Statistics show that describe their experience 93% of small businesses with outsourcing as positive. It's no wonder since outsourcing is cost-effective and requires minimal engagement from the client—just describe your challenges and goals, and your provider will handle everything.
Nowadays, more and more Western companies are opting to outsource software development to Eastern Europe, Latin America, Asia, and Africa. These regions demonstrate rapid tech growth and offer services at significantly lower rates compared to North American or Western European countries.
Our guide will walk you through the most popular destinations for outsourcing software development, highlight the pros and cons of each region, and provide software development rates for 19 countries. So, let's find out where you should look for outsourcing.
Why do offshore development costs vary by country?
Factors that influence development costs by country
Cost of living
Supply and Demand
Quality of Education
Communication Skills
Government Policies
Before we answer the question of where to outsource, we'd like to explain the factors that affect the variation in rates across different countries. While low rates are often associated with low quality, this isn't always the case. So, here's what actually determines rates.
Cost of living
The amount of money needed to maintain a certain standard of living varies from country to country. Consequently, developers from countries with a higher cost of living generally charge higher rates.
Supply and demand
The rates can change depending on professionals' availability versus companies' demand. For example, if a lot of developers are available but few companies require their services, the average wage will be lower.
Quality of education
This factor refers to a specific country's education and technical training quality. It influences the overall skills of developers, thereby affecting rates accordingly.
Communication skills
Countries where developers are more proficient in English or other languages preferred by clients charge higher rates due to more efficient communication.
Government policies
Some countries have better regulations and tax policies for IT professionals, allowing tech companies to offer competitive software development rates for their clients.
How to choose a country to outsource software development
Choose a Country to Outsource Software Development Based On:
- Price-Quality Ratio
- Language Proficiency and Communication Skills
- Time Zone Compatibility
- Security Risks Assessment
Choosing the right country for outsourcing isn't just about budget. You need to consider several other factors, and we'll present them here.
Evaluate the price-quality ratio
Notably, lower rates don't always translate to lower overall costs. Choosing the least expensive vendor might seem like a bargain, but if they have weak security policies or skill gaps, you may end up with extra costs to fix bugs and rebuild software.
Check language proficiency and communication skills
Effective communication is crucial in any collaboration. To avoid misunderstandings that could delay project completion, ensure that the country of your choice has IT professionals with the necessary language skills to communicate freely with your team.
Consider time zone compatibility
Another critical factor for effective collaboration is overlapping work hours. If you and your vendor have limited or no hours of overlap for communication, it can lead to project delays.
Assess security risks
Cybersecurity is and must be the top priority for businesses. Before agreeing to share your data with a third-party company, it's recommended to check if they have security protocols in place and assess the cybersecurity risks associated with their country of operation.
For more insights on building a successful outsourcing strategy, check out our article on How to Hire a Dedicated Development Team.
Outsourcing software development to Eastern Europe
Disclaimer: Comparison data is based on aggregated data from Indeed.com, Glassdoor.com, and Payscale.com in 2024. Figures can vary depending on specific technology, experience, industry, or niche.
The revenue of the IT outsourcing market in Eastern Europe is expected to grow at an average annual rate of 7.78%, showcasing the increasing interest in Eastern European tech providers.
The main regional hubs are considered to be Ukraine, Poland, and Romania, with average software development rates of around $25 to $45 per hour. But what else makes this region attractive to Western businesses? Let's explore.
Pros of outsourcing to Eastern Europe
High-quality professionals for a decent price
The talent pool of highly skilled IT professionals in Eastern Europe is quite large, and the rates are lower than in most Western European countries or North America. For example, Ukraine and Poland provide advanced development services for rates as low as $30-50 per hour.
Cultural compatibility
Most Eastern European countries share values similar to those of the Western world, which reduces misunderstandings and cultural incompatibility and enhances collaboration.
Easy communication
English proficiency is required for IT professionals when hiring in Eastern Europe to ensure easy communication with international clients.
Convenient time zones
For clients from Western Europe, North America, or Australia, the time difference ranges from two to eight hours, allowing for real-time communication.
Government support
Many Eastern European countries support the IT sector and encourage technology development through policies and incentives.
Need for Eastern European software developers?
Contact us today, and let our expertise power your business to new heights!
Cons of outsourcing to Eastern Europe
Confusing tax laws
Tax regulations vary from country to country in Eastern Europe, which may confuse Western businesses. However, this confusion is decreasing as many software development companies now adopt gross salaries and rates. This approach simplifies the process for companies outsourcing to Eastern Europe by providing clear and predictable cost structures.
Competitive hiring market
Even though the talent pool is large, the demand for IT professionals in Eastern Europe is high, which can lead to challenges in finding developers with specific skill sets for a project.
Software development outsourcing rates by country
Country
Average rate
Popular tech stack
Biggest IT cities
Ukraine
$25-$50
React, JavaScript (React, Node, ReactNative), Java, Python, PHP, Swift, AWS
Kyiv, Kharkiv, Lviv, Dnipro, Odessa
Poland
$35-$50
Java, SQL, Objective-C, JavaScript, Python, PHP
Warsaw, Krakow, Lodz and Wroclaw
Romania
$30-$50
SQL, Java, JavaScript, Python
Bucharest Cluj-Napoca, Timisoara, Iasi
Bulgaria
$30-$50
JavaScript, React, PHP, Java, SQL, Python
Sofia, Plovdiv, Burgas, Varna
Czech Republic
$35-$50
JavaScript (ReactNative), Java, SQL, Python, AWS, ReactNative
Prague, Brno, Olomouc, Ostrava
Croatia
$30-$50
SQL, JavaScript, Java, PHP
Zagreb, Split, Dubrovnik
Unlock your business potential with global outsourcing!
At Giraffe Software we provide exceptional expertise in software development at competitive rates.
Outsourcing software development to Asia
China and India hold the top two spots in the list of countries with the highest number of software developers, with 7 million and 5 million professionals, respectively.
With its large talent pool, Asia is one of the most attractive destinations for offshore software development. This section will help you better understand the region and determine if it could be the right choice for your needs.
Pros of outsourcing to Asia
Lower rates
Outsourcing to Asia is generally quite cost-effective. Countries like India, the Philippines, and Vietnam offer lower rates for software development than most of Europe, making this region economically attractive for many Western businesses.
A large number of IT specialists
Asian countries host a vast and diverse number of IT specialists, from software developers to data scientists, giving businesses a large pool to choose from.
Cons of outsourcing to Asia
Communication difficulties
Countries like Singapore, Malaysia, and the Philippines generally have higher English proficiency due to historical and educational factors.
However, English proficiency varies significantly in other countries. In addition, differences in accents, communication styles, and culture can lead to misunderstandings.
Time zone differences
The time difference between Asia and North America is 10-15 hours, creating communication challenges.
Low working conditions
In some Asian countries, labor rights, workplace safety, and employee welfare might not meet Western standards.
Low code quality
In some Asian countries, the focus on rigorous code quality control might not be as strong as in Europe or North America. This can lead to product defects and performance issues.
Lack of security
Some Asian countries may not have established data protection laws, posing potential risks to client data.
Hidden costs
Due to the challenges mentioned above, such as lack of security, low working conditions, and low code quality, there is a significant risk of hidden costs associated with rebuilding your software or addressing the consequences of data breaches.
Software development outsourcing rates by country
Country
Average rate
Popular tech stack
Biggest IT cities
India
$25-$45
Java, C++, Python
Bengaluru, Chennai, Mumbai, Kolkata
China
$25-$45
Python, Algorithm, Functional Development
Beijing, Shanghai, Shenzhen
The Philippines
$20-$45
PHP, ASP.NET, Ruby on Rails
Manila
Vietnam
$20-$40
Java, PHP,.NET
Hanoi, Ho Chi Minh City
Nepal
$20-$40
Microsoft.net, Python, PHP, C++, JavaScript
Kathmandu
Outsourcing software development to Latin America
Lately, Latin America has been gaining momentum in outsourcing software development, and the market volume is expected to reach $27.57 billion by 2029, according to Statista.
We've gathered all the necessary information to understand why and what opportunities businesses have for outsourcing to Latin America.
Pros of outsourcing to Latin America
Suitable time zones
The time zones of Latin American countries generally overlap with North America and have manageable differences with Western Europe (5-7 hours).
Cultural compatibility
Latin American countries often share work ethics and communication styles with Western cultures, leading to smoother collaboration.
Cost-effective rates
Compared to North America and Western Europe, the labor costs are lower in Latin America, letting businesses save money while accessing skilled developers.
English proficiency
High English proficiency among IT professionals in Latin America facilitates better communication with English-speaking clients.
Cons of outsourcing to Latin America
Legal and regulatory differences
Labor laws vary from country to country in Latin America, which can complicate legal processes for foreign companies.
Political and economic instability
Some Latin American countries experience economic and political crises, which pose risks to business processes.
Security risks
In 2023, 62% of companies in Latin America suffered from data breaches, indicating low readiness for cyberattacks.
Software development outsourcing rates by country
Country
Average rate
Popular tech stack
Biggest IT cities
Argentina
$35-$55
Java, Python, SQL
Buenos Aires
Peru
$30-$55
Node.js
Lima
Brazil
$35-$55
Java, Python, SQL
Rio de Janeiro, Porto Alegre, Curitiba, Blumenau, and Londrina
Colombia
$30-$55
JavaScript, HTML, Python
Medellin, Bogota
Outsourcing software development to Africa
African countries are focused on bringing a wind of change to their tech sector. The annual revenue growth rate for IT outsourcing in Africa is predicted to be 10.99% up to 2029, which is unsurprising given rates as low as $10 per hour. But what else does this region offer?
Pros of outsourcing to Africa
Low rates
African countries have low labor costs, resulting in affordable software development rates.
Fast development
Africa rapidly grows its IT ecosystem, with new tech hubs and a young, innovative workforce contributing to fast project delivery.
Cons of outsourcing to Africa
Political and economic instability
Some African countries experience political and economic uncertainties, which can disrupt business operations and investments.
Skill gaps
While Africa's talent pool is growing, there are still gaps in the tech stack offered by developers.
Security risks
90% of African companies have no security policies or protocols, endangering the data they work with.
Software development outsourcing rates by country
Country
Average rate
Popular tech stack
Biggest IT cities
Kenya
$25-$40
Python, JavaScript, PHP
Nairobi
Morocco
$25-$40
PHP, Python
Marrakech, Essaouira and Taghazout
Egypt
$25-$40
PHP, Python
Cairo
Nigeria
$10-$55
SQL, Java, Python
Ibadan, Abuja, and Port Harcourt
Software development outsourcing rates by country
Eastern Europe
Asia
Latin America
Africa
Rates
$25-$50
$20-$45
$30-$55
$10-$40
Cultural compatibility
High
Medium
High
Medium
Time zone convenience
Convenient
Challenging
Suitable
Varies
Code quality
High
Low
Medium
Low
English proficiency
High
Varies
High
Varies
Security
Medium to High
Medium to Low
Medium to Low
Low
Giraffe Software can assist you today
We understand that many of you need time to evaluate all options, think them over, and decide on a region, a country, and finally, your outsourcing provider.
If you're ready to explore opportunities further or discuss your ideas with professionals, Giraffe Software is here to help.
Our Process and Expertise
Giraffe Software is your go-to tech partner, with 70+ in-house experts and a network of 30,000 pre-vetted talents. Thanks to our well-oiled reporting, HR, and retention processes, we ensure our clients save at least 35%- 45% on their IT budgets.
With over seven years in the game, we've built a solid team of skilled engineers and a vast partner network, delivering 120+ successful projects for more than 60 clients across the EU and US.
And we are very proud of the glowing reviews they left us on Clutch, Upwork, and GoodFirms. Here are just a couple of projects that prove our proficiency in staff augmentation.
Looxis
looxis, a German company known for creating exclusive photo-etched gifts, came to us to shift their sales from offline to online and tap into new digital revenue streams. They wanted to launch an eCommerce store, but their previous tech vendor didn't meet their quality standards.
They needed top-notch tech experts with great English skills and strong expertise to complete the project on time. Plus, they wanted their store to have 2D and 3D image modeling features so customers could preview their personalized gifts before buying.
Within just three days of their request, we provided eight candidate CVs that fit their needs. The client selected and hired their desired experts in just two weeks. These specialists seamlessly integrated into the client's in-house team, and our collaboration lasted five years, during which we helped LOOXIS establish a new digital revenue source.
As a result, LOOXIS gained:
- A team of middle to senior developers skilled in 2D and 3D image modeling, all at half the rates of local developers
- A dedicated team working directly under their management
- An eCommerce store that met all their requirements
- Over 50% reduction in operational expenses, as our solution covered everything from salaries to taxes and hardware
This collaboration helped LOOXIS successfully transition to digital sales and expand its market reach.
Looxis
2 weeks
To assemble the team
2 months
To build an online store
29%
Of budget saved
5 Years
Cooperation Time
REM Waste
Another project, REM Waste, was for a UK-based waste management company with over 100 partners serving 700+ customers. They needed a digital makeover to scale their business and aimed to replace their outdated CRM with a new, custom platform.
After their previous developers failed to deliver a working MVP, REM Waste turned to us for help. We provided an estimate for the MVP and quickly assembled a team of two developers, an architect, a PM, and a QA within two weeks. In just four months, we delivered a polished MVP, enabling REM Waste to secure further investments.
The results were first-rate:
- A talented development team that rescued the project
- A refactored solution with bugs fixed
- A high-quality MVP with missing features delivered
- Post-MVP functionality completed over the following 15 months, with the team growing from 4 to 8 members
- A 38% cost saving compared to local estimates
Now, REM Waste is planning to build a SaaS solution based on this CRM.
REM Waste
3 days
To assemble the initial team
5 months
To launch an MVP
38%
lower budget compared to local rates
+10 months
To finalize the platform
Summary
As we can conclude, outsourcing software development to Eastern regions is a popular and beneficial practice for Western companies. Each region has its own pros and cons.
For example, while outsourcing to Africa can be more cost-effective, it may come with potential issues such as lower-quality products or security concerns.
Therefore, it is crucial to carefully consider all factors when choosing the region and country for outsourcing.
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AUTHOR
Prystupa Eugene
Co-Founder
Eugene is a Co-Founder and CTO at Giraffe Software. He is seasoned technology executive with over 10 years of experience in the industry. Eugene leads the development and execution of the company's technology strategy, driving innovation and ensuring alignment with business goals.
Aligned in both project goals and work style, Giraffe Software has proven to be a productive, cost-effective partner. Their clear communication and adaptability have earned them an expanded scope.
Johannes Renaud
Director, LOOXIS GmbH
Their reliability, tech expertise and quality of service set them apart. Giraffe Software is responsive and accommodating, establishes a smooth workflow through open communication.
James Lenoble
CEO, GrowMindGrow
I am happy I can finally start gaining traffic and fulfill my goals. The vendor's collaboration method has been a strength, as they listen carefully to ensure complete understanding of objectives and challenges.
Ori Levi
Owner, Sosimple
We liked their work so much we've brought them onboard other software development projects. Giraffe Software's project management, rates, and quality of code were all excellent.
Johan van der Walt
President and CEO, Evosolve
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