Disclosing offshore development rates: all you need to know

February 01, 2022 by Patricia Bennett

Offshoring has so many advantages that it’s becoming increasingly popular. The primary benefit of working with a team in a different country is that the offshore software development cost is lower than in countries like the US or UK. According to Deloitte, 70% of companies use offshore developers in order to save money. However, bringing up their offshore development rates during a pitch can be a sticky subject for many business owners.

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What Influences Offshore Development Cost?

When you start exploring software development in other countries, you’ll probably find that quotes can fluctuate dramatically. There are also dozens of articles online that provide lists of offshore development rates by country, and you might be surprised to find out that the rates companies are offering are very different from those amounts.

Let’s look at the factors that influence offshore software development rates.

Expertise

Senior developers cost more than less experienced developers, no matter where you are in the world. While the rates are generally lower in developing countries, tech companies still have to spend a lot of time and energy sourcing only the best talent.

Web developer

Education

Developers in top offshore destinations spend many years honing their skills in universities, and they also need to learn to speak English really well. This training can be quite costly, and the prices may reflect that to a degree.

Equipment and Premises

While you aren’t directly paying for equipment and premises, companies will work their fixed costs into their quotation. The good news is that you’ll get access to the best equipment and software without having to acquire it at an exorbitant cost yourself.

Taxes

While countries like Ukraine and other Eastern European nations are lucky in terms of the corporate taxes they are charged, China and India pay high taxes according to annual profit.

Non-Tech Support Staff

When you engage an offshore team, costs don’t only cover the developers’ expenses. There are project managers, administrators, recruiters, and client service staff to support you.

Business team

While the cost of the software developers is enticing, don’t only look at the cost savings. Offshoring has numerous other benefits, including access to top talent and equipment, diverse skill sets, and the ability to scale your projects up and down as required.

Offshore Software Development Rates Comparison

Developer rates can vary from country to country – as do their skill levels and expertise.

North America

Developers charge anywhere from $80 per hour to $110. Really skilled senior-level developers can charge $130 per hour, particularly within the highly competitive Silicon Valley. They also have high expectations in terms of perks. It’s not uncommon to receive equity and favorable vacation days as part of your corporate package.

Western Europe

Western European developers are becoming more popular, especially in Ireland, where developer hubs have been created. They can command anywhere between $75 – $110 per hour for their services.

Eastern Europe

Eastern Europe has invested heavily in IT infrastructure and is one of the most popular offshore destinations in the world. The average cost of a developer is around $45-$55 per hour, which places them in a slightly higher bracket than China, for example. However, the ease of communication, proficiency in English and various popular programming languages, as well as the favorable time zone, more than makes up for it.

Africa

Countries like Zimbabwe, Kenya, and South Africa are good choices for offshoring. Developer rates are around $31 – $50 per hour; however, the time zone differences for the US aren’t ideal, and many countries have issues with their electricity supply and widespread blackouts that can disrupt work.

China

Chinese developers charge around $32 – $40 per hour and, with the exception of Chinese New Year, are available year-round. While the timezone is too difficult to navigate for Western Europe, other parts of the world can easily communicate with China. The only downside is some of the cultural and language barriers that can crop up during projects.

Conclusion

There are a lot of factors that impact offshore software development costs. Don’t always opt for the cheapest developer rates – look at the bigger picture. What perks are you being offered, and how easy will it be to do business with that particular destination? Once you know all the information, you can make a decision.

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