The Cost of European IT Services [Market Research in 2017]
Returning to the point of common concern: 'How much does it cost to hire a software developer?', we want to clarify the state of affairs in 2017. The research presented in this article is based on the analysis of one of the biggest freelance platforms - Upwork that has over 12 million registered freelancers and over 5 million registered clients. We have analyzed over 42,000 of freelancers' profiles to give as detailed information as possible about price formation in the European region.
Before we move to freelance software development rates, let's study the subject matter - freelance developers that are registered and active of the Upwork freelance platform. To present a comprehensive view, here is the number of freelance developers (mobile, web, backend and frontend altogether) from various European countries.
Analyzing the freelance software developer market, the largest number of freelancers registered on Upwork is from Ukraine (15,938 people). The second largest freelance workforce supplier is, strangely enough, the UK (5,347 people). As you see, the gap in the standard of living, and average income doesn't affect the number freelancers. Ukraine offers a large 'army' of website and mobile app development professionals and improved the conditions for doing business, although political and economic instability in the country is an obstacle to the development of the market. This probably explains such a number of freelancers and IT services cost model that we'll discuss below.
Despite the number of freelance developers, UK businessmen outsource software development tasks to Ukraine and here is why.
The next position belongs to countries that exceed the threshold of 2 thousand people. They are: Serbia (2,585 people), Romania (2,406 people), Belarus (2,064 people) and Poland (2,064 people). There is another paradox. The first three countries are known to be the developing ones. Poland, on the contrary, is considered to be a developed country with an established economy and a decent standard of living. What unites these countries is a good technical education and a legacy of educational priorities. For example, lots of foreign employers opt for developing European countries rather than for the low IT services hourly rate in India due to the quality and qualification level.
Such developed countries as Germany (1,912 people), France (1,183 people) and the Netherlands (1,024 people) along with Bulgaria (1,027 people) have more than thousand active freelance developers on the Upwork. Bulgarian educational system has rich engineering and technical ground, which makes it a particularly a suitable place to search for a highly qualified workforce in the field of technology and programming.
The smallest number of registered freelance developers is in Estonia (219 people), Latvia (242 people), Slovakia (258 people) and Slovenia (271 people). It is explained by the small population in these countries. As for Estonia, it is considered a sufficiently developed country in the IT sphere, so the majority of developers are working in IT companies and startups. The remaining countries from our research have less than a thousand of registered freelance developers.
Eastern Europe region has always offered a wide range of IT services. Developers from such countries as Ukraine and Belarus have a high level of education, good English language skills and advanced programming. Because of these factors, the demand for a programmer in this region keeps increasing. These benefits are usually aided by the moderate costs that accompany the labor market of the region. In average, cost of developing software varies from $25 to $35 an hour. Depending on the country, the level of developer expertise and the complexity of requirements for the product, the cost can be above $40/hour.
Let's see how much the price depends on the quality. For this, we'll use the Upwork's criterion that show the percentage of successfully completed projects. We are going to compare the average price for developers' services with 80% success and over 90% success.
The chart shows that projects' outcome doesn't influence greatly the cost of IT services in Eastern European countries. What is more, only 6 countries with developers that have lower costs at higher quality. Ukraine is among them. Here I should note that freelancers with 80% jobs success are not low-skilled developers. The freelancers' score is based on the following factors:
- Feedbacks received for the job done;
- Long-term relationships with the clients (whether the repeat contracts take place);
- Contacts without any activity. If a freelancer has an excessive lack of feedback, the score is decreasing.
Another important thing, during the research, we didn't pay attention to the participants with job success score below 80%.
The Baltic states are perhaps the most dynamic region in the post-Soviet space, given the number of startups, favorable economic conditions and successful projects (yes, Skype and Swift were invented by the Estonians). On the other hand, statistics show that the salary of freelance software developer hourly rate on Upwork doesn't differ much from the countries of Eastern Europe.
As you see, 55% of Latvian freelancers, 44% of Lithuanians and 40% of Estonians charge within $10-30 an hour. At the same time, a significant number of developers agree to work for $10 or less per hour. Let's see how things change with the quality discrepancy.
The criterion of 90+ percent of successful projects has dramatically changed the statistics since the average cost of software development has doubled. On the other hand, the share of developers that charged $60 or more didn't change (it remained lower than 1%). It means IT service rates in the Baltic countries will be below $60 per hour don't imply the quality losses at all. Therefore, it can be said that 90% of the successful jobs in the Baltics are performed at around $35/hour.
There is a stereotype that Balkan people are not the hard workers. It seems like you'll never see them hurrying up on business. However, our analysis shows that developers from Croatia, Greece, Serbia, and Slovenia are ready to fulfill orders in a relatively low average hourly rate for IT services.
These countries are quite different since we have included both prosperous Croatia and Slovenia, as well as Greece and Serbia, whose economic situation is hardly satisfying. This situation explains why in Croatia and Greece only about 20% are ready to work for $10 or less per hour, while for Serbia and Greece this figure goes up to 42%. It should also be taken into account that the group "up to $10" IT service costing is bigger than in any Eastern European country, this allows us to assert that the Balkans can also be an excellent budget choice.
But what if a client decided to work with the Balkan freelancers, but expects only a high-quality performance? From a statistical point of view, the average cost to develop software increases by around $10, which is higher in comparison to Eastern European countries. Just take a look.
For many, Scandinavia is associated with a decent quality of life, personal freedom and very high salaries. This description can be partially used to primitively characterize the market of Scandinavian IT-freelancing.
There are a few evident reasons why Scandinavian entrepreneurs choose Ukraine to outsource software development.
If the quality of performance is not taken into account, there is a principal difference in software development costs of these countries and any of the above-mentioned states. Only 10% of freelancers work for $10 or less per hour, and for Denmark and Norway this figure generally declines to 9.6% and 6.9% respectively.
The tendency to IT services pricing increase is well traced if you select a search criterion of 90+% success rate. In this case, the customer will hardly find software developers with a salary of $10 or less in Finland, Norway, and Sweden, but there remains a tiny percentage in Denmark. The average prices aim for $50/hour in Finland and Norway in particular.
You were not mistaken if you assumed that freelancers here earn well, very well indeed. The category "up to $10" for all the countries here is relatively small. Although in Switzerland it is only 4.75%, in Great Britain it is 12.5%, which is higher than in all Scandinavian countries altogether. As for those freelancers whose software development rates are above $60 the value varies from 15% up to 20%.
An interesting situation is if you choose the criterion of 90+% success rate. In countries such as Germany, the Netherlands, and Switzerland, groups of freelancers with salaries of $60 or more are decreasing, while in England and France the usual trend is maintained. The average cost of software development in France, UK and Switzerland rises sharply.
This suggests that German, Dutch and Swiss freelancers face large competition, and IT services price list does not depend on quality. That is why, customers who want to hire freelancers in these countries can find good specialists for the average price of $40/hour.
As we are talking about the cost of software development in Europe, it would be wrong not to mention a large segment of IT services providers - software development companies in Europe. So, let's investigate how much the prices differ in comparison to freelancers' services.
It would be a lie to say that the development cost doesn't differ at all. We all understand that there is at least one thing software development companies consider - overheads. Freelance developers don't usually quote you a price taking into account the accomodation they are in or bills they have to pay. Agencies do have to take care about various of office stuff and employees they are hiring. So, of two equally talented developers, the individual freelancer will almost certainly be cheaper.
On the other hand, this money is usually compensated with the amount of effort and energy you will have to spend working with freelancers. Hiring via the internet is a quite exhausting process, especially when you are planning to get and manage a distributed development team. Depending on the complexity of your project, you may require an efficient team work. That is when dealing with software companies in Europe definitely pays off.
We have a manual how to manage remote team efficiently if you decide to secure your project by dealing with a trustworthy development company.
- The richest in freelance resources region is, of course, Eastern Europe. With 9 countries under our research, it has more than 25,000 of developers. Can you imagine choosing from such a numbers? As for the number of development companies, the selection field reduces to a few hundred.
- The highest average software development cost of $46 is in Scandinavian region. Western Europe charges $42 in average for IT services. Developers from the Baltics and the Balkans cost in average $35 and $33 respectively. The least costly region is predictably Eastern Europe.
- IT pricing models correlate with the quality of software development services you are to receive. The more successfully delivered projects a freelancer has, the higher price you should expect. The only exception is the Eastern European region, where we see a virtually equal cost for any kind of projects.
Working with software development companies in Europe, you should expect to pay more for the development services. The reasons are the overheads that accompany any business and increased reliability you are ensured.
If you want to know the cost of your project in a cooperation with a software development company, check out a Mobile App development Cost Calculator, which will provide you with the detailed estimate of your product cost and all the expenses you may expect to have.