Average Hourly Rates for Offshore Development Services: Software Development Costs Guide

Average Hourly Rates for Offshore Development Services: Software Development Costs Guide

Updated – 20th October 2021

Are you wondering how much custom software development costs and what is the hourly rate of the software engineer contractor? Below, you’ll find a price guide and hourly rates comparison covering the most popular development locations and other factors.

For this research, we used open sources and our internal investigation of companies. Specifically, we referred to PayScale and Clutch. They both take into account certain country-specific details such as their time zones, programming language demand, and the average rates. There are many options for how you can hire a software development company, and a lot of time is required to do your own research before making a decision.

We prepared this guide to help you find the best option and we update it on a regular basis to provide the most relevant information about rates of companies, freelancers, and developers.

Before setting up a team, you should answer the following questions:

  • How much does it cost to develop software? 
  • How do you choose a company? 
  • Will it be safe to hire a small company, or would it be safer to have a development contract with a huge consulting firm with developers in the US?
  • What would be more profitable for your budget to hire a team in the US or hire a team offshore for half of the price? 

Start with choosing between onshore, nearshore, and offshore companies location.

Onshore Outsourcing

This alternative involves outsourcing tasks to developers from the same country. Since it doesn’t require developers to be physically present in the company, this option is often preferred when time is of the essence or when there’s a request for rare skillsets.

Pros of onshore

  •  Efficient and easy communication
  •  Ability to make the personal acquaintance

Cons of onshore

  • Identical software development hourly rates

Nearshore Outsourcing

This option implies employing developers from countries that usually are three time zones away at the most. For example, a Ukrainian company developing a project for a German company would fit these terms since these two countries are located just 3 hours by plane.

Pros of nearshore

  •  Easy communication
  •  Time zones aren’t drastic enough to present a problem

Cons of nearshore

  •  Chances for significantly cheaper rates are poor due to the countries’ close proximity

Offshore Outsourcing

This alternative presupposes cooperating with programmers from overseas or countries up to five time zones away. Apart from requiring a far lower budget due to salary diversity, offshore outsourcing helps business owners get useful insights into the preferences of consumers who belong to different cultures.

Pros of offshore

  • Noticeably smaller spending for clients

Cons of offshore

  • Varying timezones can hinder communication
  • Possible work culture and standard differences

The outsourcing provider of choice is going to vary depending on the long-term goals of the business owner. Each variety has its own perks – the first two are ideal for projects which often require physical interaction, while the third one is specialized for reduced costs.

Let’s take a look at prices for development around different countries and find countries with the best cost to a quality ratio based on reviews and prices:

Offshore Software Development Rates by Region

Offshore Software Development Rates by Country

RegionCountriesRates
Western EuropeNetherlands, UK, Belgium, France, Norway, Germany, Ireland $150–$300
Eastern EuropeUkraine, Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovakia, Belarus$25–$199
Central AsiaKazakhstan, Uzbekistan, Tajikistan$10–$59
East and South AsiaChina, Indonesia, Malaysia, Philippines, Vietnam, Japan$10–$300
North AmericaUSA, Canada$100–$350
South AmericaMexico, Panama, Brazil, Argentina$20 - $ 55
AfricaMorocco, Kenya, Nigeria, Egypt, Ethiopia $10–$99
AustraliaAustralia$100–$300

 

Offshore Rates for Software Development in Western Europe

Offshore Development Rates Western Europe

Outsourcing to Western Europe: Pros and Cons

Pros Cons
Higher level of English + knowledge of an additional language  Complicated taxation system 
Outstanding work ethic and high performance standards Prices are higher than in Eastern Europe 
The issue with time zones and traveling is reduced

Earlier we conducted research on mobile app development cost and chose a few Western European countries to reveal average hourly rate for IT services. We got respondents from the Netherlands, UK, Belgium, France, and Norway. However, not all of them appeared to have an office in the above-mentioned countries. Despite their claims to be a local software development company, some of them still have ODC in India or Africa and combine management teams from Europe and development teams from nearshore or offshore countries.

Let’s see the rates in Western Europe:

  • In Germany, companies set their engineering consulting rates at around $150–$199 per hour.
  • The United Kingdom organizations have their fees at around $200–$300+ depending on experience level. 
  • The average software development price in France is $150–$199 per hour.
  • In the Netherlands, the fees are $200–$300.
  • The price in Belgium is $300+ per hour.
  • Software development pricing in Ireland is around $200–$300.

You can hire a team of developers with a rate varying from $150 to over $300 per hour.

 

Offshore Software Development Rates in Eastern Europe

Offshore Development Rates Eastern Europe

Outsourcing to Eastern Europe: Pros and Cons

Pros Cons
Low price rates paired with the excellent quality Leaks of sensitive information occur from time to time
Working schedules can be easily synched Complex payments 
The CEE region is home to over a million highly qualified software engineers
Start-up population

Although being close geographically, Western and Eastern Europe differ a lot in terms of software development rates. The region includes such countries as Ukraine, Poland, Romania, Moldova, Estonia, Hungary, etc

So, how much does it cost to outsource software development in the region’s countries?

  • The average custom software development costs in Ukraine reach around $25–$99 per hour.
  • The rate in Bulgaria is $50–$149.
  • The custom software development pricing in the Czech Republic is around $50–$199.
  • In Hungary, the cost is $50–$99 per hour,
  • The rates in Poland are about $100–$149 on average.
  • The hourly rate in Romania is $45–$99.
  • In Slovakia, the rates are around $50–$99.
  • The rates in Belarus are around $50–$99 as well

These developing economies have already got a high level of education and noticeable contributions to IT industry, but their salaries remain relatively low. If you outsource your project to a software development company it will cost you around $25-$45 per hour. If you hire a middle/senior dedicated developer, the average figure will be between $20 – $50 per hour, depending on the skill set of a particular offshore developer.

Currently, Ukraine, Belarus, are the top outsourcing locations of this region, leaving the Czech Republic, Poland, Hungary, Romania and Baltic countries far behind based on quality to price ratio.

Western vs. Eastern Europe Offshore Software Development Rates

 

Offshore Development Rates in Central Asia

Offshore Development Rates Central Asia

Outsourcing to Central Asia: Pros and Cons

Pros Cons
Affordable rates Less experienced developers
Higher attention to one’s project due to the region’s low popularity Hard to find programmers specializing in rare technologies
The local IT market is still in the development stage

When talking about offshore outsourcing services in Central Asia, people often refer to a certain set of countries, so here is a list including local salaries:

  • The average software development hourly rate in Kazakhstan is around $25–$49.
  • In Uzbekistan, the price is around $15-$49 per hour.
  • Rates in Tajikistan are around $10-$40 per hour.

At first glance, cheap software development may look tempting, but in the long run, such a low rate for software development services result in low quality and the things standing behind it – underpaid programmers and lack of motivation. We also did research on outsourcing rates in Southeast Asia.

 

East and South Asia Software Development Rates

Offshore Development Rates East and South Asia

Outsourcing to East and South Asia: Pros and Cons

Pros Cons
10 million talent pool of developers Low speed of project development
Rates are several times lower than in other regions Communication challenges
It’s easy to find developers with any tech stack  Worse code quality compared to other regions 

And here we have a situation similar to the European one — a dramatic difference in prices. China stands firmly on its feet and ramps up the potential, so the software engineer’s hourly rate makes $50-$100. In Shanghai, an offshore developer earns up to $200 per hour. In Indonesia, Malaysia, and Vietnam, one can find the golden middle between Chinese ambitiousness and Indian cheapness. As for Japan, it’s one of the leading global tech hubs, meaning that rates in the country are high, equal to those in the US. In general, they range between $200 and $300+

So, what are the average consulting fees per hour in this region?

  • Cambodia organizations’ hourly rates are around $10–$30 per hour.
  • In Indonesia, software consulting companies charge $25–$49 per hour for their services. 
  • Malaysia’s businesses in the software development industry charge $25–$59 per hour.
  • The hourly rate in the Philippines is $20–$49.
  • In Thailand, the price is $25–$99 per hour.
  • In Vietnam, the hourly rates are <$30–$99.
  • In Japan, the average hourly rate varies between $200 and $300+.

Central vs. East Asia Outsourcing Rates

Software Development Hourly Rate in North America

Offshore Development Rates North America

Outsourcing to North America: Pros and Cons

Pros Cons
Large talent pool of vetted professionals High rates
Developers specializing in any technology Competition between companies that aim to attract skilled developers
Excellent service quality 

You might think that California inflates prices because of its status, but the thing is that the average cost of software development in the rest of the states isn’t much lower an experienced developer gets about $150 hourly, and if you want to work with an enterprise company that consults Fortune 500 and builds software for them, then the hourly rate will be $195–$800 per hour, and a cost for a custom software development project cost ranges between $500,000–$1 billion.

  • Software development consulting price in California ranges from $149 to $350 per hour.
  • In Washington, the average fees per hour are $150–$250.
  • In New York, rates vary from $150 to $300.
  • The average rate in Massachusetts ranges from $150 to $200.
  • Texas companies set their hourly rates at around $100$200.
  • In North Carolina, the average price is $150–$199.

Canada stays on the same level with the US and sometimes even outruns it. However, the market here is flooded with offshore development companies with actual addresses in Asia, so rates here can vary.

  • The average fees per hour in Toronto range from $100 to $250.
  • In Ottawa, the average contract rates reach $100$149.
  • The software contract rates in Vancouver are $100 to $250.
  • Montreal’s hourly rate is $100–$200.

 

South America Average Offshore Development Hourly Rates

Offshore Development Rates South America

Outsourcing to South America: Pros and Cons

Pros Cons
Over a million qualified IT specialists Extra taxation for foreign companies
Real-time collaboration Occasional lack of discipline and quality
Travel proximity

It’s interesting to monitor the offshore development situation in South America as this IT market is relatively new and rapidly growing. Considerable investments from neighboring countries like the US and Canada created this pool of cheap software developers. 

As we know, demand creates its own supply. However, if a rich country requires employees, they will charge higher prices because of the country’s economic capabilities.

The average cost of software development in the region stays between $20–55 per hour. The proximity of Mexico, Panama, and Brazil to the northern part of the continent makes this outsourcing destination attractive despite the rising prices. An array of companies from the US nearshore to this region.

  • Brazil companies’ hourly rates range from $20 to $50 on average.
  • In Colombia, the average consulting fees per hour are $25-$45.
  • Software development companies in Argentina charge $15-$40 per hour for their services.

Hence, the price of software development services is expected to go up in the future.

america rates

African Software Development Hourly Rate

Offshore Development Rates Africa

Outsourcing to Africa: Pros and Cons

Pros Cons
Low development rates  Service quality leaves much to be desired
Programmers specialize in popular technologies  Hard to find professionals qualified in rare programming languages 
Many specialists know English on upper-intermediate level  Periodically occurs miscommunication 

Newly discovered IT continent of Africa pleases businessmen with its affordable rates, but the local market still lacks experienced specialists due to its novelty.

  • In Nigeria, the average consulting fees per hour are $10–$49.
  • Ethiopian companies’ hourly rates vary from <$25 to $49.
  • The software development price in Egypt is $25–$50.
  • In Morocco, the average software development rates vary between $25 and $49.
  • The software development rates in Kenya range between $50 and $99.

Offshore development is cheaper on the north of the continent, with prices similar to Asia. Hourly rates for IT services in South Africa can be as high as $10–$99 per hour. Such fluctuation is caused by the severe skill shortage the region is experiencing at the moment.

Many French companies see this region as favorable and hire developers from French-speaking countries; they view it as a possibility for fewer problems in communication.

 

Offshore Software Development Rates in Australia

Offshore Development Rates Australia

Outsourcing to Australia: Pros and Cons

Pros Cons
Advanced talent pool Rates are equal to those in North America
Vetted developers  Time zones’ differences 
Progressive local IT market 

The same happens in Australia. That’s the common problem of all islands – on the one hand, isolation and remoteness protect the state from wars, but on the other hand, it prevents the country from cultural exchanges and cooperation with neighbor labor markets. In the era of online, we don’t see it as a big issue, it’s more about how teams cooperate across different time-zones.

The digital era made the latter criterion vaguer as it allows more possibilities for remote work. If we take a look at the Australian Skilled Occupation List 2017-2018, we’ll see that the country lacks software engineers, web developers, QA engineers (software testers), and different types of programmers.

Are you wondering about the cost of software development in Australia? Take a look at the following numbers:

  • In Melbourne, companies’ hourly rates are around $100–$199
  • In Sydney,  fees per hour vary from $100 to $300

So, it goes without saying that the local specialists are expensive. The minimal hourly rate is $100$150, and development companies charge $200–$300 per hour for a project-based development.

 

Other Factors That Affect Software Development Rates

Although IT outsourcing has become a regular practice across the globe, the connection between rate fluctuations and the respective location is still somewhat of a mystery to business owners.

However, our experience in the industry, along with statistical analysis, helped us determine certain factors which have an influence on the offshore development rates, such as:

  • high living standards make the US and Western Europe the most expensive software outsourcing regions;
  • the cost rises as the tech stack’s complexity, depth, and required skill level increase;
  • the bigger the company’s history and reputation are, the more they will charge;
  • a lower number of employees means fewer salaries to pay out and fewer additional expenses;
  • your readiness to hire a company or work with a freelance engineer significantly affects the price.

Ultimately, a software engineer rate depends on all the factors above and personal matters, including work experience, current tech market trends, and the level of demand.

 

Company Size Factor

Custom software development companies can be classified according to their size and the prices that they charge. We researched such catalogs as Clutch, GoodFirms, SoftwareWorld, and ThinkMobile. As a result, we noticed a categorization that refers to consulting and development companies that are based in the US and Europe, and they’re as follows:

Global Software Development Companies

These top-of-the-line consultancies include both developers and consultants. The number of their employees reaches thousands, and they have development centers around the world.

According to Clutch, companies with developers in the US/Europe have high project costs, implying that their services are most commonly used by big corporate companies with big budgets.

If you hire such a company with local development centers in Ukraine, the overall rate can be lower and reach $35–$50 per hour for a developer’s work.

They usually position themselves as companies that work with Fortune 500 companies and fast-growing organizations/startups.

global software development companies

However, large prices don’t necessarily reflect their results. This is mainly due to the “all-in” methods with which these companies approach their projects.

Besides being highly volatile, this development method requires a lot of time and money while carrying a whole lot of risk due to the inability to take user feedback into account.

Large Software Development Consulting

These companies provide development services with the average hourly rates between $150–$300 and are the most popular segment on Clutch reviews site

Their services are usually offered to relatively large businesses with large budgets. Such companies typically have a wide range of technologies and developers on a bench to start your project immediately. 

If you are located in the United States or Western Europe and want to hire local software development consultants, you will likely pay these rates. However, if you look at offshore or nearshore software development firms, their rates will be lower, and depending on the country, they might be around $20–70 per hour.

The workforce usually consists of anywhere from one hundred up to one thousand highly talented developers located in one country, but sometimes they have development centers in different cities.

Small Software Development Company

These mid-tier companies are ideal for business owners looking to save money while getting a solid product from companies with dedicated experience and expertise.

The development team’s size ranges between $10–$100, with average hourly compensations around $125–$200 for the US and Western Europe teams. The project’s size starts as low as $50,000 and goes up to $5,000,000.

Business owners are highly encouraged to do research before engaging with a mid-tier company, but they are usually able to provide a good balance between price and quality.

Small-Market Companies

These are young companies with up to 50 employees working there. They aren’t engaged in a large number of projects, working with few customers or products. As a rule, they are focused on something specific, like mobile apps development, a certain programming language, or UI/UX design; they have narrow areas of specialization. Most often, such companies cooperate with local businesses or small companies. 

Boutique Agencies

No more than 10 developers run these tiny agencies. Depending on their experience, they’re able to complete projects meant for local startups, small, and medium-sized businesses, which are usually restricted to a single region. Sometimes, they complete projects for big companies or enterprises because they have exceptional experience in their industry or technology.

The hourly development rates can be anywhere between $75–$300 depending on the location of the agency and how they position themselves, while their projects’ base price usually starts at $10,000.

In Ukraine, we have such companies that provide a very defined type of development — web development or design or Ruby-focused company.

 

Price Difference for Freelancer vs Software Development Company

When it comes to turning an idea into reality, business owners usually consider various options, depending on their requirements and budgets. Most often, they are choosing between hiring freelancers or opting for a company. Let’s get things clear and see the advantages offered by each variant. 

A freelance software engineer is a self-employed programmer who usually works with several clients on different projects and has a home office. There are several advantages for the employers when working with freelancers, including:

  • Affordable prices. You pay only for the work done, not for bonuses, health insurance, or the workplace. The average freelance web developer hourly rate is $75, but you can save large sums because there are no additional expenses.

 

  • Expertise in the area. Usually, freelancers specialize in a certain sphere of development, so if a professional’s charges are higher than average, it’s usually a sign that he/she is experienced enough with working on similar projects.

 

  • Convenience and flexibility. Freelancers are great at doing their tasks when it comes to small projects, so in case there is an urgent need to finish something within the shortest terms, such employees would fit perfectly.  

 

Speaking of a software development company, it implies offering a set of full-cycle services, from planning to product launching. Such a hiring model has a handful of benefits, namely:

  • Perfect for complicated tasks and large projects. It’s much easier to work with an established team of developers, designers, QAs, and other professional staff members than trying to find each of them individually. A team spirit positively affects the project’s outcomes and improves the company’s performance on the market. 

 

  • Diversity. A team usually consists of people who have previously worked in other companies and on various projects, so they gained unique skills and experiences. Each employee has one’s own view on the tasks, and it helps create products that will consider different users’ needs. 

 

  • Staying up to date. If you want to take leading positions among the competitors, you need to offer unique products and services that will follow the newest software development trends. It’s rather challenging for one freelancer to do so, but it’s a piece of cake for a team of experienced developers.

Surely, each project is unique, and the choice comes down to what you expect to see once the product is deployed. Although this list includes only the main benefits, there are many additional ones that might influence your final decision regarding the most suitable hiring opportunity. 

 

How to Choose Offshore Software Development Company

Every project is unique in its own way, and the aspects which it requires are going to determine the best course of action for you. From your language to the target market, there are a lot of tiny variables that come into play here. Since they aren’t always in plain view, you’ll usually have to do some digging.

Average Rates

Don’t settle for the first offshore development center that seems to fit your needs. Compare each company and remember that there’s a good reason why almost 60% of business owners choose to outsource.

Security & Privacy

The biggest security threat of each business is an important information leak. These are commonly caused by misunderstandings between the businesses and certain rules set in place. Before settling for a provider, make sure that you completely understand every little detail.

Market Saturation

The higher the number of developers for a specific language, the more competitive the prices will be. Besides that, you won’t have to spend countless hours trying to find a perfect fit since there’s so many of them. Ideally, you should pick the location where the popularity of the language which you require is on the rise.

While this is not that difficult for some of the current booming technologies, the rarer your tech stack is the more you’ll have to pay. In cases like these, it’s quite beneficial to do a little bit of additional digging in order to find the most optimal solution.

Work Culture Similarities

In order to achieve a smooth workflow, the mentality of the developers has to be similar to yours. Due to the cultural differences, you might struggle in this area at the start. It’s good to trust your initial instincts since they’re most commonly going to be correct.

Other business owners who have experience in working with a certain country can be a good source of information. Take note of their thoughts – what they liked, what wasn’t as good and how your project would fit into the bigger picture. Furthermore, you can contact the businesses in that country and ask for some details that interest you – but after all, there’s no replacement for the first-hand experience.

Look Around For References

It’s always best to learn from the mistakes of others in order to know how to avoid them. For example, if a company similar to yours takes advantage of outsourcing, they may be doing business with the same country you’re considering. You can then modify their advice to best fit your overall budget, needs, and deadlines.

If you want to set up an offshore/nearshore remote team contact us to check developers rates at Qubit Labs!

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Svitlana Rumyantseva
Project Manager
Svitlana is a ex Project Manager at Qubit Labs with legal education and PhD degree in political science. She has experience in managing in-house and offshore/nearshore software development teams including freelancers. She is sure that smooth communication and motivation is the basis of efficient teamwork and successful projects. Svitlana is passionate about networking, achieving great results and acquiring new knowledge.