Compare Best Countries to Outsource Software Development

In this article on Best Countries to Outsource Software Development And Hire Freelancers, we will analyze the offshore software development rates based on locations and seniority. We also give you some tips on hiring freelance developers reasonably well. Data will be collected from reliable sources such as PayScale, SalaryExpert, Indeed, Upwork, TopTal, and YouTeam.

About outsourcing software development

Outsourcing software development is a method to realize software projects using an overseas development team. The team usually has modern technologies and thus help product owner/ companies develop successful projects while saving huge costs.

Software Offshoring opens the doors to global talent pools. This way, you’ll enjoy the work of truly talented individuals from all over the world at competitive prices. Compared to developing an in-house team, this method is much more preferable.

However, to enjoy the perks outsourcing software development brings, you must equip yourself with the basics. Firstly, the average cost of software development services dramatically varies from country to country. Besides cost variations, product development costs may also change depending on the tech stack, developer level, hiring model, and platform that you use to hire a remote development team of developers.

This article will help you answer those questions so that you can make informed decisions when it comes to outsourcing your software projects. Let’s dive in!

*According to The World Bank, the max score is 100
** According to The World Bank, a scale from -2.5 to 2.5

Please, always remember that average rates can differ a lot from the actual price for software development services, and this is why: 

• The average rate combines rates for different technologies; some of them are mainstream and less paid, others—are unique and will cost way more;
• Average cost combines rates of junior and senior developers, and the first ones are the majority of the market;
• Developers with good English, communication skills, and a proactive approach are always in demand; therefore, they are paid more than average.

Along with that, in this article, we tried to give the most realistic estimation of the hourly rate you need to pay for an experienced developer ready to work on international projects. We hope you will find it useful.

And now, let’s try to understand what market processes lead the global software development market to the current situation.

Current Situation on the IT Hiring Market 

According to our study, US-based startups prefer to hire senior software engineers. You rarely find a job opening for a junior or even a middle position. Many reasons can be behind this, such as the necessity for startups to perform fast to be able to survive in a changing environment, the need for strong leaders in each role, limited resources that make it impossible to hire and manage a big dev team, or even the opposite—receiving funding rounds that open new horizons. A similar situation is also observed in Western Europe (especially Germany and the Netherlands), where many European startups are concentrated.

Huge demand and a limited supply of senior engineers in these regions lead to a rise in salaries and intense rivalry for available resources. And if big enterprises can afford to pay the highest prices and win this competition, most startups have to look for talent in countries with lower living costs. This is how Eastern Europe, Latin America, Asia, and Africa became known as regions for offshore software development.

But last year, the whole world dove into a new, pandemic-related, digital era with accelerated tech transformation. Together with the constantly growing last years’ tech trend, it caused a tremendous increase in demand for software development services. Even the offshore outsourcing regions experienced a talent shortage. Finding an engineer with a relevant tech stack and 5-8 years of work is getting harder. Therefore, offshore software developers’ salaries have reached new levels. Let’s learn more about it.

How Did Offshore Software Development Rates Change Over the Last Year?

The first time this article was published on our blog was at the beginning of 2020. But since market conditions are constantly changing, we update this piece of content now and then. In June 2021, we decided to compare the rates that we published in this article at the very beginning with the current market prices on software development.

With no surprise, compensation for app development services will increase for almost all technologies by more than 3.8% and will continue growing. Technologies, where the rise was the most significant, were Python, React Native, ReactJS, Ruby on Rails, NodeJS, Java, and PHP. These developers got an increase in payment by up to 15% compared to the previous year.

Software Development Hourly Rates by Region 

Now we’ll give an overview of regions and offshore software development rates by country to help you make a more informed decision when hiring from overseas. We’ll be reviewing Eastern Europe, Latin America, Asia, and Africa. But first, let’s take a look at rates in the United States and Western Europe–countries with the highest demand for offshore software development–and then compare the rates with those in offshore countries.

Software Development Rates in North America and Western Europe 

According to Indeed.com, the average base hourly rate of a software engineer in the United States makes up $50.64 per hour. This number may vary depending not only on the experience and technology but also on location. And you should understand that the rate includes only the amount that the developer earns​—it doesn’t include any taxes and any additional expenses. Here are some examples of rates in various states:

Region Overview: the United States

Similarly, in Western Europe, the rates can vary by country, for example:

Region Overview: Western Europe

Now let’s proceed with the rates in offshore countries.

Offshore Software Development in Eastern Europe 

According to a report issued by AVentures Capital, Aventis Capital, and Capital Times at the beginning of 2019, Eastern European countries such as Ukraine, Belarus, Poland, and Romania are now among the top 5 global software development centers. The total volume of IT exports from these countries was about $13 billion.

Other noticeable players in this region are the Czech Republic, Hungary, Bulgaria, Serbia, and Moldova.

Here are some other numbers regarding the state of the IT industry in the Eastern European region:

• $5 billion: the profit of the 477 IT companies that participated in the research.
• 700,000: the number of IT specialists in the region (since this report, the number of IT talent has reached 900,000 professionals and is constantly growing).
• 60,000: the annual number of graduates from tech universities.
• 20-25%: annual revenue growth in the region.

According to Coursera’s Global Skills Index 2020, Belarus, Ukraine, Czech Republic, Poland, and Hungary made it to the world’s top in the Technology category, which includes Software Engineering, Databases, Security Engineering, Operating Systems, Computer Networking, and Human-Computer Interactions. Belarus, Hungary, and the Czech Republic are Eastern European countries that got to the world’s top in Data Science including such trending skills as Python, SQL, R, and others.

Offshore Software Development in Ukraine

Conveniently located in the center of Europe, Ukraine has been attracting foreign investors since the late 1990s and early 2000s, when the first software outsourcing companies started appearing in the country. Here are some numbers and facts regarding the state of the IT industry in the country:

• According to the Ain.ua, the State Statistics Service of Ukraine, in 2019, IT service exports from the country grew by 15%. Now it makes up 16% of the export of all services, which in total brought the country $15.23 billion. In 2020, Ukrainian IT exports exceeded $5 billion in a year.
• According to HackerRank test results, Ukrainian developers are 11th in the world in terms of tech skills. About 85% of tech professionals have at least an intermediate level of English.
• As of 2019, there were about 160,000 IT professionals in Ukraine employed at nearly 4,000 IT companies. This number is over 200,000 tech specialists.
• The country’s IT industry grows by about 26% a year.

There are many pros of outsourcing software development to Ukraine, and it fairly earns its place in the rating of offshore software development rates by country.

Poland as an Offshore Development Destination

Poland is one of the most expensive countries for software development outsourcing in the Eastern European region. At the same time, it’s one of the safest and most stable economies in the region. The government is constantly supporting the Polish IT industry. Thanks to this, Poland became the home of R&D offices for many international corporations, including Google, Intel, and Siemens.

One of the biggest benefits of this country is that it is a member of the European Union. That makes it extremely attractive to Western European companies sharing the legal and geographical space with it.

Fun fact: apart from its IT graduates, Poland is constantly growing its talent pool by headhunting the best engineers from Ukraine. As many software outsourcing companies operate in both Polish and Ukrainian markets, they can easily relocate engineers to the country with higher living and software development costs.

Average Software Engineer Hourly Rate by Country in Eastern Europe

The cost of development is very important when a company is looking for a long-term partnership. At the same time, the ability to build safe relationships with your offshore developers is an even more essential parameter for choosing an outsourcing region. For your convenience, we combined the average hourly rate for software developer talent in other Eastern European countries with an Index of Political Stability and Ease of Doing Business according to The World Bank.

Region Overview: Eastern Europe

Offshore Software Development in Latin America 

According to IDC, the Latin American IT industry will be growing despite political uncertainty and low economic growth. As predicted by Ricardo Villate, vice president of the consultancy for the region, the IT market reached 4.8% in 2020. IDC reports an increase in business spending on technologies related to AR/VR, AI, IoT, 3D printing, cloud, security, and robotics.

Argentina and Chile made it to the world’s top 30 in Data Science (Machine Learning, Data Management, Data Visualization, Statistical Programming) according to Coursera.

Offshore Software Development in Brazil 

Brazil is one of the leading software outsourcing countries in Latin America and South America. According to an earlier study by Agile Engine, Brazil is the country with the greatest number of software engineers in the region – over 400,000. Additionally, Brazil is in second place among the top 50 digital nations in the Tholons Services Globalization Index 2019. The average software developer’s hourly rate in Brazil is $44.

Top Performing Outsourcing Destinations in Latin America

Even though Brazil is the biggest country in South America, and consequently has the biggest talent pool, more often, companies prefer to refer to other Latin American countries in their search for engineers. The simple reason behind this is that Brazil is the only country with a population speaking Portuguese. In contrast, the rest of the continent uses Spanish. So it’s easier for companies to expand hiring to several different countries, knowing that their overseas developers will perfectly understand each other.

One of the most popular countries for nearshore software development is Mexico which is close to the United States and has developers that are used to working with US clients and perfectly understand their business culture.

The second and third offshore development countries of the region that we want to mention here are Argentina and Panama.

• As per the same study by Agile Engine, Argentina has ranked 14th among the best software outsourcing countries and is number 2 in the region. It is also the world’s 10th digital nation in the Tholons Services Globalization Index 2019.
• According to the World Bank Group, Panama has been one of the fastest-growing major economies during the last couple of years, with an incredible technological advance in the IT market.

Average Developer Hourly Rate by Country in Latin America

The latest data shows that the average software developer hourly rate in Latin American countries is higher than in Eastern Europe, while stability scores are lower.

Region Overview: Latin America

Offshore Software Development in Asia 

A pioneer of software outsourcing, Asia boasts the biggest number of offshore software developers as compared with other regions.

China is also an attractive offshore development destination. Chinese developers are the first across all HackerRank challenges. The Chinese government supports the tech sector by offering economic incentives. For example, now there are more than 50 science and technology industry parks across the country.

In the Philippines, Cebu City is the country’s fastest-growing IT industry with over 200 offshore companies and 95,000 tech positions to fill. The Philippines ranks 5th among the top 50 digital nations in the Tholons Services Globalization Index 2019, with the capital Manila being the world’s second super city.

Offshore Software Development in India 

India is the leading software outsourcing country in Asia, and also a top digital nation in the Tholons Services Globalization Index 2019. Indian software development companies are known for delivering one of the most cost-efficient outsourcing of web development processes. Every year, more than 120K IT specialists graduate from the country’s tech universities. In 2016, India was nominated as the second country in the world with the greatest number of STEM graduates – 2.6 million. The average developer hourly rate in India is $30.

Offshore Developers’ Hourly Rate by Country in Asia 

The index that reflects the ease of doing business in the Asia Pacific region is similar to the one that has LATAM countries. At the same time, the situation with the political stability of this region is way worse than in the previous region.

The outsourcing rates in other Asian countries are as follows:

Region Overview: the Asia Pacific

Offshore Software Development in Africa 

Africa’s IT outsourcing market is only emerging, but it has already demonstrated rapid growth and is now attracting overseas clients. It is predicted that the increasing number of the region’s young population will drive demand for high-quality service sector jobs, and the country will soon enter the list of the best countries to outsource software development.

• North Africa, specifically Egypt, Morocco, and Tunisia has quickly become a key outsourcing destination thanks to the time zone compatibility with Europe and a small time-zone gap with New York. Besides, Morocco and Tunisia attract clients from France because of the same language. North African programmers have expertise in technologies such as Python, Ruby, and SQL.
• South Africa is another preferable destination thanks to insignificant time zone differences and high proficiency in languages such as English, German, and Dutch. Besides, the region is featured in the Tholons Digital Nations and Super Cities rankings. South African developers are skilled in C++, PHP, and SQL.
•  East African Kenya has a particularly high concentration of programmers. The capital Nairobi is home to thousands of Kenyan businesses, and the city’s infrastructure encourages technical innovation among young businesses and startups. East African developers are well-versed in Java, SQL, and mobile app development.

Still, African countries show the worst results in international skill rankings.

Offshore Software Development Rates by Country in Africa 

The recent data shows that the software engineer hourly rate of African hubs is significantly lower than in any other outsourcing region. But for this, you will pay with the higher risks as this region has the worst stability index.

Region Overview: Africa

Software Development Hourly Rates by Region: Conclusion

As you may see, the average cost of software development in offshore countries is far lower than in the United States or Western Europe. Even a senior software engineer’s hourly rate in an offshore country can be lower than the one of a junior or middle developer in the USA. Therefore, hiring offshore developers is the most cost-effective decision because the cost of living in offshore countries is lower than in the US or Western Europe.

However, you must be careful when choosing a country to outsource software development services. Unfortunately, not all offshore countries offer a good price/quality ratio. A promising contract may end in paying twice because you’ll have to look for another offshore development team to correct the mistakes of the previous one. This often happens in Asian and African countries that offer the lowest software development rates.

Limiting your search to the best countries to outsource software development is only the first step to fruitful cooperation. You also need to keep in mind that working with remote employees requires establishing a clear system for communication and collaboration. Besides, it may be difficult for American and Western European clients to work with Asian developers because of significant cultural differences and an inconvenient time zone gap.

Benefits of Hiring Offshore Developers 

In addition to affordable prices, you will get the following advantages if you hire offshore developers:

• Access to a wide tech talent pool. The Wall Street Journal reports that in 2019, employers in the US had about 918,000 unfilled IT jobs. If your company belongs to these employers, outsourcing may be a solution.
• No overhead costs. As offshore software development occurs remotely, you pay only for the services. In most cases, you do not have to bother about insurance, office space rent, perks, etc.–either developers themselves or an intermediary agency take over these costs.
• More time is dedicated to your project. If your remote employees work from home, they don’t spend time commuting and thus can devote the saved time to the project.

How to Hire Offshore Developers

There are several ways to hire offshore developers:

Freelance Portals

Hiring remote developers at freelance portals seems to be quite an attractive option, and here’s why:

• Vast tech talent pool–for example, Upwork features more than tens of thousands of profiles of offshore developers.
• Quick hiring–it may take you less than a week to build an offshore development team of freelancers and sign contracts with them.
• Remote cooperation–you pay only for the development services and do not incur overhead costs.
• Direct communication–you can talk or video chat with your team in the safe space provided by your freelance portal.
• Low rates–to earn a reputation on a freelance portal, a freelancer needs to fill their portfolio with projects. To do that, they often agree to low-budget projects, though their rates “in real life” are typically higher.

At the same time, the cons are as follows:

• Unreliability–freelancers can leave your project at any time because they are not bound by any official agreements.
• Time zone differences–locations in different time zones can be inconvenient for both you and your team because you have to catch up with each other.
• Commission fee–you have to pay a processing fee for every payment you make through freelance portals.
• Lack of commitment–freelancers can work on other projects except yours, so you cannot be sure that they will dedicate all of their time to your project only.

Outsourcing Companies

Collaboration with outsourcing companies is the most traditional way of forming an offshore development team. Such companies work with overseas clients and deliver software development services according to the client’s project requirements. If you choose this hiring option, you will get the following benefits:

• Reliability–the employment will be legal, with official agreements, so the developers cannot leave the project spontaneously, as freelancers would do.
• No overhead costs–the outsourcing agency will overtake all of the expenses.
• 100% commitment–the developers will be working only on your project until it is finished.

The drawbacks of outsourcing companies are:

• Slow hiring process–due to bureaucracy, it may take months to form a team for your project.
• Lack of communication–in most cases, a local project manager takes over the communication, so you can rarely talk to your developers in person.

You may be interested:

• Top 15 Best Offshore Software Development Companies In The World
• TOP 10 Trusted Software Outsourcing Companies In Vietnam
• Setting Up Vietnam Offshore Development Centre Service: A-Z Checklist

Average Developer Hourly Rate on Hiring Platforms 

Now let’s compare the software development hourly rates on three hiring portals: Upwork, TopTal, and YouTeam. These rates depend on several factors, such as language, platform, project scope, and geography. Based on these factors, the average rates  are:

Developers’ average hourly rates on different hiring platforms

*Net developer’s salary — doesn’t include portal’s commission.

The Bottom Line

Hiring a team of software developers for your project can be a daunting task. This is especially true if you’re based in the United States or Western Europe and are looking for tech talent in your region. It may take you quite a lot of time to spot perfect candidates at reasonable prices. However, to speed up the process and avoid unexpected expenses, you can hire an offshore programming team. If you are new to hiring remotely, it is important to familiarize yourself with the best countries to outsource software development and offshore software development rates by country so you can effectively focus your search.

For example, the average base hourly rate of a software engineer in California is $57.07 per hour. For comparison, this is how much you would pay a mid-level developer in offshore regions:

• Eastern Europe: $48 per hour
• Latin America: $46 per hour
• Asia: $30
• Africa: $27

Such a difference is caused by the lower cost of living in offshore countries. In many cases, you would get the same quality as from local developers, but still, you must be careful when choosing a region to outsource software development services.

If you hire offshore developers for your project, you will get the following advantages:

• Access to a wide tech talent pool
• No overhead costs
• More time dedicated to your project

Freelance portals will open up a vast tech talent pool for you. The hiring process will be very quick, and you’ll be able to communicate with your team directly. Besides, the prices can be quite low even for highly-qualified freelancers. This is because they are new to the portal and first need to earn a reputation. At the same time, freelance portals are unreliable, and freelancers can work on several projects simultaneously, while you need 100% commitment to your project.

 Outsource software development with InApps Technology

So that’s a wrap on the best countries to outsource software development. All in all, outsourcing software development to a top IT outsourcing company is more reliable. If you want some help with developing your software projects, check out InApps Technology:

InApps Technology is ranking 1st in Vietnam and 5th in Southeast Asia for Application Development on Clutch by getting great ratings and reviews from our clients.

Contact us today, and we’ll be happy to provide you with more insights into the management of outsourced development.