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Cost of Hiring Developers in the US, the UK, EU, Latin America [+Comparison with Ukraine]

18 August 2021 • 12 min read
Cost of Hiring Developers in the US, the UK, EU, Latin America [+Comparison with Ukraine]
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Slava Vaniukov
Written by Slava Vaniukov
Co-Founder and CEO at Softermii
Experienced engineers for enhancing your team
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With modern technology, you are no longer limited to hiring locally or conducting in-house recruitment. Because the United States has a software developer talent shortage, many American companies look for workers outside the country. By outsourcing software development to an overseas programming team, you will not only gain access to a large talent pool but will also save money.

Hiring a remote development team can also save you time and money by avoiding time-consuming HR and administrative processes like recruiting and onboarding. Furthermore, you will gain additional professional perspectives because you will be hiring an entire team rather than a single individual. Offshore software development teams include more than just programmers. Business analysts, marketing specialists, managers, architects, and others are also among them. As a result, your project will be worked on by a team of various professionals.

However, the average cost of software development services varies greatly by country. It can be difficult to know where to outsource your project and why you should choose one country over another.

Executive Summary

Cost is influenced by a variety of factors. It can include the team’s size, level of experience and reputation, and technology stack, but it is more important to consider the outsourcing destination. The stability of a country’s economy, currency, and the local market situation will all significantly impact the hourly rate, so there are numerous variables to consider when deciding where to outsource your work. It can be extremely confusing and intimidating for new businesses, so we have created this guide on software development hourly rates by region to help make the process a little easier.

This article will discuss how much software development services cost, the average cost of software development services, software development rates by country, how to select the right offshore vendor, and why Ukraine is among one of the best countries to outsource software development.

The Average Cost Of Software Development Services

Software Development rates by region

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. For example, if you live in the United States, you should exchange all Euros for USD.

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 be higher as well. It’s a more objective factor because residents of different countries can buy lower or more significant amount of products and services with the same amount of money.

Taxation Systems

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 result in wage increases and intense competition for available resources. It is especially noticeable in the United States, which is experiencing a shortage of IT experts.

Average Hourly Rates By Region

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

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According to Indeed and Glassdoor

Software Development Hourly Rates By Region

The pricing for offshore development services is broken down by region in the sections below.

The Cost Of Hiring Developers In The US

The cost of software development services 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 on average, it is 29.7%

Although it is more expensive, there are numerous advantages to hiring in the United States.

You will be dealing with developers who speak fluent English, for starters, 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.

Furthermore, the United States consistently ranks among the top charts of the world’s digitally competitive countries. Big tech behemoths like Apple, Facebook, and Google originated in the United States, and the majority of the region’s top-rated digital companies are based there, so some of the best developers can be found within the country.

It is, however, one of the most expensive IT outsourcing destinations due to the peculiarities of its economy, national market, and taxation systems. Furthermore, because tech giants have a monopoly on the large talent pool of software engineers, there is frequently a scarcity of senior developers with several years of experience and the ability to solve complex problems. As a result, even these companies resort to outsourcing.

The following are the average hourly rates for software developers 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

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Average hourly rates in the United States, Indeed

The Cost Of Hiring Developers 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. Furthermore, national governments have begun to make significant investments in technology education and IT infrastructures to grow the industry.

The average hourly rate for a software developer can range between $4 and $9 per hour, which is 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 political climate in Latin America can be a barrier for American businesses, particularly as some governments have become anti-American and anti-business. The region has also implemented several tax reforms, which have made each country's tax regulations highly complex and challenging to understand. Companies and businesses have also reported that low project performances and delivery delays are expected, which can have a negative impact on the overall development process.

You can still hire and outsource software development to Latin American developers, but be cautious if the price is your only consideration. Perform your due diligence and thoroughly vet each company, and you will be fine.

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

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Average hourly rates in Latin America, Glassdoor

The Cost Of Hiring Developers In Western Europe

Western Europe is also one of the most expensive software development markets. This region is nearly as expensive as the United States due to its high cost of the 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.

The advantages, on the other hand, include accessible communication as nearly all developers speak English fluently. It is unlikely that you will encounter any communication or cultural issues. You will also be in similar time zones and have access to a large market of dependable and qualified offshore companies.

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

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Average hourly rates in the European Union, Glassdoor

The Cost Of Hiring Developers 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. Several countries have also been named the best IT outsourcing destinations for many years. Many companies have global offices in the region that have consistently made it to the top 100 of the Global Outsourcing list. Apple, Google, IBM, and Microsoft are some of the few countries that have opened multiple branches in this region.

The hourly rate 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. Its IT industry is expanding rapidly and steadily, and it is the leader in IT outsourcing in Eastern Europe. More information about the costs and benefits of hiring developers in Ukraine can be found in the next section.

One of the primary advantages of outsourcing software development to this region is that Eastern European developers generally have a strong command of the English language. Furthermore, these developers are frequently very experienced in working with global technology companies, making them familiar with Western value sets. There is little chance of cultural values clashing, and there is a massive talent pool to choose from.

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

Belarus

$13.63

Czech Republic

$16.81

Hungary

$12.18

Poland

$14.20

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The Cost Of Hiring Developers In Ukraine

Ukraine has risen to the top of the IT outsourcing world, not just in Eastern Europe. It received $510 million in investments in the Ukrainian IT industry in 2019, and its market has grown to exceed 15% of the country’s GDP in the same year. The talent pool is also highly experienced and extensive, with over 2,000 IT start-up companies originating in the country.

Ukrainian developers charge between $11 to $16 per hour on average. For a middle developer, the annual salary of a junior developer can range from $40k to $50k. It is incredibly cost-effective, and while its outsourcing rates are not as low as in some Latin American countries, it comes with numerous advantages.

Ukraine is the world’s fourth-largest supplier of tech talent, trailing only behind the United States, Russia, and India. It has frequently been named the best outsourcing destination, with Outsourcing journal ranking it first, Gartner ranking it in the top twenty, and PwC ranking it in the top 25. In 2019, the country’s IT service exports increased by 25% and now account for 16% of total exports, bringing in a total of $15.23 billion to the economy. Its exports grew and exceeded $5 billion by 2020. Its industry is also expanding at a rate of 26% per year, and its GDP is growing at a rate of about 3.5%.

Furthermore, approximately 85% of Ukrainian tech professionals speak English at an intermediate level, removing the concern of language barriers. The majority of IT and technical specialists have also completed higher education at one of the country’s 402 universities and colleges, many of which specialize in technology. As a result of the country ranking as one of the top ten for engineering, the local talent pool is brimming with well-educated and talented developers.

90% of Ukrainian developers speak English

Global giants such as Apple, Microsoft, Samsung, and Skype have recognized these enticing advantages and established operations in the country. It has over 110 R&D centers for multinational tech companies and has aided in creating notable start-ups such as Grammarly, GitLab, CleanMyMac, and Readdle. Furthermore, the country was named in the World Bank’s list of the top 70 countries for ease of doing business in 2019.

Ukraine provides an incredible cost-benefit opportunity, allowing you to hire highly qualified specialists with good English skills for a fraction of the cost in the United States and Western Europe. With low corporate taxes and expenses, you can get the most value for your money and be confident in finding committed and experienced employees in the freelance market.

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.

When looking for the best offshore development vendor, keep the following points in mind:

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. The hourly cost in Ukraine, for example, may be higher than in Latin America. Still, the results are comparable to those obtained in the much more expensive United States.

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. For example, because the United States has an extremely high cost of living and taxation system, billing American developers will be far more expensive than hiring developers from other countries.

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 either hire or retain those individuals. However, in Ukraine, there are many experienced and talented developers who are always up for a new project. And that’s what keeps the overall cost low.

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 which region or country to hire developers from. Rates can vary for a variety of reasons, some of which are not always obvious. However, we were able to highlight 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.For example, Latin America's low prices may appear appealing, but you may receive lower-quality services and projects. On the other hand, you will pay a higher fee for developers in the United States, but you are more likely to receive high-quality results.

However, you do not have to pay exorbitant prices for a good product. Ukraine has demonstrated this by providing highly experienced and talented developers who consistently deliver successful custom projects. Ukraine has earned such a stellar reputation for its low-cost service contracts and highly qualified labor pool that it has become the world leader in outsourced software development work. You can get results that are just as good, if not better, for a fraction of the price in America.

At Softermii, we can provide you with precisely that. Based in Ukraine and operating for over seven years, our team comprises highly educated professionals who are 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.

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. While you concentrate on your business objectives, we will handle all the software development.

Contact us to speak to a consultant and become a part of Ukraine’s ever-growing start-up culture. You can edit this demo text!

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