Offshore Software Development Rates in Top Destinations

Introduction

As an IT decision-maker, finding ways to cut costs is essential for your organization's success. Offshoring presents a promising opportunity, but how can you ensure maximum profitability? 

Our guide is here to help. Follow our tips and learn what are the offshore software development rates in top European and Asian destinations, and make sure you make the best possible choice.

Introduction to offshore software development costs

Choosing the right outsourcing destination is crucial for cost optimization and leveraging competencies. While Western Europe's salaries reach high figures like $6,000 in Germany or the Netherlands, and even $10,000 in Switzerland, Eastern Europe, and Asia emerge as attractive options. 

However, before you make your final choice, we recommend considering not only offshore rates for software development but also other factors, such as: 

• salary range
• taxation system
• developer expertise and experience
• cost of living
• project complexity
• your company’s profile and needs
• type of cooperation.

Average offshore software development rates by country

Now, let’s take a look at the average offshore software development costs in the most popular offshoring destinations.

Eastern Europe - offshore software development rates by country

Asia - software development rates

How to decide?

CASE 1: DELEGATE A MINOR PART

Your needs: You only want to delegate the development of a minor part of your software.

Recommendation: You may want to choose Asia because of the lowest cost.

CASE 2: GET IT DONE QUICKLY WITHOUT MY ENGAGEMENT

Your needs: You don't want to take part in the development process, just need to get it done quickly without your engagement.

Recommendation: If English profficiency and culture similarity are not your priorities, you may want to choose Asia because of the lowest cost.

CASE 3: CUT COSTS BUT PRESERVE QUALITY

Your needs: You need to cut costs but also care about quality, want to keep the finger on the pulse and take part in the development process.

Recommendation: You may want to choose Eastern Europe locations or China because of the top cost-quality ratio. Scroll down to learn more about that.

CASE 4: CUT COSTS BUT CARE ABOUT COMMUNICATION

Your needs: You need to cut costs but care about transparency and mutual communication.

Recommendation: You may want to choose Eastern Europe locations, since many countries offer great English fluency and Western-like culture. Scroll down to analyze the outsourcing conditions in Eastern Europe to choose your top destination.

Outsourcing conditions in Eastern Europe

As offshore software development costs are just one piece of the puzzle, it's essential to consider other crucial factors. Let’s move on to discussing other outsourcing conditions that will help you to compare top outsourcing destinations. 

Poland

Tech expertise: Poland is one of the fastest-developing technology hubs in Europe. The tech sector already takes up 8% of the Polish GDP. This translates also into access to more than 400k talented developers and other IT specialists with various skills and competencies. There are also 25 technical universities with 15k graduates annually. 

English proficiency: According to EF English Proficiency Index, Poland is the #13 country out of 111 included locations. This is considered a very high proficiency, which makes Poland the top choice in terms of the ability to communicate in English.

Pros:

• Access to a great and still expanding educated IT talent pool.
• Cultural proximity and ability to work with qualified professionals with a Westernized mindset.
• Attractive tax system for IT companies and investments (the standard VAT rate was reduced from 23% to 5% for IT services). 
• Strategic location in the heart of Europe, ability to cooperate with an EU member, and operate in the European timezone.
• Sufficient data security due to EU regulations.

Cons:

• Software development rates in Poland are higher than in nearby Ukraine or in Asia. However, higher salary expectations are understandable as Polish developers are one of the top in the world.

Choose Poland if you:

• Wish to execute complex IT projects with a reliable partner;
• Seek cultural proximity, smooth communication, European location and EU membership;
• Need access to an educated, diverse, and skilled workforce;
• Want to achieve the best value for money.

Ukraine

Tech expertise: Outsourcing to Ukraine means a great balance between rates and quality. The country is considered one of the best IT outsourcing destinations. As a result, several tech giants such as Microsoft, Uber, and Apple work with the Ukrainian workforce. Ukraine is also home to more than 120 promising startups.  

English proficiency: According to EF English Proficiency Index, Ukraine offers moderate proficiency in English, reaching the #35 position in the overview.

Pros:

• Highly qualified staff. As an attractive tech hub with a number of major IT investments, Ukraine provides access to a skilled talent pool.
• The attractive tax system as IT services are exempt from VAT. 
• European location, timezone, and business ethics in terms of communication style and working practice.
• Experience in providing services to companies from the US and Western Europe.

Cons:

• Ukrainian software developers' rates are higher than in Asia. 
• The political situation is unstable, which may result in migrations and personal changes in teams. 
• As Ukraine is not a member of the EU, the country doesn’t have regulatory frameworks and security standards.
• For the same reason, starting cooperation may come along with excessive paperwork and bureaucracy. 

Choose Ukraine if you:

• Want to have access to highly skilled developers;
• Wish to achieve great value for money;
• Seek a European partner operating in a European timezone and having European business ethics.

Romania

Tech expertise: Romania, as well as Poland, is one of the top European outsourcing destinations. The IT and outsourcing market is constantly growing, and Romanian programmers are more and more valued internationally.

English proficiency: According to EF English Proficiency Index, Romania is the #17 country in the overview which is considered a high proficiency. 

Pros:

• Romania provides a great pool of IT professionals, the greatest after Poland and Ukraine.
• The Romanian government is supportive of the IT industry, R&D, innovation, and startups.
• No language barrier due to more than sufficient English skills.
• Convenient, European timezone.

Cons:

• Lower skills than in other European countries such as Ukraine or Poland.
• A lower number of IT outsourcing centers.

Choose Romania if you:

• Seek a reliable, EU-based partner offering European standards, quality, and regulations.
• Wish to get access to IT workforce performing excellent English proficiency.

Czech Republic

Tech expertise: Access to skills and talented developers make the Czech Republic one of the world’s top outsourcing countries. As numerous educational programs are provided to support tech adepts in finding jobs, the Czech IT workforce is strong and continuously expanding. 

English proficiency: Czech Republic is the #23 country on EF English Proficiency Index, which is behind Poland and Romania, but still considered as high proficiency.

Pros:

• Taxes are only 19%, which encourages investments in the IT sector. 
• Czechia is a member of the EU with strict data protection regulations.
• The country is a hub with talented and educated developers with Western business ethics and business management practices.

Cons:

• Czechia is the most expensive country in the overview, compared to Poland, Ukraine or Romania.
• The lower number of IT outsourcing services providers compared to neighborhood countries.

Choose the Czech Republic if you:

• Wish to get access to excellent software development skills and outstanding quality;
• Want to cooperate with an EU-based partner.

Dive deeper into Eastern Europe outsourcing conditions

Want to discover more about Eastern Europe conditions? Read the guide Easter Europe software outsourcing with 10 top vendors revealed.

Outsourcing conditions in Asia

India 

Tech expertise: India is one of the world’s top outsourcing destinations. Low fares and access to IT specialists make it an appealing destination for international companies seeking cost-efficient software development solutions.

English proficiency: Although India is an ex-British colony, it reached the #52 position in the EF English Proficiency Index which is considered moderate English proficiency. 

Pros:

• Software development rates in India are one of the lowest in the world which is a great option to reduce costs.
• India, as the country with the second biggest population, is a great labor pool with even 9-10 million IT professionals.

Cons:

• India, as an Asian country, cannot provide the comfort of operating in the European or American timezone. 
• Moderate English proficiency may result in communication issues.
• Common quality drawbacks generate the risk that delegating complex projects might not be fully successful.
• Not sufficient copyright, licensing, and data security regulations.
• Lack of European working ethics, business practices, and culture proximity.
  
  

Choose India if:

• Cutting costs is your top priority;
• You seek support in simple, repetitive tasks instead of complex, strategic projects.

The Philippines

Tech expertise: The Philippines is one of the top outsourcing destinations in Asia chosen by tech giants such as Facebook, Apple, and Google. The country offers both software development services as well as BPO/SSC centers.

English proficiency: As an ex-US colony, the Philippines absorbed the Western culture and English language, reaching the #22 position of the EF English Proficiency overview which is considered a high proficiency.

Pros:

• Great communication in English being an official language.
• Cultural proximity despite the geographical distance.
• Government supporting IT industry and investments, including the outsourcing sector.
• Good value for money.

Cons:

• Natural disasters may result in power interruptions and a temporary lack of business continuity and delays.
• Non-attractive timezone with a 15-hours difference from the US and 6 hours with the majority of European locations.

Choose The Philippines if you:

• Don’t mind cooperating with specialists from a different timezone;
• Seek excellent English-speaking skills in cost-efficient destinations.

China

Tech expertise: As China is the world’s second-top technical empire, it can provide you with top specialists in mathematics, data structures, functional programming, and other IT-related areas. 

English proficiency: With the #62 position in the EF English Proficiency, English proficiency in China is considered low. 

Pros:

• Excellent access to modern and rapidly developing technologies and research & development.
• Cooperation with top specialists in the field.
• Government and legal support for investors interested in Chinese innovation and foreign companies seeking outsourcing services.

Cons:

• Language barrier and possible communication issues caused by cultural differences and misunderstandings.
• Quality flaws and not meeting Western standards and requirements.
• Lack of European mindset and business practices.
• High prices as for Asian outsourcing locations.

Choose China if you:

• Value the access to the world’s top skilled professionals and technologies driving innovation.

Next steps

Now, after you got familiar with our overview and offshore rates for software development, we hope it’s much easier for you to choose a great outsourcing destination.

In case you have any doubts that we can dispel, feel free to contact us. We will provide you with more tips on choosing an outsourcing destination, and advise you on the best solutions in top European outsourcing destinations.