior engineers, the rate for offshore developers may be as low as $18 per hour.
Offshore Development Cost in Easter Europe
Eastern Europe is a happy medium where you can hire high-quality software developers with lower rates without compromising the quality of the product. The region is well-known for its density of software developers with an impressive 1.3 developers per 100 people.
The rapid growth of the IT industry in the region has resulted in about 1 million software developers in Eastern Europe, making it a lucrative software development outsourcing destination.
Key Facts About Offshore Development Rates in Easter European Countries (source)
Numerous technical universities and favorable business conditions stimulate the industry’s prosperity. Ukraine is among the fastest-developing countries in the region. By the end of 2020, Ukrainian tech market is expected to have 200K software specialists.
This makes Ukraine one of the biggest IT nations in Eastern Europe, second only to Poland with 255K software developers. Outsourcing rates in Ukraine range between $26 and $43, which is considerably lower than in Poland, where you’ll be charged $40–$56 per hour.
|Country||Number of Software Developers||Average Minimum/Maximum Hourly Rates||Most Popular Programming Languages||Main IT Hubs||Famous Startups|
Key Facts About Offshore Software Development Centers in Eastern Europe
Software developers in Ukraine, Russia, and Belarus have advanced programming abilities, university degrees, and speak Intermediate and Upper Intermediate English. Because of these factors, the demand for Eastern European developers in the region continues to increase.
Offshore development rates in Asia are lower than the average developer rates in Eastern Europe. If you’re thinking about contracting a software development agency, outsourcing rates will reach about $18 for a junior software engineer and $25 for a senior developer. However, offshore development rates in large Asian tech hubs keep increasing and can reach $30–40 per hour.
Offshore Developer Rates in Asia
China and India are the main Asian tech hubs with a large number of software engineers — there are nearly 5 million developers in each country. Other countries in Asia, such as Vietnam, Malaysia and Indonesia, are also gaining ground and offer similar software development services.
Low offshore software development rates in Asian countries often come at the cost of poorer project quality. Adverse work conditions, cultural differences, and disparities in time zones have a negative cumulative effect on the correspondence and result in decreased quality.
Asia boasts a vast tech talent pool — more than 10 million developers. The rates of overseas software development in Asia are shaped by various aspects and can differ a lot from country to country.
An hour’s work of a junior offshore software developer from a Latin American country like Brazil, Argentina and Mexico would cost you around $30. Offshore development rates of senior software developers get as high as $50 per hour. Hiring the same dedicated software developer through an outstaffing vendor would cut the rates by up to 20%. This means that you can hire a junior software developer for $24 per hour. The same goes for a senior software developer whose offshore development rate can be decreased to $40 per hour.
Offshore Outsourcing Rates in Latin America
Latin America is the most popular offshore software development destination for North American tech companies. US companies primarily outsource software development due to considerably lower software developer rates that cut the cost of product development.
Negligible time difference is another good reason why American businesses seek cooperation with Latin American software development companies.
Also, Latin American countries are the most geographically close to American clients, which makes Puerto Rico, Brazil, Argentina, and Mexico very convenient outsourcing destinations.
Hiring a junior offshore software developer in Africa can cost you about $20 or less per hour. The comparatively high junior offshore developer rates are caused by a small talent pool of software engineers in African countries. An hourly offshore developer rate of a senior software developer in Egypt, Morocco, and Kenya fluctuates around $40 on average.
Offshore Outsourcing Rates in Africa
Distribution of Offshore Developers and Venture Capital in the World
Cities with venture capital are usually short of software developers. To fill in the gap, they seek outsourcing services in countries with larger pools of technical specialists.
Centers With the Highest Venture Capital and Human Resources
The world tech capital is concentrated in the United States and Western Europe. Small and middle-sized US companies suffer from local tech talent shortages and aren’t able to compete for software developers with tech giants. A similar situation plagues Western European companies that struggle to find developers locally and to reduce software development costs.
When choosing an offshore development country for outsourcing software development, pay attention to these key factors: average developer rates, the maturity of the tech industry, time difference, and cultural fit.
Compare the Average Offshore Software Development Rates
About 59% of tech company owners choose outsourcing to reduce software development costs. The rest are chasing the talent they lack at home. Nonetheless, you should remember that quality is always your first priority, and great software developers are costly everywhere.
The first thing we recommend that you do while looking for a perfect outsourcing company is research the average offshore developer rates.
Luckily, we’ve already done most of the work for you, so if you’d like to learn about the top outsourcing destinations, the average developer rates in the world and many other topics, please hit our blog.
Pay Attention to Time Difference
Despite the predominant opinion, an 8-hour time difference might actually bring more efficiency to your daily work than a 1–2 gap. An 8-hour time difference can cut the time to market by involving a “follow the sun” development model.
Within the “follow the sun” model, two teams in different time zones take turns developing a product, taking twice less time than would be possible if the time difference was only 1–2 hours.
A 1–2 hour difference, however, is very convenient in a different scenario as it allows you to maintain live communication with your remote developers. It’s traditionally used for long-term projects where developers from two teams need to do planning and knowledge sharing more often.
How Many Developers in the Country Know Your Tech Stack?
Countries with high availability of developers who specialize in your particular tech stack unlock two benefits at once. First of all, you’re able to hire them quicker, second, the offshore developer rates are perceptibly lower.
Hiring a specialist with knowledge of lesser known technologies requires more exploration. For instance, developers with good knowledge of functional languages such as Scala, F# or Elang are in short supply even in the greatest tech hubs of the world.
Speaking of Scala developers, if you’re searching for rare birds fluent in this technology, you’re more likely to find them in the UK, Ukraine, and Poland.
How Close Is the Country Culture-Wise?
Many people think that cultural proximity and mentality is hard to measure, but we believe that it’s important to trust your personal opinion.
You can arrive at your opinion on the cultural fit of a certain country by asking fellow business owners or CTOs with similar collaboration experiences to share their feedback.
Reach out to business owners in the outsourcing country of choice and ask them about the legislative system, their approach to task management, and any other aspect that is important for you.
Cultural proximity is the one key aspect that defines whether you and your remote team will be able to create a mutually comfortable work environment and directly influences the end-result.
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Finding an appropriate software development vendor is crucial for your final product and business success in general.
We recommend starting with profiling the vendor and getting to know the cooperation model the company uses and whether it matches your business model.
Pay Attention to the Cooperation Model the Vendor Uses
For instance, if you already have tech expertise on your side, you can easily go with the outstaffing model. Within outstaffing, you can hire an entire remote development team, the only requirement is that you have someone to manage it.
In case growing a development team isn’t on your list, you can outsource the entire project to your vendor. The company working within the outsourcing model will take full responsibility for managing and developing your product.
Focus on Value Instead of Cost
We’ve all heard those outsourcing horror stories that resulted in an end-result that wasn’t even worth the investment. That’s why we recommend you to pay special attention to the quality of services your vendor provides.
Paying more for better quality code will bring about long-term benefits for your business. Consequently, investing in a reliable remote team can lead to a more financially appealing product in the long run.
What’s the Vendor’s Price Formation Algorithm?
The outsourcing and the outstaffing model have different price formation principles. That’s why you should make sure the rates don’t include any hidden costs.
As we’ve discussed before, within the outsourcing model developer rates include additional expenses on project managers, business analysts, and cover for the time the developers had spent on the vendor’s bench before they joined your project.
The outstaffing model has a transparent cost structure and has no hidden costs. The vendor charges for the hours the developers work directly for you.
There will also be a single fee the vendor will charge for maintaining your team, but since this fee is fixed, you’ll always know how much you have to pay at the end of the month.
Is Your Budget Predictable and Flexible?
Fixed-price payment contracts were created to guarantee the stability and predictability of monthly expenses and work results. Yet, the devil is in the details: should you change any of the requirements during development, you’ll be charged for extra hours. On top of that, you’ll be the one responsible for changes in deadlines.
The outstaffing model gives you more flexibility. Since you pay for the time your developers spend working on your project, you’ll be able to change requirements on the go.
That said, you’re still able to plan your budget well as you always know exactly how much you’ll have to pay the vendor at the end of each month.
Who Will Manage Your Developers?
If your company already has technical expertise on its side, and you want to continue using all the methods and tools you know and love, the outstaffing model is your best pick. Within the outstaffing model, you have absolute control over your team of offshore developers. But remember that the responsibility for managing the team and therefore the results will be yours.
Companies with no established development process and technical expertise will more likely prefer the outsourcing model. Within the outsourcing model, the vendor gathers all the requirements, assembles a team and assigns a project manager.
As a client, you’ll help clarify the details and provide feedback. Thus, the outsourcing model is suitable for short-term projects.
Visit the Outsourcing Vendor
Schedule a one-on-one meeting with the prospective vendor — even if the company is based on a different continent. Meeting decision-makers in the company is beneficial especially when you’re aiming for long-term cooperation.
During your stay, you can see the working conditions of your potential developers and feel the work ethic of the company first-hand.
Make the most of your trip — have a look around the local tech community and meet recruiters to see if local developers meet your criteria.
Ukraine is a great country to hire an offshore developer for several reasons. The main benefit of hiring offshore developers in Ukraine is that you’ll have access to the second biggest tech talent pool in Eastern Europe. Among other benefits are the speed of hiring and the lower cost of developer attraction.
The Largest Pool of Tech Specialists
At Daxx, we have the pleasure of working with the second-biggest tech talent pool in Eastern Europe. By the end of 2020, Ukrainian tech talent market is estimated to reach 200K tech specialists.
Ukraine takes 11th place on the list of top software development outsourcing countries in the world. The tech industry is the most rapidly growing industry in Ukraine with $4.5B in investments in 2018.
About 35K tech specialists graduate Ukrainian tech universities every year. The majority of software developers in Ukraine have bachelor’s degrees and speak English on Intermediate and Upper-Intermediate levels.
Low Corporate Tax and Expenses
Ukraine offers comfortable corporate taxes. In Kyiv, the corporate tax ranges between $2.5K and $50K a year. To compare, the corporate tax in Berlin varies between $11K and $50K a year, and in New York, it fluctuates between $7K and $50K a year.
The cost of living in Ukraine is lower than in the rest of European countries. For instance, the rental of a one-room apartment would cost $500 a month. It would cost you slightly less if you want to rent an apartment outside the city center — around $300 a month.
Ease of Doing Business
Ukraine made a leap to join the top 70 countries in the “Ease of Doing Business” chart issued by the World Bank in 2019.
It’s a justified concern that leading business operations overseas is complicated, yet Ukraine has proven to be a positive environment for developing and growing large international projects.
Active Software Development Community
Kyiv, Dnipro, Kharkiv, Odesa, and Lviv are the most rapidly developing software tech hubs in Ukraine. About 40% of all Ukrainian software developers reside in Ukraine’s capital, Kyiv. Lviv, another large tech city, annually hosts the biggest technology conference in Eastern Europe, IT Arena.
Technical universities are the most active incubators of new generations of software developers. However, private software development companies also invest in educating more entry level tech specialists.
Ukrainian tech community has rapidly adopted widely popular knowledge sharing events such as hackathons, tech conferences and educational courses funded by software development companies.
Growing Startup Environment in Ukraine
About 2K IT startups, among which Petcube, iBlazr, Grammarly, Jooble, CleanMyMac, Mobalytics and Looksery, originate from Ukraine. The latter has been acquired by Snapchat.
More and more of the 4K of software development companies in Ukraine spare their internal talent resources to build their own products.
Moderate Offshore Development Rates for IT Services
On average, software developers in Ukraine charge lower rates as compared to Western European software engineers. Take a three-minute read of our Guide to Nearshore Software Development in Eastern Europe to see for yourself.
Lower rates are caused by a number of reasons. Quick growth of the tech industry and a powerful influx of fresh talent decrease the average talent demand on the internal Ukrainian market. This brings down the average development costs for the clients, too.
What Worldwide IT Outsourcing Trends Will Influence Offshore Rates in 2020?
New outsourcing destinations, a flow of investment in security and GDPR compliance, and many other IT outsourcing trends will change the global outsourcing market in 2020.
Since 2018, when the global IT outsourcing market earned $85.6B, the ITO industry has been on a stable increase. About 52% of small and middle-sized businesses reported that they’re willing to continue outsourcing software development services in 2020.
The growth of digitized industries created an even greater talent shortage in European countries. Consequently, the heightened demand is causing bloated software development costs.
Tech companies are already turning their attention to Easter European countries such as Ukraine to hire offshore software developers or build remote development teams.
Small and middle-sized businesses are expected to outsource software development more than big corporations. This is because, first, they cannot compete with the prospects big companies are offering on their local markets, and second, because of the general shortage of locally-based software developers.
If you’re looking to find out more on this subject, read the full version of our report on the IT outsourcing trends in 2020.
Daxx Can Help You Hire Offshore Software Developers in Ukraine
We’re a multinational company that specializes in hiring software developers for clients from all around the world. With us, you can hire one developer or build an entire dedicated team.
We have offices in Kyiv, Dnipro, Kharkiv, and Lviv — Ukraine’s four largest tech hubs. Each developer you hire with us works exclusively on your project. You’re the one managing the team, which means you’ll be able to use all the management tools and methods you already know and love.