Disclosing Offshore Software Development Cost by Regions

If you’re reading this post, you’ve probably realized that onshore software development is too expensive and doesn’t have significant advantages over options like offshore development. In fact, the decision to switch to an offshore development model may be more convenient, mostly because of the financial aspect. Usually, offshore software development cost range between $4-20/h and it varies depending on the IT vendor’s location and the level of specialist proficiency. The main difference between these approaches lies in communication. You either speak with your development team in person or via video calls.

However, the price and qualification heavily depends on the region where you’re hiring them. In this post, we’ll figure out offshore software development rates by country, benefits and drawbacks of each outsourcing destination, and understand what tech hubs are worth your attention. Here’s a brief overview of rates in all popular regions:

To estimate developers' rates in different countries, we’ve used platforms like TopTal, Upwork, Payscale, and others. We’ll go through the rates in North America, South America, Western, Central and Eastern Europe, Africa, Asia, and Oceania.

The CEE region (including the countries of Central and Eastern Europe) is a golden mean in terms of offshore development. The IT sector is constantly developing here, while the number of software development companies grows each year. According to Clutch, there are 2,230 IT firms in Northern, Central, and Eastern Europe. The offshore development cost in this region (namely, Estonia, the main EU tech hub) is $30-60/hour on average.

The offshore software for your project depends on the company you choose. Small companies usually charge less, but the majority of them won’t offer full-cycle software development. Besides, they don’t have additional options like solutions architects or database engineers for complex projects. Below we list examples of several countries in the Northern, Central and Eastern Europe and their peculiarities in comparison with Estonia, the leader of the IT sector in its region.

Estonia

Estonia is heading the leading position in IT-related services in Europe. The secret of the popularity of this region is quite simple: it mixes well-qualified specialists offering their top-quality IT services for an affordable cost, a comfortable business environment, and a direct entry to the European market.

With these aspects, Estonia is considered one of Europe's most fundamental IT hubs. With offshore software development rates typically varying from $20-60/hour and fast and high-quality project delivery — it may be an ideal option for outsourcing your product development to this region.

Poland

Poland is the second biggest outsourcing tech hub in Central and Eastern Europe. This country has created a favorable environment for the IT field and the feedback is impressive. As for today, Poland has 720 outsourcing IT companies and one of the biggest talent pools in Eastern Europe of 295,000.

Even though the number of talents is higher than in Estonia, many programmers look for new opportunities in neighboring Germany. The Schengen Area contributes to IT emigration from Central and Eastern Europe to countries of the First World.

Offshore software development rates in Poland are almost twice higher than in Estonia. Programmers in this country charge $50-$99/hour. Such a difference in the same region is caused by the difference in programmers’ salaries. Software developers in the middle of their career earn $35,000/year and over.

Still, you can cut your expenses when outsourcing to Poland. If you need to get a subtask of a large project done, you can outsource it to a team of junior developers. They usually charge lower offshore development rates and can manage small tasks.

Hungary

Hungary faced a significant evolution of its IT industry and became a promising outsourcing region. This country is famous for its robust performance and high-quality IT education. It has become a European phenomenon, becoming more advanced each year to stay competitive.

Generally, this country attracts people because of the low labor cost. Offshore software development rates here vary between $15-20, providing an excellent price-quality match.

Czech Republic

The situation with offshore development rates in the Czech Republic is very diversified. There’s a small number of software development companies in the country. According to Clutch, there are only about 70 of them.

What’s really interesting is that their offshore software development rates by country fluctuate between $25 and $149 per hour depending on the location. The majority of Czech companies are small and don’t have enough reviews, so they’re taking up all cases to expand the client base and gain more trust of potential contractors.

Still, the Czech Republic is an IT-oriented country. The majority of developers work on internal software projects for companies from various fields. The Czech Republic has the biggest salaries for software engineers in Central and Eastern Europe. Experienced developers earn $35,000-$45,000 and over.

Romania

The last destination on our Central and Eastern European list. After Romanian’s integration into the European Union, the country's IT sector underwent significant transformation. Large foreign investments pushed forward the offshore software development sector. As for now, the count of major outsourcing companies reached the number of 300.

Romania is more attractive in terms of offshore software development rates than Poland or the Czech Republic. A considerable part of companies set their offshore software development rates to $25-$49/hour. However, there are some exceptions. Large companies charge $100-$149/hour and work on projects starting from $100,000 and more.

Western Europe is the region that attracts IT talents around the world. The Schengen Agreement created a relocate-friendly environment for developers from nearby countries. That’s why Western Europe became a motherland for more than 3,000 IT firms.

Germany

A high standard of living and competitive salaries encourage developers to move to Germany. A successful labor migration politics, exceptional education, and stable economic growth brought Germany nearly 901,400 developers. That’s the highest count of professional developers in the entire Europe.

However, German offshore software development rates are the flip side of the coin. According to PayScale, a middle-tier developer with 2+ years experience earns around $64,000/year. Senior developers in large companies earn $90,000 and over. These salaries result in high offshore software development costs.

German companies charge $100-$149/hour on average. However, it also depends on the city where the company is located. For example, in Stuttgart, developers earn less than in Berlin, so the rates are lower.

United Kingdom

The United Kingdom holds the second place in the number of IT talents after Germany. Every thirteenth UK citizen is a software developer. Even though UK programmers' average salary is slightly lower than the German ones, around $55,000/year, the offshore development rates are still high. Companies without significant expertise and client reviews charge around $100/hour. Speaking of well-established companies, they charge up to $200/hour.

France

According to reports by trade.gov, French tech companies employ 3.5% of the total countries’ population. French software development sector is divided into three groups:

• Publishing companies. Software development companies that publish their own products. They hold 22% of the market.
• Large consulting companies. Large companies that provide IT consulting services to businesses. Companies like Capgemini, Sopra Steria, and others hold 17% of the French IT market.
• Outsourcing companies. Small and mid-size outsourcing companies that develop software for businesses. They have the biggest market share of 61%.

However, France is far from its neighbors in the development of the IT sector. At the beginning of their career, programmers earn a humble salary of $35,000/year. Senior developers earn around twice more — $67,000. It’s almost the same as the salary of German middle-tier developers. The difference in salaries and insufficient development of the IT sector is playing into the hands of entrepreneurs willing to get European quality for a fair price. After spending some time on research, you’ll find several trustworthy companies that charge $50-$99/hour offshore software development rates.

Asia is another popular outsourcing region. There are two factors that distinguish Asia from other tech hubs — low offshore development rates and poor communication with the client.

India

India is the top favorite outsourcing region of both small entrepreneurs and large companies like Google and Amazon. India offers the lowest offshore software development costs range among all outsourcing hubs around the world. However, don’t fall for the cheapest option. The price is so low for a reason.

India doesn’t have enough facilities where enthusiasts can get education and become experienced developers. Indian developers lack expertise with various tools required for the project. That’s why clients who hire Indian developers often report bugs and vulnerabilities in their products.

Moreover, the client service level in Indian software development companies is rather low compared to other regions. Poor English language doesn’t allow PMs to find common language with the contractor. On top of that, time zone differences may bring additional troubles. When it’s 9 AM in Los Angeles, Indian partners have already left their working place, because it’s 9:30 PM for them.

As for the offshore development rates in India, they are really attractive. Smaller companies often charge less than $25/hour. But if you’re thinking over outsourcing your project to India, we advise you to find a big company with, at least, several reviews. Even though they charge $25-$50/hour, the fact that someone worked with them and stayed satisfied may save your project.

China

Right after India, China holds the second place in terms of IT outsourcing. A common stereotype about cheap labor and productive workers in China can be applied to this niche too. The Chinese IT sector is growing fast.

So, how much offshore software development costs in China? Actually, the price range is very versatile. Alongside affordable companies that charge less than $25/hour, you can find companies charging $149-$200/hour.

Philippines

The Philippines is another attractive outsourcing hub. One of the distinctive features of this country is its high level of English language. According to the English Proficiency Index, the Philippines score 60.14 points, which is close to Belgium and Switzerland. Such proficiency is rather rare in the Asian region. Still, the Philippines is a small country that experiences a shortage of talents. This results in a poor choice of companies (According to Clutch, there are only 100 companies).

As for the offshore development rates in the Philippines, they are quite the same as in India. The companies with less than 50 employees charge $10-$25/hour, and companies with 50-250 employees set their rates to $25-$49/hour.

North and South America are two opposite sides in terms of the IT sector. While North America is the world-leading IT giant that gathered top-tier tech companies under the same roof, South America has a steadily evolving IT field with its own benefits. Both of these regions are worth mentioning.

North America

North America is the epicenter of technologies. The USA attracts developers from different parts of the world. Companies are always in need of new tech employees. Besides, North American software engineers earn the highest salaries among developers in the world. Depending on the technology they work with, developers with 3+ years experience earn $75,000-$100,000/year. Senior developers sometimes earn $150,000-$200,000/year.

There’s no doubt that such salaries and overall demand of developers influence offshore development rates. With more than 3,000 outsourcing companies in the US, it’s hard to find the one that delivers a quality product for a price less than $150/hour. The majority of US-based companies set their offshore software development rates to $150-$300/hour. This price may be a disaster for large projects that require 3,000+ hours of development time. So, if you’re on a budget, it’s worth paying attention to options with lower offshore software development rates like Central and Eastern Europe.

The situation with Canadian IT outsourcing is similar to the US. The salaries of middle developers lie in a range of $65,000-$70,000/year. The rates fluctuate in the range between $100 and $200 per hour. However, the number of outsourcing software development companies is lower than in the neighboring USA.

Mexican developers work for $25-$50/hour, which is similar to rates in Central and Eastern Europe. Besides, most companies will work on the project of almost any complexity (the initial project price should be more than $5,000). This lets companies outsource small parts of large projects to release the load off the main development team.

South America

South America is raising more popularity among entrepreneurs willing to pass software development to third-parties. Geographical proximity to the USA lets entrepreneurs visit companies personally and stay updated about the project condition. Also, the time zone difference between Brasilia and Los Angeles is only 4 hours. This helps to schedule meetings at a comfortable time for both parties.

Due to the non-settled state of South American IT, offshore rates for software development are much more attractive compared to North America. Brazilian developers earn $10,000 - $15,000/year while the company’s rates lie in the range of $50 - $100/hour.

Africa and Oceania are the last two outsourcing regions on our list. These tech hubs have their own pitfalls like geographical isolation and time zone difference. Still, countries like Egypt and Morocco attract entrepreneurs from the Middle East and Europe.

Africa

African IT outsourcing is gaining momentum. Countries like Egypt, Morocco, Kenya, and Nigeria have become well-known software development centers. Geographical proximity to rich neighbors like UAE and Qatar grants a stable influx of new clients. Middle Eastern entrepreneurs hire developers from African countries to their in-house teams and outsource small tasks to boost their main team's productivity.

However, the poor Internet in the majority of African countries and the lack of IT education influenced the state of affairs in African outsourcing. Some developers from this region don’t have enough experience with up-to-date technologies to create flawless products with complex features. To mitigate the risks, it’s better to search for other tech partners to build a custom project with complex features.

As for the offshore development rates, African companies charge $20-$40/hour. It’s possible to find companies that work for less than $20/hour, but the quality they deliver may be questionable.

New Zealand

According to the Census report, there are only around 12,000 software developers in New Zealand. However, the demand for IT talents raises over time. Software development companies in New Zealand provide developers with high salaries to attract more developers to their country and encourage students to study computer science. The estimated average income of a software developer in this country is around $88,000/year.

However, business owners have to balance high salaries with offshore software development rates to make a profit. That’s why New Zealand, with all of its drawbacks, isn’t the cheapest place to outsource your software. The average hourly offshore development rate in New Zealand fluctuates between $100-$200/hour.

Australia

As in the case of New Zealand, Australian outsourcing isn’t a striving business niche. Due to the high competition with India, Australian entrepreneurs are focused on software publishing and the development of internal products. Local Australian companies aren’t interested in poaching developers from other countries because the industry has enough local engineers. A lot of Australian entrepreneurs prefer to outsource to other countries to cut expenses.

If you need to outsource your project to Australia for some reason, you should be ready to pay high offshore development rates ranging between $150-$200/hour.

There are a lot of opportunities, and it’s quite easy to get lost. Let’s overview the advantages provided by the CEE region and figure out if it’s indeed the best option possible.

• Extended talent pool. The majority of CEE countries have a significant amount of tech specialists compared to population size. For example, in 2021, the number of specialists in Estonia reached up to 28,000+, proving and promoting the title of one of the most advanced digital societies.

• Education. The educational approach in the CEE region is modern and very industry related. That means that every graduate already has advanced knowledge in the field and understands how to integrate this skill. Also, the government strongly encourages graduates and gives them the necessary support and opportunities.

• Main technology domains. The variety of fields embraced by CEE region specialists is undoubtedly huge. However, such industries as digital infrastructure development, E-government, FinTech, HealthTech, and more, are exactly what the CEE region IT sector is known for.

• Government. Government approval and involvement are huge advantages in offshore development in the CEE region. Let’s overview the Estonian example.Their government has shown proactiveness in the case of the IT sector as well. Accepting the transformations, they implemented multiple policies and created a comfortable business climate for IT startups and projects. By investing in IT education, the Estonian government ensured a significant amount of skilled workforce and contributed to a technology-driven economy. In case you'll decide to establish an offshore development center, CEE region may appear as the most beneficial option.

• Competitive cost structure. Besides all previous aspects, the key factor remains the price and quality match for most people who decide to outsource to CEE regions. Offshore software development rates in the CEE region make nearly $46-86, much lower than average Western Europe($50-125) or North America($69-115) rates.

Generally, the whole CEE area is generously enriched with a wide talented specialists pool and numerous IT companies of all scales. Solid governmental support of start-ups and innovative projects also makes up a great bonus.

As you can see, there are various factors that influence offshore rates for software development in different countries. We’ll single out the major aspects that you should keep an eye on while choosing a tech partner.

The location of a software development company is the main factor that influences offshore development rates. Different regions have different income levels, costs, and standards of living. For example, with an average German developer’s salary of $64,000, African engineer could start his own company after a year of work. That’s why salaries scale according to the region. And as you may understand, developers’ salaries are the main cost driving factor of the offshore software development cost.

The company’s brand name and image play a significant role in price formation. It’s obvious that noname companies charge less than their well-established rivals with a lot of reviews. The company size also influences offshore software development costs. A small company of 20 employees may not have enough resources to develop a large project with complicated custom features.

So, before contacting a tech partner, you have to learn about the software development services they provide. Maybe you don’t need to hire a large company and overpay for the additional competencies.

The last but not the least is tech stack. Depending on the niche and your expectations for the project, the tech stack varies. If you need a simple e-commerce website that displays the goods and lets clients make orders, developers will use a common tech stack for a web project (HTML, CSS, JavaScript, Bootstrap, Node.js). However, if you expect this platform to analyze clients’ preferences, suggest them goods, and have an internal chat, the tech stack is likely to expand and raise the offshore software development cost. Moreover, offshore mobile app development tech stack is different from web development.

Hiring an offshore company is often the only way out for many businesses that want to get a digital product and not spend all their monetary resources. Cleveroad is a top-performing web and mobile app development outsourcing company located in the CEE region, namely Estonia, that provides IT services for enterprises in various industries, such as Healthcare, FinTech, Logistics, Education, Retail, and more.

We work on three flexible cooperation models so you can choose the ones that suit your business needs and budget:

• Time and Material. The T&M model is perfect in cases when it’s kind of problematic to make an accurate final estimate. The price is formed based on the team’s time and materials consumption.
• Dedicated Team model. It allows clients to enrich the crew over the years and increase project support volume and demand
• Fixed Workscope model. In fact, this model helps you to set a fixed budget, which is not dependent on the time or materials utilized. Using this model significantly simplifies future planning and set a certain fixed financial resource.
• Staff augmentation. This model implies hiring specialists( temporarily or long-term) for special needs that your project requires. So instead of hiring a brand new team, you can find a specialist with suitable qualifications who will help your team to deal with a particular work scope.

For this time, our team has delivered many software solutions for our clients across the world: USA, Australia, Asia, UK, and more. To prove our competence, look through some of our offshore projects that we successfully designed and delivered to our business clients:

• Clinic management system
• Transportation management system
• Broker research platform
• Social network with streaming
• Web platform for searching travel activities