How Much Does It Cost To Outsource Software Development?

The Earth revolves around the Sun. We all agree on that, right? Right

Metaphorically though, it revolves around money. Do you copy? Yes, you do :D

That is especially true when it comes to ‘businesses’. Most business decisions are heavily influenced by finances, from where to hire to which untapped market to tap next - so on and so forth. But of course, whether the business itself succeeds or fails is precisely measured by market capitalization. So once again — by money.

Recently, rising software production costs have become an absolute enemy of businesses struggling in the post-covid era. To give an idea, the average cost of setting up an in-house team starts from $11000 to somewhat around $32,300.

Now obviously if you are starting fresh, you would rather spend that amount of money on yourself instead of setting up an office, and that's completely understandable pal. Let’s figure out why?

Recommended: Secrets to Achieve a Fault-proof Software Development Process

Why Hiring In-House Teams is Questionable?

Only in 2019, Information Technology (IT) was capped at around $66.5 billion globally. In-house teams are considered convenient to some extent because the process of “getting things done” seems rather quick, but is it actually the thing?

The process of hiring an in-house team is not only rigorous but is also extremely tedious and limits your options. In case you are going for an in-house team you will try to get the most out of what is available and to be frank there is not going to be much available. It will pretty much look like a boxing day, and to further support my statement, let’s see why hiring in-house teams is daunting:

• In-house recruitment demands a high budget
• Projects may face interruptions due to the unavailability of skilled employees
• Lower retention rates can lead to your project falling behind

The Modern Solution: Software Development Outsourcing

We are all aware of the “modern solution,” but very few want to talk about it. That solution is outsourcing your development. It is estimated that around 300,000 positions are outsourced annually.

Before we proceed to a more detailed dialogue about outsourcing. Below are a few stats for boosting your confidence in outsourcing:

Why rely on bits of outsourcing when you can verily master it? Let’s begin!

Understanding Software Development Outsourcing

First things first, once you outsource a project, only the factions of it are provided to 3rd parties and not the entire project. But if you want to outsource your entire project, you can do that as well – it all depends on the level of authority or control you provide to your vendor in the outsourced software development process.

Outsourcing Comes with Many Blessings

Started to feel confident about outsourcing your project yet? No? How about this: nearly 60% of outsourcing is done in the IT sector. Most of the IT sector is saving huge amounts on outsourcing their resources. So in regard to outsourcing, the future is bright as the industry is making slow but steady progress.

Outsourcing comes with many blessings. The biggest, or one of the biggest in this, is the ability to tap into the best skill set irrespective of region, time, or other binding factors. This has allowed the IT industry to grow many folds over the past couple of years.

However, the implementation of outsourcing is something that many business entities are still not confident about as they don’t trust the cloud system. But right now, we are on a mission to dissect your hesitations towards outsourcing development and outsourcing in general.

In-House Development V/S Outsourcing

The pertinent argument is valid, the question of privacy cannot be ignored, but everything becomes secondary for three reasons mainly.

1. Pest control is real
2. it's all about money
3. In-house is all talk and no show

Pest Control is Real

Yes, it is as real as a digital currency and as efficient as blockchain. Many cloud networks are undoubtedly volatile and prone to privacy breaches. However, on the contrary, there are many spaces that are not only secured but are constantly monitoring behavior.

No, we are not talking about cats. We are talking about security teams that make sure that your business and customer databases are not harmed by bugs or external hacks. Thus making outsourcing worth a great deal of money.

It is All About Money

Here are the top reasons for you to believe and commit to outsourcing: cost-effective and result-oriented. Saving your costs of production is a practice that every business owner likes to dwell in.

Similarly, you cut down major employee costs with outsourcing, which is otherwise considered another important part that adds to the overall production cost. Effective measures involve cutting, doing, or reducing the cost of production. Trust me, this is not a farcical claim!

Other than cost-cutting, outsourcing allows you to:

• Focus on your core business operations
• Increase business efficiency
• Save dollars otherwise spent on internal infrastructure
• Access innovation, and thought leadership
• Adapts to a variable capacity
• Get cracking with your time to market

So easily determine the visible signs and make an informed decision rather than an impulsive one. Yes, I am talking to you, please calm down!

In-house is All Talk and No Show

The in-house appearances of teams might seem very good for your LinkedIn page, and in all honesty, it does look really good. I mean hiring a group of dedicated individuals who eat, sleep, and repeat your product till a public-ready delivery is made while ending the burnout.

A well-trained in-house project team is nothing less than a utopia in itself and you can earn it through trust. However, the issues with in-house are not dedicated individuals rather it is unavailability or the disability to have the best possible person for the job.

These teams limit your approach and you have to improvise with available tools and resources while maintaining a complex flow chart and hierarchy with team leads, and project coordinators. As a result, it is not just the team that suffers in the process but the entire project as well.

So as much as you would like to house 200 finest individuals in the market, you can and will not escape the underlying consequences. The cost of production is now added to the cost of resources which is further counted into the cost of housing.

Basically, your in-house resource is costing you at least 2 times more than what an outsourced resource will cost. Something to ponder upon while we get back to the real topic at hand.

Where to Outsource Software Development from? - A Little Knowledge Trivia

Here is a little knowledge trivia for you. India is still the king of outsourced tech resources in the world. This trivia comes right in time, as we are about to embark on a worldwide journey of finding out what are the different rates for outsourcing region-wise. Nope, the last statement is not metaphorical, we are actually talking about every region.

We already have established India being a hub. But to simply answer your question about where to outsource software development from, the rest of the regions also provide particular resources and skill sets when it comes to outsourcing.

Cost to Outsource Software Development

EUROPE and the UK

The first stop we are going to take is the European region and yes I have mentioned the UK separately, for obvious reasons (we talking facts only ;)).

Ukraine

Ukraine is a strong IT region that comprises several tech giants. It has a fairly large number of developers to an estimated guess of around 200,000. However, that seldom impacts the wages of the resources there. On average, this is how an outsourced resource will cost you in Ukraine.

• Junior – $18-25
• Mid – $30-45
• Senior - $50+

Poland

Now onto the neighbors, Polish people have a clear knack for software development. According to an estimate, 1 in every 10 polish is a software developer (which accounts for nearly 25% of the entire developer population).

It has a high stake in the globally booming software industry. Since the country actually eats, breathes, and sleeps software development, the average hourly wages are obviously higher than what they were in Ukraine.

• Junior – $20-27
• Mid – $35-50
• Senior – $65+

Romania

As compared to the other two, Romania has the most number of developers, with clutch.io featuring over 300 development houses. So let's take a look at their hourly rates.

• Junior – $15-23
• Mid – $23-30
• Senior – $45+

Now let's move to a warmer region in Asia.

ASIA

India

The ratio of software developers is dwindling in millions and is reported to be around 5.8 million. Currently, India is the head of the IT sector. I mean 30% of the Fortune 500 companies have Indians as their CEOs such as Sundar Pichai from Alphabet or Satya Nadella from Microsoft - which is a big deal for India itself. Speaking of, as the market is huge, one cannot find the best developer due to the sheer size of the industry that they have.

• Junior – $15-20
• Mid – $25-40
• Senior – $50+

Indonesia

Following the footsteps of India Github reports, Indonesia is part of the top 10 IT contributors. It also houses some of the top tech universities such as the University of Indonesia or Institut Teknologi Bandung which are highly reputed for breeding futuristic developers. The developer marketplace offers different rates from region to region, however, Indonesia costs you on average:

• Junior – $10-18
• Mid – $20-30
• Senior – $35+

Pakistan

Pakistan is yet another visible destination on the rise for software outsourcing. According to studies, Pakistan’s export of Information Technology and IT-enabled services touched a whopping $1.9 billion during the FY 2020-21.

This is pretty evident in the fact that Pakistan's IT industry is one of the fastest-growing industries in the world. Moreso, Pakistan houses over 2500+ companies, with 48,000+ employees who are helping global businesses meet all their IT needs in the best of ways. Therefore, you can easily outsource software development at market-competitive rates.

• Junior - $15 - 35
• Mid - $40 - 70
• Senior - $100 - 200+

Singapore

Singapore has a reputation for providing everything - wealth, location, and a business-friendly reputation. Plus they have made and attracted some notable contributions to the information technology industry. The ICT sector according to their government is providing employment to around 200,000 people, how about that!

• Junior – $20-25
• Mid – $35-50
• Senior – $55+

The USA

The USA is a top-ranked county when it comes to digital innovation and housing software development companies. I mean Americans literally own silicon valley.

The average rate of outsourcing a resource in the US is around $100-450 owing to the project, its complexity, and its requirements. There are no specific brackets for it but this is something they will charge you for outsourcing.

CANADA

The outsourcing cost in Canada is lower compared to the States. But Canada is still considered one of the most favored regions to outsource software development services.

Most importantly because of the same time zones, language, and similar culture. Sounds perfect. Right? The average rate of outsourcing a resource starts from $30 and ends at $160 or more in some cases - the average cost is around $60/hour.

How to Choose the Right Destination to Outsource Software Development?

They say it right, choosing the right region and the right software development outsourcing partner are some of the determining factors of the company’s long-term success. So here’s how to choose the prime outsourcing destination for your next project.

Take Your Sweet Time

It's not just about getting the job done, in fact, it is about long-term commitment and building relationships that last. So take your sweet time. Do not rush the decision, because your one ‘wrong’ decision can make or break your business venture.

Study Their Data Protection Regulations

The security and privacy of confidential data are everything! Therefore, it is important to check the country's data protection regulations, and network security policies to which you wish to outsource. Choose a region with stringent policies in place. This is also an important factor to consider in case you set up an offshore development center.

Skill-Set is Everything

Evaluate the skill set of every country under scrutiny. Looking for IT-related services? India, Pakistan, and Canada would be your best bet. Looking to outsource engineering or manufacturing, China is your go-to country. Wanting to outsource customer support, the Philippines is the safest choice. Know what I am saying?

The Volatility of Different Markets

The differences in currency rates are one of the many reasons why outsourcing destinations offer services at a comparatively lower cost and hence why you must understand the volatility of different currencies, and exchange rates.

Quality Above All

Last but not least, cost shouldn’t be the only deciding factor. Quality of services is equally important because they are the secret ingredient in your recipe for success. Make sure to go with a country that offers high-quality standards, along with meticulous professionals.

Outsourcing Models at InvoZone

Fixed-Price

In this pricing model, we set a ‘fixed’ standard rate for product development – charged monthly or on project completion or depending on the client’s preference or as decided in the final settlement. Plus, all the costs associated with product development are included such as

• Expert UI/UX design
• Weekly/ monthly sprint meetings
• Wireframing and prototyping
• Premium code quality
• Dedicated project management, and
• Quality assurance

Dedicated Teams

Here we offer a personal extended team exclusively working on your project and are responsible for building a dedicated team of expert developers with the necessary skill set you require.

Our dedicated teams involve all the major stakeholders such as QA engineers, UX/UI designers, project managers, business analysts, and professionals to hold the mandatory positions. Most importantly, we can extend and reduce the team according to your requirements. Our dedicated team model is ideal, if:

• You need to extend your expertise
• You are working on tight deadlines
• Your startup needs to scale faster
• You are looking to manage offshore IT specialists

A failed attempt to find a company that gives the best consultation when it comes to outsourcing? Do not worry. Read our well-structured outsourcing articles to gain valuable insights to kickstart your project.

Staff Augmentation

Looking for expert software developers or engineers on a time and material contract basis? We got you covered. This model allows you to reduce recruitment costs, payroll services, and challenges that may accompany project implementation. Our process is simple:

• Get vetted developer profiles in 48 hours
• Expect staffing within 1-2 weeks

 

My Final Two Cents on Outsource Software Development

Let’s see what you have to pay for outsourcing

In the table given above, you can easily see how much you can save with outsourcing. You don't have to pay for IT expenses, systems, software licenses, overhead, or even perks & benefits.

Now what you need to do is calculate the estimated amount you have to pay for both in-house and outsourced development - because only after that you will get a ballpark to compare your cost with.

As an outsourcing partner for innovators, InvoZone can help you gain a competitive edge at cost-effective rates. We are a leading software development company that specializes in advanced technology stacks.

Since its inception, InvoZone has undertaken notable projects to transform the business landscape. These projects not only improved clients' target customers' perceptions of the company but also led to a consistent stream of revenue.