Why and How to Outsource Software Development: Cost and Rates by Country in 2024

For many business owners, entrusting an outsourcing team with the present and future of your product may sound quite daunting. As an initial stakeholder, you always aim for the best quality for your solution, so you need to find a tech team you can trust with outsourcing rates you can afford. Hence, whether outsourcing development is a good pick for you among the other opportunities is a question worth careful consideration.

With years going by, the number of businesses benefitting from outsourcing development is only increasing. This continuous rise is demonstrated in one of Statista’s market insights, which projects an outsourced software development market to reach a revenue of $121.60 billion in 2024. This helps us understand that in the eyes of companies from various industries, risks and concerns that come with hiring outsiders can be outweighed by the advantages it brings to the table.

If you are ready to delegate the development to specialists outside, your goal is to find a team with the best price-quality offer in the market. The market itself is very diverse in terms of pricing different regions offer, and higher rates are not always the best quality indicator. Instead, they are affected by numerous factors. As a company that's been on the market for over 10 years, we know all about these factors.

In this article, we are going to look at outsourcing rates from every region, define the factors that impact the costs, and share how you can find a team of a perfect fit.

Outsourcing statistics and forecasts in 2024

Outsourcing continues to be of high interest among business owners every year. For example, according to Zippia’s research, around 300,000 jobs in the US are outsourced to other countries each year. Among the top outsourcing destinations, China is strengthening its position as the country to provide the most outsourcing services to the US, showing a 30% market growth year after year. India is often the choice to outsource app development for businesses: It offers the largest number of specialists for every software development task imaginable, along with one of the lowest hourly rates.

Outsourcing software development forecasts for 2024 by Statista

The one region that can compete with Asia in terms of price rates and provide quality products in outsourcing software development is Eastern Europe. For instance, despite the Russian invasion, Ukraine continues to be one of the top 5 outsourcing destinations for US businesses.

Aside from country-based choice, there's an issue of finding specific professionals. It's especially challenging with new and upcoming technologies, like AI. Since AI has dominated all the news and trends of 2023, it’s safe to say that it will continue to be of high priority for businesses in 2024. The huge market demand for specialists in machine learning and AI integration will create lots of vacancies, but yet there won’t be enough talents available to fill them.

According to McKinsey’s Technology Trends Outlook for 2023, job postings for specialists in applied AI, generative AI, and industrialized machine learning still don’t meet the standard benchmark of 2 profiles with skill per vacancy.

Therefore, in 2024 many businesses that didn’t consider outsourcing software development may eventually stick to it to have a bigger talent pool while searching for a proper implementation of artificial intelligence tools and their maintenance.

Reasons why businesses choose software outsourcing

Reasons why businesses choose software outsourcing

Among the main reasons why outsourcing looks like a sensible development strategy for business owners, we’d point out the following.

Cost savings

Software development outsourcing is generally cheaper than building an in-house team from scratch. In comparison, all you need to pay to an outsourcing team is their hourly rate multiplied by the number of hours the development goes for. On the other hand, an in-house team adds social packages and equipment expenses to the competitive salary you must pay either way.

Also, the outsourcing route enables you to pick the price ranges that you will find more suitable for your budget without losing quality. To do so, you can pick the region with lower hourly rates to develop your solution and save money to make your project more complex, for example.

Access to specialized skills and expertise

According to a survey of over 40,000 employers from 41 different countries, 75% of employers find it hard to fill positions with candidates. Due to its bigger talent pool, outsourcing is a better choice for finding a required specialist compared to in-house development. It is much easier to find narrowly specialized experts if you have more candidates to look through. With the whole world full of professionals as your talent pool, businesses have more chances to find the one regardless of specialization.

Improved productivity

Outsourcing teams are usually the ones that have the most diverse working experience among the competitors. Being one ourselves, we can offer a wide range of services in various industries, from healthcare to real estate, and we have enough expertise to give your idea a fresh look and suggest ways of making it even more prosperous.

Previous experiences help outsourcing teams save time in developing an effective strategy for your product to succeed. And the more projects the team had worked on, the better understanding of potential pitfalls in development and ways to avoid them they would provide. So, the solid background of projects is another key advantage in the eyes of business owners to build trust in outsourcing their products.

The main reason behind the improved productivity of outsourcing teams lies in how the payment for the outsourcing job works. As the teams get paid according to their hourly rate at the end of a project, it’s in their best interest to deliver a quality product sooner and to get fairly paid. This also opens them to new projects right after, which means more opportunities and more payments for their work.

Cost of outsourcing software development by country

To give you a bigger picture of how diverse IT outsourcing prices are based on the destination you pick, let’s compare software outsourcing hourly rates in 7 regions: North & South America, Western & Eastern Europe, Africa, Australia, and Southeast Asia.

Also, in addition to outsourcing software development rates for every country on the list, we provide its position in global rankings and skill proficiency level according to Coursera’s Global Skills Report 2023.

Average outsourcing software development rates by country

Country Coursera skill ranking 2023 Country’s average hourly rates
Germany 3 $150–$200
Japan 5 $200–$300
Indonesia 6 $25–$50
Slovakia 7 $50–$100
The Netherlands 8 $200–$300
France 9 $150–$200
Belgium 10 $250–$350
Ukraine 15 $25–$50
Bulgaria 18 $50–$150
Colombia 19 $25–$40
Norway 22 $200–$250
Poland 24 $80–$150
USA 78 $100–$350
Canada 82 $100–$250
Kenya 98 $50–$100
The Philippines 99 $20–$50
Nigeria 100 $10–$50

As we can see from the approximate numbers, the regions with lower outsourcing software development costs are Southeast Asia (except for Japan), Africa, South America, and Eastern Europe. On the other hand, regions like Australia, North America, and Western Europe operate with higher average software development outsourcing costs.

The table also shows that higher average costs don’t always indicate the best skill set among the developers. For example, Ukraine, Indonesia, and Columbia are in the top 20 of the most skilled countries, but their hourly rates remain low due to the lower cost of living.

Factors influencing outsource software development costs in 2024

Factors influencing outsource software development costs in 2024

To create a project whose estimate will not exceed your budget, we recommend exploring the factors that affect the costs of development and understanding how you can adjust those costs. For example, suppose you need an app with complex functionality and can’t cut project’s features. In that case, you can always fit the cost frames you have by partnering with an outsourcing team with lower hourly rates.

In this section, we will briefly overview the factors that influence costs to outsource your software development in 2024.

Factor

Description

Location

From the previous sections, you already know that a team’s geographical location significantly influences outsourcing development costs. The differences in living costs, economic factors, and regional wages are the factors behind the different price ranges. And that brings you many options to choose from.

Team experience

Regardless of the team role and position, every specialist has a certain level based on their skill set, experience, and confidence. In software development, these levels are broken down into junior, middle, and senior. The higher level means a better knowledge base and expertise, indicating a higher hourly rate for a specialist. In Ukraine, for example, you can hire a:

  • Junior specialist for ~$15–25 per hour
  • Middle specialist for ~$30–45 per hour
  • Senior specialist for more than $50 per hour in general

Project size & duration

Basically, outsourcing software development is built on the hourly rates of the team members you hire. This means the longer the development lasts, the more you will have to pay for the billed hours. There won’t be a scenario where you can have additional requirements spring up mid-process and have them implemented for free. Any factor that prolongs development time, whether it is new requirements, updates, or complex functionalities, will eventually contribute to higher costs in a contract.

Project complexity

Similar to the previous factor, project complexity directly affects the development time frames and, thus, the outsource software development price. So, if you need to lower your project costs, you may reconsider adding complex features that require more time to develop and won’t affect the product’s quality if gone.

For example, the scale of mobile app development project based on its complexity shows that it takes:

  • 2+ months to build a small-complexity app
  • ~6 months to build a medium-complexity app
  • 8 months to more than a year to build a complex app

Following the trends

A smart decision is to follow modern development trends and consider integrating technologies that are booming to attract more users. But you need to remember that some of the trends raise the project complexity and therefore cost you more money to develop. So, it’s up to you whether your budget can allow it or you will fare better by making it simple yet effective.

How to choose the right outsourced software development partner?

After browsing the opportunities different regions offer, there comes a logical question: “How should I choose a software development partner that would be right for me?”. Of course, there is no one-size-fits-all answer, but we’d like to give you some tips on finding the best outsourcing destination for your case.

Research as much as possible. There are plenty of countries in every region, and every single one of them has different traditions, economic factors, working approaches, hourly rates, and even time zones. For your pick to be a hit, it’s vital to know most nuances that come with hiring a team from a certain country.

For example, it's not unusual for developers in India to prioritize speed over finesse. That's not to say that the quality will be low, but trying to add "bells and whistles" or asking for extra testing that will prolong development might be met with a lack of enthusiasm on the team's side. On the other hand, in Austria, many developers love to try and create flawless products, thus spending more time than strictly necessary on fine-tuning and testing every little thing.

These are just two examples, and no two teams are the same, even if they're from one country. Our point is, regional specifics and culture are among the things that you'll have to include in your consideration when choosing a team.

Be patient in your decision. Take all the preparations and groundwork you have to because hiring an outsourcing partner is not for a sprint — it’s for a marathon, and you need to be absolutely sure in your tech team. Without enough background checks, you may involve yourself with “wannabe professionals” who aren’t interested in meeting your needs and won’t care about your product at all.

Don’t take the lowest price. Quality matters more. Prices that are unusually low for their region can also be a sign of a lacking service. So, don’t let money be the only factor in your consideration. It’s always better to spend more and have a decent solution than to buy the cheapest one and pray for the outcome.

Look out for the best data protection experience. The one aspect that is a sign of quality is data protection and security measures your future team is used to working with. Pay more attention to the companies that value safety as much as you do, and don’t consider the ones that have no interest in protecting your users by any means.

In-house development vs. outsourcing

According to our approach to software development, every business requires a unique solution, and we have to define the best strategy to follow the path that fits best. And the first step towards that is considering every option. Although outsourcing software development is a great choice for many small businesses, in-house development is also a considerable pick for those needing more control over the development. To learn more about how and when in-house development can outshine outsourcing, feel free to read our article on the matter.

Mind Studios as your outsourcing software development partner

We’ve recently celebrated our 10th anniversary of delivering user-oriented products and helping businesses benefit from the outsourcing approach. We previously mentioned trust as a fundamental part of considering outsourcing your product to outsourcing teams, and we are truly grateful that our partners decided to work with us and entrust the future of their business to our expertise.

And that’s not just fancy words. We continue to grow and build up even more experience with new projects from companies worldwide. In 2023, for example, we established partnerships with 3 new regions: Southeast Asia, East Asia, and South America, to widen our borders and experience working with new cultures.

Mind Studios' Outsourcing Expertise

In the case study section on our website, you can find stories behind the development of various projects for different regions and countries. Among them are:

Want to know more about why our clients choose us? Book a free consultation with our experts to discuss your business idea, get valuable market insights, and look behind the curtains of outsourcing software development with us.

Conclusion

If you decided to outsource your project development to a team of specialists, there are a lot of factors you should consider in your pick. The team’s location, time zones, country’s economic state, team’s expertise, and cultural differences are the ones you’d better acquaint yourself with before hiring a certain candidate. In terms of budget and priorities:

  • If you aim to spend as little as possible and to get your project completed quickly, Southeast Asia and South America are the regions to match your needs. An hourly rate for offshore development specialists in those markets is in the range of $15–$100.
  • If you require a mastery of the latest technology and have a bigger budget to achieve it, your best choice is to find outsourcing talents in Western Europe and North America. Professionals in those regions charge around $100–$350 per hour but will ensure the highest quality of your product.
  • If you want the best quality for a fair price, many businesses continue growing interest in outsourcing to Eastern Europe every year. Countries there are known to provide services of more than decent quality at affordable prices. The average hourly rates of developers there vary from $25 to $80 per hour.

Hard to decide what route to take to get to the best of your idea? Schedule a free 45-minute consultation with our experts to ask any questions you have left and discuss new ways of enhancing your business with a top-notch solution from an experienced outsourcing team.