How Much Does It Cost to Outsource Software Development?

"Software outsourcing is not just a cost-saving measure; it is a strategic move to stay ahead of the competition." - Tim Ferriss

In this Blog Post

We will be exploring the following aspects

• Software development outsourcing models and their average hourly rates
• The top outsourcing regions and their cost comparison
• Software development outsourcing in Asia
• Software development outsourcing in Eastern Europe
• Software development outsourcing in Latin America
• Software development outsourcing in Africa
• Software developer rates in the best outsourcing regions all over the world
• How to choose countries for IT outsourcing
• Aspired can be your trusted outsourcing partner

Any astute entrepreneur conducts a thorough market analysis and price comparison while selecting an IT outsourcing partner. Still, before diving headfirst into the outsourcing world, it's essential to understand the cost breakdowns. Offshore developers in the top outsourcing regions offer hourly rates that vary widely, making it tough to determine the right outsourcing partner. Here, we present the most up-to-date data on the worldwide IT outsourcing market and provide a helpful How-To Guide to Boot. So please continue reading to learn everything you need about software development outsourcing, whether you're thinking about it for the first time or want to improve your current practices.

Software Development Outsourcing Models and Their Average Hourly Rates

According to Statista, In 2023, software outsourcing is expected to cost an average of $46.26 per worker. By outsourcing developers, a business can cut the cost of producing a web or mobile application by as much as 60 percent without sacrificing quality. Here’s a brief description of each software development outsourcing model.

Managed Team Models

• In this model, the outsourcing partner provides a team of developers, project managers, and other support personnel to work on the client's project.
• The client has complete control over the team and project direction and pays each developer hourly.
• The average hourly rate can range from $50 to $120 per developer.

Staff Augmentation Model

• Staff augmentation, or extended development team or team augmentation.
• It is a software outsourcing strategy that maximizes your in-house team's performance while giving you full project control.
• The average price range is between 50$ to 100$ per hour.

Project-Based Model

• The outsourcing provider undertakes the majority of responsibilities in project-based arrangements. Your outsourcing provider executes your development projects to your specifications, owning the projects from beginning to end.
• This model is ideal for well-defined tasks with clear deliverables and timelines.
• The average rates are $5,000 - $100,000 per project.

The Top Outsourcing Regions and Their Cost Comparison

Software Development Outsourcing in Asia

Several of the world's leading outsourcing destinations are in Asia, and its developers are notorious for producing low-cost and valuable products. For example, suppose you are considering seeking a software development partner in Asia. In that case, the hourly rates for a junior software engineer will be approximately $18, and for a senior developer, $40 in the most prominent Asian tech centers.

Best countries to outsource from Asia

• India
• China
• Indonesia
• Philippines
• Pakistan
• Malaysia
• Vietnam
• Bangladesh

With approximately 5 million engineers in each country, India and China are Asia's largest software development markets. In addition, Indonesia, the Philippines, Vietnam, and Pakistan are expanding markets for the same outsourcing services as the preceding nations.

Software Development Outsourcing in Eastern Europe

The cost of IT outsourcing in Eastern Europe varies per country. For instance, developer rates in Ukraine will be lower than in Poland or the Czech Republic. The average rates for offshore developers range between $25 and $50 for junior and experienced software developers, respectively.

Best countries to outsource from Eastern Europe

• Ukraine
• Romania
• Poland
• Bulgaria
• Hungary
• Czech Republic
• Slovakia,
• Belarus

Eastern Europe has all the qualities of a place where software development is proliferating, like a fast-growing IT industry and a large pool of IT talent.

Software Development Outsourcing in Latin America

It costs about $30 per hour to hire a junior offshore software engineer from a Latin American country like Brazil, Argentina, or Mexico. Senior software developers cost $50 per hour. In this area, you can also find lower prices, like $7–$15 per hour, but keep in mind that the quality of the work may not always be high.

Best countries to outsource from Latin America

• Argentina
• Brazil
• Mexico
• Colombia
• Peru
• Chile

Due to their proximity and time zone, US customers have bought more software from Latin American countries.

Software Development Outsourcing from Africa

African countries have high junior software developer rates due to a limited talent pool of software engineers. For example, African junior development specialist outsourcing fees are nearly $20 per hour. While senior software developers in South Africa, Morocco, and Kenya charge $40 per hour.

Top countries to outsource from Africa

• South Africa
• Morocco
• Kenya
• Nigeria
• Egypt

Software Developer Rates in The Best Outsourcing Regions All Over the World

Large and mid-sized businesses in various industries, including telecoms, finance, e-commerce, and manufacturing, embrace IT outsourcing at a record rate. The primary reason for outsourcing is the need for more IT professionals. The scarcity results from demographic factors and high demand for skilled personnel. According to a report by Statista, The IT outsourcing sector is the most significant contributor to the IT Services market's revenue, with $361 billion in 2021 and $587,3 billion anticipated by 2027.

Below are the recently updated average hourly rates per region that could interest you. Note that the ranges may vary depending on various factors, such as the project's complexity, the developers' skill level, and the outsourcing partner's location.

How to Choose the Best Countries for IT Outsourcing

To choose the best country for software development collaboration, consider the following crucial factors.

• Budgetary considerations are a vital driver in outsourcing IT projects. Try to find countries with low living costs and earnings but excellent employment standards.
• Technical know-how: Your best bet is to outsource to a country with a sizable population of skilled IT workers.
• Language proficiency: The success of any outsourcing venture hinges on the success of the project's communication. Be sure the person in the nations you're considering has a firm grasp of the language you'll use for communication. To avoid unnecessary lapses in communication and productive work hours, it's best to find a country that shares a similar time zone as yours.
• Cultural compatibility is crucial since it influences the establishment of a pleasant environment during the work process and the quality of your final product.
• Intellectual property protection: Ensure the country has stringent rules and regulations to safeguard your data and other forms of intellectual property.

Final words

With continuing technological improvements and increased demand for skilled developers, the future outlook for outsourcing software development is bright. Outsourcing can be a powerful tool for maintaining a competitive edge and achieving long-term business success. To achieve the appropriate fit, it is necessary to undertake rigorous research and analysis, evaluate crucial issues such as cost comparison and security, and ask critical questions when selecting an outsourcing partner.

Aspired can be your trusted outsourcing partner

At Aspired, we offer a hassle-free solution for hiring remote developers. Our team of experts has already done the groundwork for you and handpicked the most skilled and experienced developers worldwide. With our pre-vetted development teams, you can skip the research and focus on what matters to your business. We pride ourselves on our communication skills, attention to detail, and timely delivery. Plus, our flexible engagement models ensure you get the best value for your money.

Focus on your core business while Aspired handles your software development needs.