Offshore software development rates: in-depth guide

So, you’ve got a great idea but in-house development is too pricey? Or are you on a tight deadline and finding and onboarding new talent would take too long?

Well, in that case, offshore software development is your best bet.

But, what are the average offshore software development rates? And where do I find the best engineers? (hint: it’s the only country whose capital starts with “Z”)

We’ve got you covered.

In this article, we’ll take an in-depth look at the average rates across different countries, regions, and continents to help you make the right decision.

Let’s dive in!

What is offshore software development?

Let’s cover our bases first – what is offshore software development?

Offshore software development is when you outsource development to a company or team in another country – specifically one that’s geographically far away from you.

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So, let’s say you’re in the U.S. – outsourcing to Poland or Ukraine counts as offshoring software development.

But, how do you know it’s the right choice for you?

Here are some top scenarios when offshore development is the right choice:

source: Tateeda

Offshore outsourcing is a great way to reduce development costs and plug skill gaps in your in-house team.

If you do it right, you can do that without sacrificing quality.

And that’s why offshore outsourcing is so popular.

Factors affecting offshore software development rates

Offshore software development rates vary from region to region and country to country.

Several key factors influence the different rates, like:

• Cost of living – countries with a high cost of living have higher labor costs, which is one of the main drivers behind higher hourly rates
• Economic conditions – stable economies offer more reliable and predictable pricing and they’re more resistant to external shocks
• Amount of skilled experts – countries with big talent pools have more competitive rates because there’s a large supply of skilled experts, while countries with smaller talent pools often have higher prices because of a lack of competition
• Project complexity – if you have a complex project, you’ll need to hire experienced engineers who have higher rates while simple projects can be handled by less experienced engineers at lower rates

Next, we’ll go over the average rates in the top offshore software development destinations on each continent.

Offshore software development rates by country

Now, we’ll give you an overview of the average offshore software development rates by country.

Western Europe

Let’s start with Western Europe.

Germany

With a robust tech industry and a strong emphasis on quality and precision, Germany is a top offshore development destination if you want to build high-quality software.

And as the single biggest ICT market in Europe with over 100,000 companies employing almost 1.2 million people, there’s no shortage of top talent.

But, that talent comes at a cost – Germany has one of the highest average offshore development rates in the world.

Average offshore development rates in Germany

France

France has a fast-growing ICT sector, growing at a compound annual growth rate (CAGR) of 11.77%, with Paris emerging as a major startup hub in Western Europe.

So, it’s no surprise it’s a destination for offshore development, too.

But, high labor costs and living standards in France mean that the average hourly rate is high, too.

Average offshore development rates in France

UK

As a leading tech hub in Europe, the UK has a well-established tech industry and infrastructure with a large pool of skilled engineers.

London is still a major center, but other cities like Manchester and Edinburgh have emerged as major hubs for IT, too.

But, with fierce competition and high costs of living, hiring talent from the UK doesn’t come cheap.

Average offshore development rates in the UK

Belgium

Belgium has a growing tech industry centered around the capital, Brussels.

With multilingual engineers and high-quality development services, it’s a good outsourcing destination if you want to build a top-notch software product.

But, like its neighbors, that high quality comes at a cost and Belgium has one of the highest hourly rates in the world.

Average offshore development rates in Belgium

Netherlands

With plenty of high-quality tech talent and an innovative IT industry, offshore development to the Netherlands can be a good choice for your business.

Dutch software engineers have excellent English skills and with a top-tier education system, their development skills aren’t far behind.

But, as one of the most advanced economies and highest standards of living in the EU, development doesn’t come cheap – and that’s reflected in the average hourly rates.

Average offshore development rates in the Netherlands

Central Europe

Next, we’ll cover offshore software development rates in Central Europe.

Poland

Poland is one of Europe’s biggest offshore software development centers and a major player in the global IT outsourcing market.

And the stats back that up, too – Poland’s IT services market has a market volume of $9.75 billion, with outsourcing taking up $3.49 billion.

It has a large pool of talented engineers, centered around the cities of Warsaw, Krakow, and Wroclaw.

And with its competitive hourly rates, it’s no surprise it’s one of the top players in the offshore development market.

Average offshore development rates in Poland

Czech Republic

The Czech Republic is another significant player in the European offshore development market.

It has a large talent pool, with the capital, Prague, and Brno being major tech hubs.

And its favorable corporate tax policies and competitive rates compared to Western Europe make it easy to see why it’s so popular.

Average offshore development rates in the Czech Republic

Croatia

Croatia is one of the best choices if you’re looking to outsource development offshore, especially if you need a full-service development partner.

Here are some key reasons why:

source: Croatian Chamber of Economy

But, there’s another huge reason beyond just the numbers – cultural compatibility and English proficiency.

Croatia ranks 11th out of 113 countries in the EF English Proficiency Index, so miscommunication isn’t an issue.

Sprinkle in competitive hourly rates and you have the recipe for the best offshore software development destination.

Average offshore development rates in Croatia

Lithuania

Lithuania, although much smaller than Poland and the Czech Republic, is another top destination for offshore development.

With a business-friendly environment and relatively low hourly rates, it’s an attractive choice – especially if you’re building a fintech app.

The capital, Vilnius, is a major fintech hub, so if you’re looking for fintech specialists, Lithuania is a great choice.

Average offshore development rates in Lithuania

Eastern Europe

Next, let’s discuss offshore software development rates in Eastern Europe.

Ukraine

Ukraine is almost synonymous with offshore software development.

Since it has a huge talent pool and high-quality STEM education, that should come as no surprise.

Ukraine also has very competitive hourly rates and they, combined with the strong technical skills of Ukrainian engineers, made it one of the best outsourcing hubs out there.

Average offshore development rates in Ukraine

Romania

Romania is an emerging offshore software development hub in the European market.

It has well-developed infrastructure, with internet speeds twice faster than the global average, and a good education system with strong government support.

And the competitive pricing doesn’t hurt, either.

Average offshore development rates in Romania

Bulgaria

Centered around the capital, Sofia, Bulgaria has a comparatively small, but strong IT sector with some of the best-performing software engineers in Europe.

With a favorable business environment with low hourly rates, its outsourcing sector is likely to grow stronger in the coming years.

And that’s why it’s a good choice.

Average offshore development rates in Bulgaria

Asia

Now, let’s talk about offshore software development rates in Asia.

China

As the second most populous country in the world, China has a massive talent pool and a significant player in the global tech industry.

With strong government backing and a highly skilled workforce, it’s no wonder it’s a top offshore development hub.

But, higher costs compared to other Asian countries and potential language barriers can be a major challenge for potential partners.

Average offshore development rates in China

India

When you think about offshore software development, India is likely the first country that comes to mind.

With a massive talent pool of over 5.2 million software engineers, it’s one of the top global offshore development hubs.

And with such a high supply of skilled workers, their rates are very cost-effective.

But, that has a downside – quality can vary wildly from company to company, so you should proceed with caution.

Average offshore development rates in India

Japan

Japan has a well-established tech industry, with a strong focus on building high-quality software.

Japanese engineers are highly skilled, especially in fields like AI and robotics, so it’s a natural choice if you’re building a product with those technologies.

However, high hourly rates and costs of living, as well as cultural differences and language barriers can make outsourcing difficult.

Average offshore development rates in Japan

Philippines

With its ICT sector reaching a value of $23.7 billion in 2023, the Philippines is an emerging Asian hub for offshore software development, 

There’s a good reason for that – the Philippines has a large talent pool of English-speaking engineers, so working with them is much easier than with engineers from China or Japan.

And the significantly lower hourly rates don’t hurt, either. 

Average offshore development rates in the Philippines

Vietnam

Vietnam, with its huge and rapidly growing IT industry, is an underrated offshore software development destination.

Reaching a market size of $148 billion, it’s an important regional player and a good choice if you’re looking for cost-effective development.

And strong government support means it’s likely to grow even more in the coming years.

Average offshore development rates in Vietnam

North America

Here, we’ll discuss offshore software development rates in North America.

United States

The U.S., as the home of Big Tech, needs no introduction.

With the most innovative tech sector and a massive talent pool, outsourcing to the U.S. means you get access to the best talent pool on the planet.

But, that top-tier expertise and infrastructure come at a cost. 

Although hourly rates vary depending on region, the U.S. still has some of the highest average rates in the world.

Average offshore development rates in the United States

Canada

If the hourly rates in the U.S. are too high for you but you want the same level of quality, Canada is a great choice.

Although it has a much smaller talent pool, Canada’s lower hourly rates make it an attractive offshore development destination.

And the high cultural compatibility and close economic relations with other English-speaking countries make it particularly attractive.

Average offshore development rates in Canada

Latin America

Next, we move on to offshore software development rates in Latin America.

Mexico

Mexico is a key player in the Latin American offshore software development market.

With a large talent pool and competitive rates, it’s especially attractive as a nearshoring destination for U.S.-based companies.

But, for the same reasons, it’s a top offshore development destination, too.

Average offshore development rates in Mexico

Brazil

Brazil is a huge player in the Latin American offshore development market.

With an IT industry that’s estimated to reach a value of $193.20 billion by 2027, that shouldn’t come as a shock.

But, there’s a catch – Brazil has a notoriously complex tax system, so working with Brazilian companies can be challenging.

Average offshore development rates in Brazil

Chile

Chile has a rapidly growing tech sector and is an emerging player in the Latin American offshore software development market.

With a stable economy and high-quality educational system, Chile has a growing pool of skilled engineers and tech professionals.

And its competitive hourly rates make it one of the top choices in the region.

Average offshore development rates in Chile

Peru

Peru, with a growing IT sector centered around the capital, Lima, is an underrated choice if you want to outsource development to Latin America.

Although its tech industry is smaller and less mature than some of its neighbors, Peru makes up for it with its budget-friendly hourly rates.

And since it has a favorable business climate, the Peruvian IT sector will only grow in the coming years.

Average offshore development rates in Peru

Argentina

Argentina has a well-educated, tech-savvy workforce and an established, mature IT sector, so its position as a major outsourcing hub is no surprise.

And that’s not just idle talk – 11 of the 34 unicorns in Latin America come from Argentina.

But, chronic economic instability and high inflation in recent years can make collaboration difficult.

Average offshore development rates in Argentina

Africa

Finally, we’ll cover offshore software development rates in Africa.

South Africa

As the biggest and most mature IT market on the continent, valued at $33.45 billion, South Africa is a natural choice if you want to outsource development to Africa.

And because English is an official language and widely used in business, you don’t have to worry about miscommunication.

But, South Africa has the highest hourly rates in Africa, which might turn off budget-conscious companies.

Average offshore development rates in South Africa

Morocco

Morocco is a key player in the North African tech industry.

It’s a particularly attractive outsourcing destination for French-speaking companies, due to its proximity to Europe.

And the cost-effective rates help, too.

Average offshore development rates in Morocco

Kenya

Nicknamed the Silicon Savannah, Kenya is the regional IT hub of East Africa.

With the IT sector accounting for 7% of the Kenyan GDP, it’s becoming a popular offshore software development destination, too.

And with government support expected to increase in the coming years, Kenya’s role in global outsourcing will grow, too.

Average offshore development rates in Kenya

Nigeria

Nigeria is another major regional IT hub, with a huge pool of young, talented tech professionals.

Other than its huge talent pool, Nigeria’s main draw is its competitive pricing, as one of the most affordable outsourcing locations on the globe.

But, moderate English proficiency and poor infrastructure might make collaboration challenging.

Average offshore development rates in Nigeria

Offshore software development rates: comparison by region

Here’s a comparison of the average rates in every region we’ve covered:

Offshore software development rates: FAQs

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