Cost of offshore software development for 2020
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We are a software development consultancy based out of Bangladesh. One of the big reasons companies from all over the world approach us for software projects is the relatively lower cost of production in countries like Bangladesh. The risk of getting your software made by an external team located literally thousands of miles from you is always big. But sometimes your budget makes your options limited and selecting a good external software consultancy can keep the cost in control without taking too much of a risk.
A common questions we get asked how do our costs compare with the rest of the world. This is always very hard to answer because even within a single country the cost of software development varies by a considerable margin. Take US for example, even when you take a large sample and average out you get a variation from $20 - $80 for the same experience and skill set.
However knowing a ball park number always helps and makes your search for finding the right software consultancy easier. I wanted to share the result of our own surveys and googling today, this is a ball park chart we keep to share with our would be customers and also for ourselves too make sure we offer competitive rates to our customers.
Here goes, range of costs per hour (in USD) for 2020 based on regions where there are considerable software development consultancies. The costs are based on “blended” teams in mainstream technologies such as .NET/Python/Javascript development, etc.
Eastern Europe: $25 - $55
Custom software development rates in Eastern Europe vary by a very large margin between countries. For example rates in Ukraine are significantly lower compared to Poland.
The following chart shows the highest hourly rates in our data country by country:
Latin America: $35 - $50
Latin America is the fastest growing (CAGR of 5.84% over the period 2015-2019) software development destination currently with Argentina, Brazil, Colombia, and Chile leading the way. With time zones matching all major cities in North America the industry has a huge advantage over other offshoring destination when it comes to software projects originating in US and Canada.
We found the hourly costs to be on the relatively higher side during our research, the following shows the highest rates for standard tech stacks from only the large providers.
Africa: $15 - $35
Africa is emerging as a big offshore software destination with a young population set to double by 2050. In GitHub’sState of the Octoverse report, developers from Africa created 40% more open source repositories over the past year— bigger growth rate than any other continent. Morocco is leading the in this stats, but others are catching up. The following shows our data for highest hourly rates:
Asia: $12 - $50
Asia has a lead on the number of developers and companies that work on custom software development. India obviously is the clear leader but many other countries such as Bangladesh, Vietnam, Cambodia, Pakistan are also become major providers of offshore development support. Given the large number and variation in skills and maturity the very large variation in hourly pricing is expected.
The following shows the highest hourly rates in our data for countries in Asia:
Conclusion
There is a large number of offshore software development companies available to any company looking for new software partner. The most important factor for a successful software project at the end of the day is to find a good software partner. Software development rates will vary over regions, this is to be expected. But more interesting metric to follow is how the rates and skills change over time. An example is Bangladesh, which used to have very low rates about a decade ago but was also lacking in skills and experience. As the industry matured the resource on offer become more skilled and experienced and obviously that led to much better quality. Better quality leads to a growth in the industry as more projects starts feeding into the market. This obviously leads eventually to a rise in cost as the demand for the skill increases. Finding the optimal balance of cost vs. quality that fits a software project’s budget is the key.
