Global Offshore Software Development Rates By Country in 2022
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Rapid growth of the technology behind your business is no longer limited to your country of residence, location, or region. Today, we have an option to hire a team of developers from any part of the world. There is no need to look for a developer from your city or a professional who is open to relocation. All software development business needs can now be covered online.
Software outsourcing opens a wide range of possibilities for business, like access to a bigger talent pool and cutting costs. Moreover, offshore software development reduces HR workload, as remote teams regularly have all team units that you may need.
When you hire an offshore development team, you also get analysts, marketing managers, product and project managers, architects, etc. As a result, the project is fully operated, and you can totally rely upon the outsource team.
Yet, a question appears: how much does it cost to hire offshore development specialists or a team? What are software development rates? It depends on various factors. And the first and the most important one is the country of origin of the developers.
This article will discuss offshore software development hourly rates, the average cost of software development services, software development rates by country with comparison, selecting the right offshore vendor, and the best countries to outsource software development.
The Average Software Development Rates Worldwide
Software development is one of the most growing industries. In 2018, the number of software developers was 23 million, and it is expected that by the end of 2024, it would grow to 28.7 million.
Therefore, the market itself will also grow. Only the application development market promises to demonstrate the CAGR growth of 25.54 % from 2020 to 2027.
The industry is skyrocketing, and software development services are growing in demand. Therefore, the rates also change. Let’s analyze our data for offshore software development rates comparison to understand them better. Below, we will describe the key factors that influence the development rates.
What Determines The Costs of Software Development in Each Country?
Each region has important factors that influence its software development price range. These include:
Salary range
The salary range is determined by the average and median salaries in the country. When comparing salaries from one region to another, you must convert them into a single international currency.
Cost of living
In general, if a country’s cost of living and purchasing power is higher than another’s, its software development rates will also be higher. Countries with lower costs of living will have lower development prices.
Taxation system
Each country’s tax legislation is unique. Some countries are more lenient towards the IT industry, while others impose higher taxes. It can add up to the higher overall software development costs.
Supply and demand
As with any industry, high demand, and limited supply will increase wages and intense competition for available resources. It is especially noticeable in the United States, experiencing a shortage of IT experts.
Average Hourly Rate For Software Development By Region
Depending on the points mentioned above, the average rates of offshore developers will also be different. However, it does not mean that the quality of services will depend on the prices only. When you hire a team of developers from a region with lower hourly rates, the quality of the job may still be high. A low rate can be explained by the simplified taxation system or the low cost of living.
| Region | Average Hourly Rate |
|---|---|
|
North America |
$38 to $63 |
|
Western Europe |
$20 to $42 |
|
Eastern Europe |
$11 to $25 |
|
Latin America |
$3 to $9 |
|
Ukraine |
$11 to $16 |
|
|
According to Indeed and Glassdoor
Software Developer Hourly Rate in The US
Software development hourly rate in the United States is among the highest, ranging from $38 to $63 per hour. The total cost, including taxes and benefits, can range from $137k to $173k per year on an annual salary. On average, 70% of this pay is the net salary, with the remaining 30% representing taxes and benefits. Tax rates vary from state to state, but it is 29.7% on average.
Although it is more expensive, there are numerous advantages to hiring in the United States.
For starters, you will be dealing with developers who speak fluent English, so risks, such as cross-cultural miscommunications or language barriers, are unlikely.
Furthermore, you will have better control and coordination because you will be in the same or very similar time zones if you are in the United States. You will also have the opportunity to meet people on-site and become personal acquaintances.
The following are the offshore software development rates in some of the largest US tech cities:
| City | Software Engineer | Web Developer |
|---|---|---|
|
San Francisco |
$62.5 |
$52.8 |
|
Los Angeles |
$52.2 |
$38.79 |
|
New York |
$59 |
$46 |
|
Boston |
$57 |
$44.2 |
|
Chicago |
$48.7 |
$38.35 |
|
Seattle |
$60.7 |
$38.2 |
|
|
||
Average hourly rates in the United States, Indeed
Software Developer Hourly Rate in Latin America
Latin American countries can be a good choice for companies looking to nearshore their software development because of their geographic proximity and overlap in working hours. It enables businesses to manage teams more efficiently and communicate more quickly. Besides, national governments have begun to invest in technology education and IT infrastructures to grow the industry.
The average offshore developer rates can range between $4 and $9 per hour, a reasonable rate in exchange for competitive talent and convenient outsourcing locations. Because there is no single dominant country in the region's IT industry, the rates are pretty comparable across the board. Even Brazil, which is regarded as one of the top 50 most advanced digital nations, has relatively average rates compared to other countries. It provides a significant cost advantage over other regions, but cost should not be the only consideration.
The top outsourcing countries in this region, as well as their average hourly rates, are as follows:
| Countries | Software Engineer | Web Developer |
|---|---|---|
|
Brazil |
$7.56 |
$3.82 |
|
Argentina |
$6.49 |
$4.27 |
|
Mexico |
$8.58 |
$4.57 |
|
Colombia |
$6.65 |
$5.91 |
|
Chile |
$13.7 |
$16 |
|
Peru |
$7.25 |
$4 |
|
|
||
According to Payscale, SalaryExpert, and Glassdoor
Offshore Software Development Hourly Rates in Asia
Asia is now growing as a region with a professional approach to software development. The market has the two biggest tech hubs in India and China.
However, considering the size of the whole region and the total number of developers, the whole market should be divided into three major directions: East (China as the most prominent representative in development), South (Bangladesh, India, Nepal, Sri Lanka as the most prominent representatives in development) and Central Asia (Kazakhstan and Uzbekistan as the most prominent representatives in development).
Only in China the overall revenue in the software development industry is expected to grow by 6.9% in the upcoming five years, reaching $1.2 trillion.
Obviously, the developers from this region are frequently chosen by customers from Asia. It can easily be explained by the factor of time zones and languages. Besides, due to the low average price range, Asian developers are always in demand.
| Countries | Average hourly rate |
|---|---|
|
China |
$8.52 |
|
Bangladesh |
$2,44 |
|
India |
$6,72 |
|
Nepal |
$4,56 |
|
Sri Lanka |
$2,37 |
|
Kazakhstan |
$6,30 |
|
Uzbekistan |
$14,59 |
|
|
|
According to Payscale, SalaryExpert, and Glassdoor
Offshore Software Development Hourly Rates in Africa
Software development is growing more popular in all regions. Africa is one of them. Recently, Africa was not included in the regions with the highest number of software developers, but the situation has changed.
The e-Conomy Africa 2020 report shows that Africa’s IT business promises to reach $180 billion by 2025. It will show 5.2% GDP. By the end of 2050, it is expected that the industry will demonstrate $712 billion in revenue, with 8.5% of the continent’s GDP.
As the African region is only entering the software development market, the price range for development is quite low compared to the US and European rates. But with the industry's rapid rise, the range will also change.
| Countries | Average hourly rate |
|---|---|
|
South Africa |
$20.3 |
|
Morocco |
$21.53 |
|
Zimbabwe |
$10.5 |
|
Kenya |
$6 |
|
Nigeria |
$2.43 |
|
|
|
According to Payscale, SalaryExpert, and Glassdoor
Offshore Software Development Hourly Rates in Australia and New Zealand
Australia is another software development destination that raises popularity but can hardly overcome the popularity of the US, Europe, and even Asia. The matter is that Australian time zones are very specific for European and American countries.
Despite this fact, the Australian software development industry still demonstrates impressive results. According to IBIS World research, the industry grows by 3.1% yearly.
Software development rates in Australia and New Zealand are rather high.
| Countries | Average hourly rate |
|---|---|
|
Australia |
$130.57 |
|
New Zealand |
$125.16 |
|
|
|
According to Payscale, SalaryExpert, and Glassdoor
Software Development Rates in Western Europe
Western Europe is also one of the most expensive software development markets and, at the same time, the best offshore software development countries. This region is nearly as expensive as the United States due to its high cost of living, taxation system, and developer qualifications.
Hourly rates can range from $20 to $45 per hour, with an average annual salary of $60k. Taxes, insurances, and other legal costs amount to 35% of the overall pay, so you will be paying a significant amount for allowances that aren’t part of the actual net salary.
Western Europe’s primary offshoring locations are France, Germany, the Netherlands, Switzerland, and the United Kingdom. For each location, you should expect to pay the following hourly rates:
| Countries | Software Engineer | Web Developer |
|---|---|---|
|
France |
$42.16 |
$21.56 |
|
Germany |
$32.80 |
$23.32 |
|
The United Kingdom |
$28.55 |
$22.17 |
|
Denmark |
$37 |
$35 |
|
Netherlands |
$23.57 |
$20 |
|
|
||
Average hourly rates in the European Union, Glassdoor
Offshore Software development Hourly Rates in Eastern Europe
Eastern Europe is well-known for its technological expertise and support of the start-up culture. Eastern European developers are often well-versed in C/C++, Java, Javascript, .NET, Python, and other full-stack specialties that attract many foreign clients.
The hourly rates for software engineering services can range between $11 and $25 per hour. The average annual salary ranges from $40k to $70k. This average has a wide range because Poland is one of the most expensive countries in Eastern Europe for software development outsourcing, which can slightly skew the results.
Belarus, the Czech Republic, Hungary, and Ukraine were named the world’s top technology countries in Coursera’s Global Skills Index 2020. Ukraine, in particular, has some of the world’s best developers, ranking 11th in the world according to HackerRank.
Ukrainian developer hourly rate is considered one of the most attractive from the point of view of price and quality. Its IT industry is expanding rapidly and steadily, and it is the leader in IT outsourcing in Eastern Europe. Find more information about the costs and benefits of hiring developers in Ukraine in the next section.
The following are some of the most common outsourcing countries in the region, along with their average hourly rate for software development:
| Location | Average Hourly Rate |
|---|---|
|
Bulgaria |
$32 |
|
Romania |
$35 |
|
Croatia |
$39 |
|
Latvia |
$16 |
|
Estonia |
$23 |
|
Slovakia |
$9.61 |
|
|
|
According to AcrDev, Payscale and Glassdoor
Software Development Size Factor
When hiring a team, you should also remember that overall rates of the team will also depend on the size of the company you’re hiring.
All in all, the development company can be classified as follows.
- Global software development companies
Global software development companies are focused on big enterprises and corporations. Thus, their price tag may impress. However, hiring a global company with local development centers is possible. In this way, the development costs will be lower. For example, global companies with delivery centers in Ukraine offer $35–$50 per hour.
- Large software development companies
The development price is also high here. On average, the hourly rate reaches $150–$300. However, large software development companies also add extra services to this price, making them attractive to many big businesses.
- Mid-size software development companies
Depending on the country of origin, the prices may vary from $20–70 per hour. Of course, some mid-size companies have even higher prices, but you will hardly find the one asking less than $20 per hour.
- Small software development companies
The rates of small development companies mainly depend on their location. Even though these companies may work worldwide, their rates still will be average for their country of origin.
- Boutique agencies
The situation is the same as with small development companies. The rate will be higher for particular projects requiring professionals of the highest levels.
How exactly does the size of the company influence the rates? The bigger the company is, the more people are working there. Global and large software development companies regularly offer better salaries and work conditions. Therefore, they have higher rates as they need to cover these expenses.
However, small software development companies and boutique agencies also have high rates in many cases. They say that reasons for that are developing a personal approach to each client and needing more time for development than big companies.
It’s always up to you to decide whether to work with a small boutique agency or a global company. Still, make sure you’ve discussed the rates and price project in advance.
Price Difference between Freelancers and Software Development Companies
In some cases, you may decide to hire a freelancer, not a development company. What are these cases? For example, you need to develop or update some easy projects.
However, cooperation with freelancers is full of risks. Among the most popular ones are the following:
- unclear conditions of cooperation
Always sign a contract or agreement with all details on cooperation including the scope of work, rates, and deadlines. Also, indicate that the code and the project are your company's property.
- the quality of work
Before you start working with a freelance developer, better check their portfolio
- NDA
Always sign an NDA contract with developers if you want to protect your sensitive data
Hiring freelancer vs. Hiring a company: Pros and cons
| Freelancer | Companies | |
|---|---|---|
|
Rates |
Lower rates |
Higher rates |
|
Quality |
Depends on the specialist. It’s important to check the work and the results of previous projects. |
Depends on the team. As a rule, companies have profiles on Clutch and other websites to check the reviews. |
|
Agreements |
Always indicate clear agreements on cooperation. If a freelancer refuses to sign an agreement, it’s better to skip this candidate. |
As a rule, companies ask to sign agreements to protect their rights. |
|
Number of employees |
For big projects, you need to hire several freelancers. Therefore, you need to find each of them. |
Working with a company, you get a team of developers. |
|
Relationship management |
You need to manage how the freelancer cooperates with other team members. |
Management within a team is the responsibility of the company you hire. |
|
Project management |
You need to hire a project manager to control all processes. |
Companies regularly have a dedicated PM to each team. |
|
|
||
Yet, the rates of freelancers seem to be more than attractive. An hourly rate for a freelance software developer will vary depending on different factors, but you can always communicate the price depending on the type of tasks you need to solve.
How to Choose the Right Offshore Software Development Vendor
As previously stated, you should not hire solely on price when choosing a country to outsource software development. When considering outsourcing costs, the quality of service and developer skills should come first. The phrase “you get what you pay for” is sometimes accurate, as a cheap option does not always equate to finding a dependable and high-quality development team.
Quality-to-Price Ratio
It is sometimes preferable to pay more than less. Often, paying a higher price gets you more experienced and talented developers who know what they’re worth.
Business Environment
Study the country’s taxation and economic systems. You must understand whether working with a company will be easier or more difficult depending on the region in which it is located.
Availability of Qualified Developers
The average rate in the IT industry is heavily influenced by supply and demand. Because there are so few specialists in the United States, companies will have to pay exorbitant fees to hire or retain those individuals.
English and Communication Skills
Communication is crucial, especially if you plan to outsource your development project. Because you cannot meet face to face, you must ensure that every detail is covered and that your team understands exactly what you want. As a result, you should look for a team with at least an intermediate level of English.
Ratings and Previous Projects
Conduct some research and evaluate the completed projects and ratings of your prospective team. Read reviews from previous customers and try to find them that aren’t on their website as they may delete negative ones. Check out LinkedIn, Glassdoor, and UpWork, where they cannot change or remove any reviews.
Softermii: The Reliable Place to Hire Developers for Your Project
It can be difficult to decide in which region or country to hire developers. Rates can vary for several reasons, and some are not always obvious. However, we highlighted a few of them throughout this article.
The cost of living in a region, tax legislation, supply and demand, and average salary range contribute to an hourly rate. Quality and experience can also sometimes be equal in price.
At Softermii, we can provide you with precisely that. Based in Ukraine and operating for over seven years, our team comprises highly educated professionals committed to their projects. Every team member has at least a B2 English level and either a bachelor's or master's degree in IT, computer science, or a related technical field. We have extensive experience and expertise in popular and specialized technologies that can propel your project to new highs. Also, we offer probably the best Ukrainian software developer rates so any company can order our services.
We believe that IT outsourcing is more than just finding labor; it is also about finding a dependable technical team and bolstering your project with professional expertise. Contact us to get to know how to hire experienced software developers and become a part of Ukraine’s ever-growing startup culture.
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