Cost optimization has always been a big concern for businesses, whether mature companies or aspiring startups. Yet, in times of the looming recession and general vagueness in the air, cost optimization is gaining more and more focus.
So what’s the first step to take to optimize cost? Outsourcing software development to a distant country is among the action steps.
As a Sales Manager with 5 years of experience working with mature businesses and startups, I have seen how outsourcing saved companies with limited resources and helped them get the expertise, talent pool, and advice they would have never gotten by hiring in-house.
In this article, I want to talk about the top 3 countries to outsource software development, the differences between the rates, pros and cons, and the specifics of each option.
So let’s start!
Criteria to Keep in Mind When Choosing a Country to Outsource
The chances are higher to find a team that would match your culture and business approaches in particular regions. Here are the criteria to take into consideration:
- The goals of your project: what is it about?
- Your budget: how much are you willing to spend?
- Level of tech education in the country;
- Ranking of software developers;
- English language fluency;
- Competency in your project’s domain;
- Availability of the team.
Does Geography Really Matter When Choosing a Country to Outsource?
Well, yes and no simultaneously.
Geography matters, but there are other factors to consider. The modern world gives us a myriad of opportunities, including remote work. So you can find a software development outsourcing company in any country. Wherever your development team is situated, the variety of tech instruments helps to manage the remote work, ensure the security of development and communicate with the team.
Hiring an outsourced development team in different countries has compelling benefits:
- More flexibility – there are a variety of partnership forms in outsourcing. You can choose any that suits your business;
- Cost-efficiency: you can benefit from more affordable hourly rates for software development in offshore regions;
- Higher autonomy of the team – an outsourced team has its project managers, team leads, and organized processes, so do not have to control everything;
- No fuss with the employment arrangements – hiring an employee is resourceful and effort-consuming. But outsourcing – you do not have to worry about it;
- Access to a broader talent pool – you can fill the expert gaps on your existing project by hiring from abroad.
Talking about the instruments for remote work, here are the ones that mostly come in handy:
- Google Meet;
At Uptech, we also use Plai – a teamwork performance management tool that helps set KPIs for the team and track their implementation. Plai also helps to grow your team, make individual development plans for your team members, and organize the process of feedback sharing.
For more insights into organizing remote work with the development team, check our blog post “10 Tips On How To Organize Remote Collaboration For Maximum”.
Now let’s apply these criteria to the most popular destinations of outsource development!
The Most Popular Countries To Outsource Software Development To
Here are top 3 destinations to outsource software development.
India has a population of 1,3 billion people and a solid education system. These factors make it a competitive candidate for your development vendor.
The cost of living in India is significantly lower than in Europe or the USA, which brings another pleasant bonus: the development rates in India are also much more affordable, with a reasonable level of quality. Thus, the average hourly rate for a software developer in India would be around $18- $25.
As for the English language level, it’s the second official language there! Which makes it a bingo for India as a software development destination.
- English level fluency;
- Quality of work.
Well, there is no need to seek anymore. There are still a few concerns that can make outsourcing to India challenging. These are:
- Cultural differences: the business approaches and the unique culture of the Indian environment can lead to miscommunication and, eventually, reduced productivity.
- Time zone differences, which can make communication and coordination hard;
- Security concerns: Indian IT environment is known for data breach cases.
All pros and cons assessed India is an excellent destination for software development if you are in Asia. Whereas, if you live in the USA or Europe – the cons of outsourcing to India can be risky for your business.
Ukraine is another destination that comes to mind when thinking of a country to outsource to. This is one of the most prominent IT destinations in the world and the most significant IT hub in Eastern Europe.
The first compelling reason to outsource to Ukraine is the country's high level of tech education.
The IT sector of Ukraine is now counting 285 thousand IT professionals (as of 2022). This number is expected to grow in the upcoming years. This number can be compared to the size of a city like Bend, Oregon, or Fort Lauderdale, Florida. So imagine a whole town of IT professionals!
Finally, Ukraine proudly ranks 42nd in the Global Skills Index 2021, scoring 7.07 out of 10 for IT skills.
The IT service cost in Ukraine is higher than in India, but it is still lower than in most Western countries. Let’s compare:
- The average hourly rate of Ukrainian software development is $25 to $50.
- The same metric for US developers will vary between $50 to $150, depending on the skill level and regional location.
- As for Europe, the rate’s diapason will be $40 to $100 per hour.
So the numbers speak for themselves. An important thing to note is that the lower software development rates in Ukraine do not mean a lower quality of service. It’s all about the cost of living, which is more affordable in Ukraine than in other European or US regions.
Reasonable Time Zone Differences
Let’s be honest here – Ukraine is located in a different time zone from the US, which, at first sight, makes it no different from India.
Yet, the time difference with Ukraine is quite reasonable, allowing regular and efficient communication without compromising the quality of services.
Moreover, since COVID-19 became our new reality, Ukrainian vendors handled the remote work skills so well that they took responsibility for all the processes themselves. Highly skilled project and product managers organize the whole development process, manage the team and communicate transparently with the clients, so you do not have to worry about the project’s ongoing development.
Business Culture Compatibility
Ukraine’s business environment is swelling, with new startups and tech businesses appearing annually. I bet you’ve heard of Grammarly, Reply, Jooble, Petcube, RefaceAI, and GitLab – these are world-class companies (some unicorns) born in Ukraine. And even more are coming!
Many Ukrainian IT companies have their R&D departments, where they incessantly build products. This means Ukrainian companies know not only how to code but also how to do business. So outsourcing to Ukraine, you can count on getting far more than just programming services but also profound business and product development advice.
The Ukrainian government acknowledges its huge tech potential and regularly cultivates it. Thus, it offers the IT businesses beneficial tax offers and attracts international investments.
Also, Ukraine's institution drives digitalization and tech implementation – the Ministry of Digital Transformation of Ukraine. Impressing? Wait for it! Ukraine is the first country worldwide to legalize digital IDs in smartphones fully. Are any more reasons needed?
Language Barrier as a Challenge of IT Cooperation with Ukraine
In general, Ukrainians are skilled in English. Yet, certain nuances can still be caused by imperfections in pronunciation or written English. However, these nuances can be easily overcome by arranging effective processes and a skilled proofreader (which is in each Ukrainian IT company).
Recap: if you are in Europe or the US, Ukraine is an excellent option for a country to outsource software development to in terms of cost/quality ratio. When outsourcing from Europe, there can hardly be any challenges or difficulties. But if you are from the US – there are some challenges to tackle (like time zone or language barrier). Yet, these hardships can be successfully overcome via arranged communication processes.
Another Eastern-European country to outsource to is Poland. Being one of the biggest economies in the EU, Poland provides certain perks for those seeking to outsource software development.
Firstly, Poland is a member of the EU, which provides it with a competitive edge compared to Ukraine and India. In particular, it has access to supporting programs, helping with unemployment and infrastructure improvement. Also, Poland is a proper country to outsource because of its economic and political stability, which is also a factor to keep in mind.
Poland’s location also benefits it from its proximity to Western-European countries and the US. Regarding European outsources, Poland is perfect regarding the time difference – as there is virtually no such.
As for the US – things are a little more complicated (the same as with Ukraine), and there is a reasonable time difference, which can be overcome via adaptable processes.
Another edge of Poland as an outsourced county is its European context. As a part of the EU, Poland shares the same cultural values and business approaches with Western Europe and North America. This is a significant advantage as compared to India. Yet, there is barely any difference in this one with Ukraine.
Yet, participation in the EU gives Poland stability and investment reliability that differ it from other destinations.
IT Sector Development
The IT sector of Poland has been growing annually, creating more and more convenient opportunities for outsourcing. Polish IT companies tend to extend their operations abroad, opening R&D globally. Its IT/ICT market is growing at about 3% per year.
Polish software developers are exceptionally skilled in software engineering, data analytics, and cybersecurity.
Higher Rates of Outsourcing to Poland
The main challenge in choosing Poland as your go-to IT provider is the cost of living. The cost of living in Poland is higher than in India or Ukraine, so developers' hourly rates also soar higher than there. Averagely, the hourly rate of a Polish software engineer will range between $45-$80, which can come off as more costly than in Ukraine.
Why Choose Uptech as Your Outsourcing Partner?
Besides helping our clients to build and grow their businesses, we also develop our own products in our R&D team (one of our projects even got Google Investment Funding). Among them are:
- Rozmova (a mental health platform).
- Plai (an award-winning HR tool).
- Dyvo (an AI-based avatar generator).
All this combined, we wield two-fold expertise in both product development and business growth. So stay assured of getting full-faceted advice on your project.
Our clients value us for the following:
- Profound expertise in product development;
- Sound experience in particular domains: fintech, real estate, healthcare, e-commerce;
- Transparency in communication;
- Resilience in adapting to the client's needs;
- Taking a moonshot, where others only deliver the basics.
Moreover, each of our team has strong English fluency, which is a critical requirement for us when hiring candidates. Moreover, Upetch has an international team of people speaking English fluently every day of their lives. Check out more of our services on our website.
So there is hardly any hardship for a productive partnership with Uptech.
There are a complex of factors to consider when choosing a country to outsource: from the education level in IT to the development rate costs. Another non-obvious but no less important factor is the cultural compatibility with your business values, which varies from company to company.
The best way to find the “one” is by talking directly with the vendor and hearing what they offer.
So why not do it right now? Contact me, and we will discuss your project in more detail.