When it comes to hiring offshore developers, budget is usually the key restraint and, naturally, software development prices remain a topic of a broad interest. So how much does software development cost? It’s not a secret that the cost of software development depends greatly on the geographical area where engineers are located. In other words, the US team may charge up to 10-15 times more than, let’s say, Indian developers for the same work.
But no one wants to compromise on the quality of a final result even if the costs are really low, and, of course, there are other factors which have to be considered when choosing offshore programmers. So, when we speak about software development pricing, it’s more about a price/quality ratio than about rates alone.
To help you make a wise choice, we researched software development rates in Europe, Asia and the USA and analyzed other crucial aspects that may influence the success of a project. Here’s what we found out.
Developer Cost Per Hour: General Overview
Let’s start with the USA which is the most expensive country in terms of average cost of software development. Hourly rates here constitute about $100-200, but there are also a so-called “premium” players providing ICT services to governments and Fortune 500 companies with rates of $250-850 per hour. Software development cost could also be lower than average (i.e. with hourly rates of $50-75) if you decide to hire a beginner freelancer.
Asia, to the contrary, is famous for the most budget-friendly cost for software development. This region has a vast labor pool and custom software development rates vary between $15 and $40 per hour. Yet, you can easily hire a software engineer for as few as $8-10 per hour, for instance in Pakistan, Nepal, India.
In general, Europe is a golden mean with medium developer cost. Hourly rates here constitute $50-100 on average. However, if you decide to look for people for your project in this region, you should be aware that the cost to develop software would depend on whether you choose Western European or Eastern European country. In the former case (e.g. the UK, the Netherlands, Norway etc.), the price could be close to the one you may find in the USA ($100-200 per hour), while software development hourly rates in Eastern Europe (e.g. Ukraine, Poland, Belarus) are much lower and typically range between $25 and $50.
Beyond Rates And Prices: Other Factors To Consider
As already mentioned, although developer cost is a crucial factor when looking for software engineers, it’s not the only one you should consider if you want to avoid a “high cost for a poor quality” trap. Other things you should take into account before signing a contract include time zone, level of tech competency, English skills, work approach and mentality.
Let’s take a closer look at each of them.
Time zone. Although we are talking about hiring offshore developers who will work remotely, a time zone is an important aspect of to consider. It’s hard to argue that the possibility to communicate with the team on a regular basis is a foundation of the success of every project and software development isn’t an exception. Ideally, the difference between your time zone and the time zone where software engineers are located should not constitute more than 7-10 hours. Otherwise, it would be quite challenging to establish the effective communication within the project.
Competency and work approach. It goes without saying that the level of developers’ expertise is a key factor defining whether your investment in a project will pay off in the end. If you want to receive a product that will satisfy your needs, you have to search for tech professionals who are able to see a big picture rather than just blindly follow your instructions. Hence, you need to look at the overall educational and professional environment in a region or country to understand what level of expertise you can expect from developers you are going to hire.
English skills. As with time zones, a low level of English may impede the effective communication between you and a development team. This would likely lead to misunderstandings that could affect the quality of a final product. So, if you don’t want to waste your money on the product that won’t work, you need to search for professionals who have a strong command of English.
Mentality. Cultural differences also play an important role in determining whether a project would end up successfully. You will unlikely receive the results you expect to receive if your team has a poor work ethic, cannot (and what’s even worse – don’t want to) think from your perspective and in general is not collaborative.
A Price/Quality Ratio for Each Region
We already mentioned that, when talking about a cost of software development, the question should be What quality will I receive for this price? rather than How much does it cost to develop software? So let’s look at a price/quality ratio for each region.
Developers from the USA are the most convenient in terms of time zone–most clients are local and the time difference with Europe is just 6-7 hours. In addition, being the country of Silicon Valley, the USA has a high level of tech education and a strong IT community which means that you may find top talents there.
Hence, if you decide to hire the US team, the quality of a product you’ll receive in a result, will probably be of the highest level. But the downside is that custom software development costs will be extremely high as well. So if you don’t want to overpay, we recommend you to search if there are more affordable alternatives which could give you the same level of quality before opting for the US engineers.
Significant distance between time zones is one of the major downsides when working with developers from Asia. For example, the time difference between the USA and India constitutes 10-12 hours that means that the response time is about 24-48 hours. This could lead to a situation when the development of a simple project would take ages.
Also, a lot of developers from Asia have a low level of English proficiency. And the lack of a clear understanding of what needs to be done could become a devastating factor for the whole project.
Speaking about the work approach, Asian countries cannot boast the most favorable work conditions and this is usually reflected in the developers’ attitude about work. And, as you may have already assumed from the low prices, the level of tech competency isn’t the highest one either. Most common complaint clients have after working with Asian developers is that they don’t work independently meaning that they just follow the client’s instructions without analyzing if the solutions will work in practice.
It’s also worth mentioning that after wasting money on the void solutions developed by Asian teams, some clients then have to hire developers from other regions to resolve the same tech challenges. So don’t let inexpensive prices deceive you, they usually come at the cost of a low quality.
As mentioned, the time difference between the USA and Europe constitute 6-7 hours. This mitigates a risk of miscommunication between a client and a development team. In addition, European software engineers usually possess good English language skills and the cultural differences are barely noticeable (if any).
Thanks to a favorable educational environment, the developers’ tech competency is also on a quite high level. Besides, the IT community existing in Europe is not inferior to the one you may find in the USA and, on the top of it, European countries host a lot of networking events, conferences and hackathons gathering top talents of the industry.
Surprisingly enough, but despite the fact that the rates are higher in Western Europe, the above equally applies to the countries from Eastern Europe.
Here’s is a table showing the price/quality ratio for each region. As you may see, we added some additional criteria to the above factors, but they are self-explanatory and should not require detailed explanations.
Please note that the above conclusions are average for the region and are based on our research and practical experience. Separate cases may differ from these results.
Your Best Choice for Outsource
Ukraine is one of the most popular outsourcing destinations and there are specific reasons for that. We even have a separate blog post about the main advantages of Ukrainian developers. Here is its short summary outlining key aspects which make Ukraine stand out from other countries of offshore software development:
Affordable prices. Out of all countries in Eastern Europe, hourly rates for software development in Ukraine are among the lowest.
Strong tech education. Ukraine has a reputation for strong tech education. Almost 80% of Ukrainian engineers hold a bachelor degree and the QS World University Rankings listed two Ukrainian technical universities (Kyiv and Kharkiv) among the best institution of higher education in the world.
Competency. Ukrainian developers often know multiple programming languages and are familiar with the newest technologies that allow them to provide top-notch services. In addition, there is a long-lasting demand for web services in Ukraine, so the expertise of Ukrainian engineers is considerable while the web application development cost is quite modest. The IT Community is also broad and competitive that creates a suitable environment for the professional growth of each developer.
Work approach. Client orientation is an important principle for most Ukrainian engineers. So if you decide to hire software development team from Ukraine, they’ll likely take the initiative, do a code review and examine whether your idea will bring the expected results before getting their hands dirty with the actual coding.
Large labor pool. There are more than 50k software developers in Ukraine and it’s expected that the number will hit the 200,000 mark by 2020.
Western-oriented mind. Cultural differences between Ukraine and the USA and Western Europe are so insignificant that you’ll barely notice them. Ukrainian developers always take their work seriously but do not forget about a healthy sense of humor.
Fast-growing industry. The IT industry is growing rapidly and it’s the only industry in Ukraine that is not affected by political and economic fluctuation. Ukraine is sometimes referred to as the second Silicon Valley meaning that you can get the US quality of services here.
When it comes to software development costing, the price/quality ratio is more important than the developers’ rates. There are many factors influencing the quality of a final product and each outsourcing destination has its advantages and downsides. If you don’t want to overpay (the US case) or receive a solution that doesn’t work in practice (the Asian case), a development team from Eastern Europe is your best choice. Ukraine stands out from other countries in Eastern Europe in terms of offshore development as the prices are more than affordable and the quality of work is superior.