In Martin Prosperity Institute’s report Rise of the Global Startup City, they found that the US dominates the rest of the countries by 68.6% as the centre for venture capital. This is followed by Asia and Europe with 14.4% and 13.5%, respectively. Consequently, these regions also suffer from local tech talent shortage.
The lack of IT professionals in these tech-concentrated countries results in high developer rates and difficulty in finding the right talent. That is why many startups and enterprises from these countries outsource their software development. Mainly to access a larger talent pool and, of course, save on operational costs.
For example, in the UK, a software engineer is paid an average of £30 ($39.45) per hour, according to Payscale. Meanwhile, outsourcing your software engineer to an Asian country can cost you an average hourly rate of £13.69-£30.41 ($18-$40). Startups and enterprises have the option to get quality output for less; that is why it is still a popular and efficient business solution.
If you’re looking to know more about offshore developer rates, continue reading for more information on average outsourcing rates at each popular outsourcing destinations and know what to look for when choosing the right IT offshore partner.
Before comparing offshore developer rates, it’s important to understand how these numbers came about. According to a 2018 Accelerance report titled The 2018 Guide to Global Software Outsourcing Rates, offshore rates depend on these five factors:
Aside from these, another factor to consider is the outsourcing firm’s cooperation model. The right cooperation model for your business can efficiently help your project and can help determine the rates of your offshore developers. Here are three common cooperation models.
The hourly rates of a project outsourcing company can be higher than the hourly rates of the same service from a team extension company model.
Here’s a quick comparison:
Take note that the inclusions above can change depending on the offshore vendor’s services and conditions. Also, keep in mind that the offshore developer rates below are a rough guide for you to know the average hourly rate you would have to pay.
To know the exact offshore hourly rates, it is best to ask an offshore vendor’s developer pricing guide.
Offshore hourly rates per region
Asia
In the 2017 Tholons Top Outsourcing Destinations, 6 out of the top 10 cities are from countries in Asia like the Philippines and India. Aside from these top two offshore destinations, other Asian countries such as China and Vietnam have emerged as ideal offshore locations for software development as well.
Asian offshore destinations boast a large labour pool, advanced skills, and inexpensive prices that are attractive to most startups and enterprises. For example, because of Asia’s vast talent pool, offshore developer rates cost around $18-$40 per hour. These advantages make it easier to find and hire offshore developers from these countries.
Eastern Europe
Since these countries are near Europe’s tech hubs such as the UK, Eastern European countries have a dense number of software developers. The demand for these developers has risen in recent years due to the region’s advanced education and similar culture with Western clients. In addition, the average IT outsourcing rates in Eastern Europe are between $25-$50 per hour making it an ideal offshore destination for some, especially nearby countries. Popular offshore destinations are Ukraine and Poland.
Latin America
The rise of “TechnoLatinas” gave way to a growing pool of tech talent and tech entrepreneurs in Latin America. Not only are global startups and enterprises investing in tech ventures, but there has also been a growing need for offshore developers. Due to its proximity, low cost, and small time difference, Latin America is an ideal offshore destination for North American clients. Top offshore destinations are Mexico, Argentina, and Brazil with average hourly rates of $30-$50 per hour.
Africa
With the continent’s growing tech industry and cheap labour costs of around $20 or less, Africa has gained attention from global startups as an offshoring destination for software development. However, due to the low labour market, it can be difficult to find skilled developers and prices can cost around $40, especially in Morocco, Egypt, and Kenya.
To give organisations a better idea on offshoring rates, Accelerance compiled and listed down different outsourcing rates of various positions from qualified IT outsourcing companies. See the full list below.
Offshore rates via Accelerance
In the same report, Accelerance recommends businesses not to select an offshore vendor based on the lowest cost available. Price does not guarantee the quality of service an offshore vendor can give. The report also recommends to “tread cautiously with services offered below $25/hr” as this may be a sign that a provider is either under-investing on the company or cutting corners in quality or delivery requirements.
According to the report, the best course of action in this situation is to select an offshore vendor offering reasonable and competitive rates compared to other providers in the same region. In the long-run, these offshore companies can deliver consistent quality output and help you save costs in other areas as well.
Aside from looking at developer rates as a major factor, here are more key factors to consider when choosing a reliable offshore provider.
Want to know what other factors you should look for? Here’s a quick guide on choosing the right IT Outsourcing Partner.
Tip: If you’re still hesitating to partner up with an offshore vendor, why not pay them a visit? This allows you to examine the working conditions of your potential offshore developers, see their work ethic, and know the people you will be working with. Remember, your offshore team and vendor are not just a resource, they are valuable partners who will help you grow your business.
As a consistently top outsourcing destination in the world, the Philippines is one of the best countries to outsource software development. Dubbed as the BPO Capital of the World, the Philippines has also emerged as a reliable IT outsourcing resource for software engineers, and QA engineers, among other tech occupations for businesses across the globe.
At Cloud Employee, we believe the following reasons make the Philippines stand out as an ideal and top outsourcing destination in the world.
Related Article: 3 Reasons Why The Philippines is One of the Top English-Proficient Countries for Business