Comparing Offshore Software Development Rates By Country
Are you looking for a list of offshore development rates by country? We’ve compiled a comprehensive list of rates for developers from Eastern Europe, South America, and Asia. Learn more about them today.
Offshoring has become one of the most popular business solutions to gaining access to quality and affordable employees. When offshoring came to light, the primary reason was to reduce labor costs. Now, companies discover a lot of benefits from this venture.
If you think about it, offshoring helps you eliminate the hassles in looking for qualified software developers. Offshoring companies like Full Scale already filter out the best, so you can be sure you get quality developers. But there is one provocative question that remains, why are the rates different per country? Let’s find out.
Here’s a list of topics we’ll discuss today:
- Why Are Offshore Software Development Rates by Country Different?
- Offshoring Software Development Rates by Country
- Pros and Cons of Offshoring per Region
- Saving Up on Wages through Offshoring
Why Are Offshore Software Development Rates by Country Different?
The IT industry is snowballing every year. According to Statista, they are seeing massive growth in the IT offshoring market alone. They expect it to grow at almost 359 billion US dollars. With that growth, you can also expect a shortage of skilled developers who can keep up with the demands in the industry.
Before choosing where to put your money in hiring software developers, it is essential to understand the differences between rates per country. But if the IT industry is growing, why can’t companies pay software developers the same in every country? Here are the top reasons why:
1. Geographical location
The demand for software developers is not secluded in one area or country. When it comes to wages, some countries or states have different factors that affect minimum wage costs.
Considering the location where your software developer would be, their salaries will most likely be dependent on these factors:
- Local demand for a specific job
- Standard minimum wage per state or country
- Costs of living
You also have to take into account that each country’s taxation system is different from one another. Some countries might impose higher taxes on businesses in the IT industry which can affect software development costs in the long run.
2. Experience and skill
The more experience a developer has, the higher the salary will be. If one has stayed longer in a specific job or field and has relevant skills, they certainly receive a higher paycheck. Skill proficiency and proven productivity in a line of work compared to beginners affect salary rates.
3. Industry and employer
In every industry, there is a specific job grade with a corresponding amount for salary. In IT, the amount of industry experience and skills help define the software developers’ salary rate.
Top that off with diverse work conditions, clients, certification requirements, and employers. These aspects show the differences in wages from one company to another.
The demand for software developers also helps determine the minimum wage rates for a particular industry. When the industry demands a specific skill but the supply is low, the wages are higher.
The market rates also influence the amount of salary you get. When wages do not have a standard or a fixed wage bracket, there is a possibility that employees will leave their jobs to find a higher-paying one.
This damages the progress of any industry as it will be tough to retain top talent. Rather, they are so money-driven that employees leave for the next employer who will pay them higher wages.
4. Job tasks and responsibilities
Even when software developers work together on the same project, there are some with specific responsibilities. More complex tasks are usually given to those who are more experienced. They might have to deal with more responsibilities or more intricate duties. In turn, it will affect their take-home pay.
While you are in the process of choosing a country with the lowest rates, it is also advisable to consider the following essential factors:
- Time zone differences
- Quality of work
- Level of expertise
5. Government Regulations and Unions
Different governments aim to improve the quality of working conditions for employees. With that, they pass on legislation that will determine a certain amount for minimum wages. Sadly, the labor force in developing countries has very low bargaining power. Most times, employers exploit workers with low wages.
Trade unions have bargaining power and can influence a country’s wage rates. Usually, the power of trade unions is determined by the number of members, leadership, and financial position.
Now that you have an idea of the top factors that affect wages let’s compare offshore software development rates by country.
Offshoring Software Development Rates by Country
If you want to expand your reach when hiring software developers, offshoring is one of the best options to consider. When it comes to salaries, getting the right developer will save you from the headaches of hiring freelancers.
There is also a significant difference between freelancer rates and offshore developers as well. Let’s now dissect and compare the best offshore software development rates by country.
If you have a business based in the US and choose nearshoring, hiring from Latin America would be your best choice. The average hourly rate for software developers can be between $30-$50 per hour worked.
This is already a reasonable rate when you think about competitive talents in nearshoring locations. The most common tech stack used is Java, Python, and SQL. It is easier for teams to collaborate with a close geographical location since there isn’t a huge time zone difference.
Just like hiring onshore, you have to make sure that you get qualified software developers to work for you. When it comes to launching software products, your software teams must know how to do their job right. Which countries do businesses usually nearshore in Latin America?
1. IT wages in Argentina
Argentina is among the top destinations when nearshoring software developers. Most developers earn an average of $35 to $55 per hour. The typical tech stacks used are Java, Python, and SQL.
Argentina believes that a good education provides a good backbone for growth in skills development. With that belief, the Universidad de Buenos Aires ranked first in Computer Science Education.
Not only that, in Coursera’s Global Index Report 2020, the country ranked 22nd in a global skills rating survey. This just goes to show that Argentina is not backing down in competing in the IT space.
2. IT wages in Brazil
In a 2021 Tholons Services Globalization Index, Brazil ranked 15th in the top 50 list. The region is gaining popularity by producing at least 13,000 IT graduates each year. They also have 500,000 software developers currently working. The usual hourly rate ranges from $30 to $50 with Java, Python, and SQL expertise.
Over the years, Brazil has continued to support the IT industry by catering to global demand. They even imposed a law that will offer tax incentives for corporations that work in tech innovation. This encouraged infrastructural growth providing foreign investors with more options to hire skilled software developers in the country.
Eastern Europe doesn’t fall behind when it comes to technological expertise and support. Most software developers in this part of the world are often well versed in Java, Python, C or C++, .NET, Ruby, and Python.
These developers compete for projects that require full-stack development, thus attracting many clients. Software developers in this region earn on average between $20 to $50 per hour.
IT wages in Ukraine
Ukraine is the top provider for quality developers, where they produce around 130,000 new software engineering students per year. The country is also home to tech giants like Grammarly, WhatsApp, and Reface. The average hourly rate ranges from $25 to $45. Among the most common tech stacks used in the country are Python, Java, and Ruby.
The State Statistics Service in Ukraine revealed that IT services exceeded $5 billion in 2020. It is no wonder that Ukraine remains one of the top countries in Eastern Europe that attract foreign investments throughout the years.
Other than that, Ukraine has a healthy and vibrant tech community. A dou.ua survey found out that 60% of developers regularly attend conferences, IT events, and even local meetups. As the IT industry progresses into the future, developers need to get access to a healthy community of developers.
2. IT wages in Belarus
Belarus produces thousands of high-quality software professionals each year due to the country’s focus on education. Tech universities like the Belarusian National Technical University have a proven track record for providing excellent courses in IT. With the government’s support, Belarus’ graduates are products of innovative studies and research.
Asia remains competitive in the IT industry where businesses offshore software developers. Though there will be a big difference in time zone, most developers in this continent are willing to work in the wee hours of the night. Developers situated in these time zones want to ensure they can collaborate with their onshore counterparts.
Let’s explore the wages in Asia’s top two offshoring countries, India and the Philippines.
IT wages in India
India is one of the leading software offshoring countries in Asia. They are popular because they can deliver one of the world’s most cost-effective offshoring software development services. Their average hourly rate is $30. The most common tech stack used in this country is Java, C++, and Python.
According to Github, there are at least 5.8 million developers in India, including new developers. This just goes to show that the IT industry in India continues to grow.
With that massive growth, there will be challenges in finding the right developer. You must work with a hiring manager, outsourcing company, or a local recruiter to help you find a qualified candidate.
IT wages in the Philippines
The Philippines is known for its tropical beaches and beautiful islands. But the country is also building traction when it comes to IT offshore outsourcing. The average hourly rate for a Filipino developer ranges from $25 to $50. The most common tech stacks used are ASP.NET, Java, Ruby on Rails, ASP.NET Core, Python, and PHP.
The citizens in the country have a good level of English. Their primary language of instruction is English which makes it easy for them to communicate with foreigners.
Cebu City is a growing IT hub in the country where the Full Scale office is located. Here, 200 tech companies work with software developers. This shows that the Philippines produces a lot of competent developers who are valuable in the industry.
Just like in other Asian countries, there will be a big-time difference for your onshore and offshore teams to collaborate. One advantage of this is that it creates an opportunity for your teams to continue work where they left off. This will help your team be productive and efficient.
Offshore Rates by Country Comparison
It is clear that hiring offshore is far cheaper than hiring developers in Eastern Europe or the United States. If you are a founder, you would want to get the most out of your hard-earned money.
Throughout the years, offshore developers have proven that they can deliver quality while giving the best value for money. Though many developers have shown this through hard work, it is also important for you to double-check. You must be careful when hiring offshore developers. Yes, they may be cheaper, but not everyone can deliver.
One thing you can do is choose an offshoring company with an amazing track record to help you out. There are many offshoring companies, like Full Scale, that provide software development resources to US-based companies.
Also, be mindful of the price to quality ratio. Not all companies can offer a good deal. Being more careful will save you a ton of money and a whole lot of time in development. So choose your offshore destination wisely.
Pros and Cons of Offshoring per Region
While many businesses are offshoring, there is a common ground for pros and cons. Let’s discuss them for each region.
1. Nearshoring to Latin America
Before nearshoring your software development team to Latin America, consider the following factors that will affect your business.
A. Expensive Software Developer Wages
If your budget is tight, then nearshoring to Latin America might not be your best choice. You want your developers in the same time zones, but that is not feasible if your budget is dense.
There will be minimal language and cultural differences, which means that your software teams will communicate effectively. If location, time zone, and team collaboration are your priorities, then spending a little extra will be worth it.
B. Easy Recruitment
If you’re hiring people yourself, then you must know how challenging HR can get. You have to find the right partner in Latin America who can help make recruitment easier for you. Since there is only very little time difference, scheduling interviews is more accessible.
2. Nearshoring to Eastern Europe
Though Eastern Europe is competent for quality software developers, some cons come with it. Here is a list of factors that affect offshoring to Eastern Europe.
A. High Number of Qualified Candidates
Let’s take Ukraine, for example. We know that they produce at least 130,000 software engineering graduates per year. When you hire candidates from that country, there is a high chance of getting the right developer who can do the job. The massive amount of options help you filter out the best candidates fit for the project.
B. Laws and Regulations
Eastern Europe takes security very seriously. They have a law covering intellectual protection that includes protection and copyright for your database and software programs. The law states that no pieces of code or database information should be shared with any third party.
C. Taxation Rates
The taxation rates for countries in Eastern Europe are pretty high and can get confusing. It is best to check first before getting into any agreement with the offshoring company you will work with.
Delays in Software Development
Since software developers are also in high demand locally, there might be some cases that developers will leave in the middle of the project. This would create a delay in producing your software product, especially if there are no proper handovers.
E. Your Code in Developer Portfolios
It is crucial to have an NDA agreement with your developer. This is to ensure that they do not carelessly share code and confidential information on their Github accounts. Discuss this during onboarding or even when qualifying a candidate.
Offshoring to Asia
If you want to have a cheaper option when hiring software developers, hiring in Asia might be for you. Here are some things to consider when engaging in India or the Philippines.
There are differences in the cost of living and the minimum wage in Asian countries compared to the US. Therefore, salaries for your software teams in India or the Philippines are lower compared to other countries.
This cost-efficient strategy will benefit small to medium-sized companies that have little funding. The most important thing for a startup is to push through and work around budgets to complete and launch products.
B. Monitoring Productivity
Technically, your offshore employees work remotely. You need to set up a system where you can track their progress and productivity. This becomes tiresome on your end. The best remedy for this is to have an offshore development partner in the country.
That’s why many businesses work with companies like Full Scale. Rather than hiring and monitoring their offshore employees themselves, they work with us to manage the employees for them. We also offer learning sessions for our software developers to always be in the loop for any updates in the IT industry.
C. Time Zone Opportunities
We cannot stress enough that offshoring will have a massive impact on collaboration between software teams. Our teams in the Philippines work night shifts when required to ensure they can collaborate with their onshore counterparts.
If close collaboration is not required, you can create an overlap between teams. This is so they can hand over parts of the project that need to be worked on right away. With that strategy, you can maximize the time and resources which will technically work 24/7.
D. Little to NO Language Gap
Collaboration and communication is the key to success. When offshoring to India the Philippines, they can understand instructions as they go. Since this country speaks the language well, you can ensure that they can accomplish the tasks at hand.
E. Wider Access to a Global Talent Pool
Why should you limit yourself to hiring onshore when you can access a vast global pool of quality software developers? It is no wonder that more companies are offshoring to countries like India and the Philippines. Besides the lower wages, there are a lot of skilled software developers waiting for the right project.
Full Scale keeps a database of skilled software developers who deliver quality work at a lower cost. We have provided quality software products to our clients and continue to attract more. This means that Filipino developers are rising to the top and competing on a global scale.
Saving on Wages through Offshoring
Depending on what your priorities are for your business, it is best to consider your options. Whether you hire nearshore or offshore, you need to ensure that your software products get launched with quality.
Here are some things you need to consider before deciding where to hire:
- Priorities (money, time, quality, etc.)
- Ask yourself, “Do I have a trusted offshore partner?”
Starting with these three things will help you arrive at the best decision for your business. Keep track of what you’re doing and your plans to stay prepared for your big business decisions. And when you’re ready, partner with a strong offshore software development company.
At Full Scale, we only work with developers who continue to up their game every time. Our rigorous hiring process helps us make sure that we hire the right people for the required projects. We strive for success, and we look to create teams that work together to set you up for success.
If you want to hire quality software developers, book a call with us today. Let us know what you need so you can achieve the right results for your business.