Top 10 offshore software development stats you need to know about for 2025

9 min read
December 20, 2024

Offshore software development can be a great choice for your business, especially if you want to cut development costs without sacrificing quality.

And we’ve got the numbers to prove it.

Of course, this isn’t a choice you should make lightly.

So, we’ve compiled this list of the top 10 offshore software development statistics to give you extra context and prove why outsourcing development offshore is a good choice.

Let’s dive in!

The offshore software development market will be worth $151.9 billion in 2025

The global offshore development market will reach a value of $151.9 billion in 2025.

And demand for these services isn’t showing any signs of slowing down.

By 2033, the market is expected to grow to a staggering $389.7 billion in value, growing at a compound annual growth rate (CAGR) of 12.5&.

Global offshore software development market

This statistic shows the sheer scale and growth of the offshore software development industry in recent years.

So, where does all this demand come from?

Just one look at the main benefits of offshore development explains it:

  • Lower development costs
  • Access to a huge talent pool
  • Easy scalability
  • No administration overhead
  • Faster time to market

Companies worldwide are using offshore teams to improve operational efficiency and cut development costs.

And this strong growth shows confidence in the viability of offshore development as a strategic business choice.

Large enterprises have a 59.4% market share in offshore software development

According to Cognitive Market Research, large enterprises account for nearly 60% of the offshore software development market.

This shows large enterprises heavily rely on offshore development companies for mission-critical projects.

Now, enterprise software is built to meet the needs of large businesses and organizations and is more complex than standard software. Here are a few of the key qualities it needs to have:

Enterprise software

So, this statistic proves that offshore development is hugely popular with the biggest players on the market.

It’s a mature, trusted model for handling large-scale and complex software development projects.

Large enterprises benefit from the lower costs and flexibility of offshore teams without sacrificing quality.

And for smaller businesses, this is proof that offshore development is a credible and viable business option.

North America generates $46.2 billion in offshore software development

North America’s $46.2 billion contribution to the offshore software development market shows the region’s heavy reliance on outsourcing to meet its software development needs. 

In fact, not only does North America generate the most revenue in the offshore development market, it also holds the highest market share, coming in at 38.5%.

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And this demand drives competition among offshore destinations like India, Eastern Europe, and Latin America who all want to get a slice of that pie.

So, why is offshore development so popular there?

Companies in the U.S. and Canada hire offshore teams to tackle challenges like:

  • Talent shortages
  • Skill gaps
  • High labor costs
  • The need for round-the-clock support

Of course, cost is a primary driver – we’ll touch on it a bit later.

But, it’s a mistake to think North American companies are just looking to cut costs.

They’re also looking for innovation, easy scalability, and strategic partnerships. 

In short, this stat shows that offshore outsourcing plays a key role in North American companies’ operations. 

Whether it’s startups needing MVPs or Fortune 500 companies building scalable enterprise platforms, offshore development 

Banking, financial services, and insurance account for 24.3% of offshore development

According to Market.us’s latest report, the banking, financial services, and insurance (BFSI) sector holds one of the biggest market shares in offshore software development, coming in at 24.3%.

This is another sign that offshore development is a mature market.

Building software for the financial sector comes with a number of unique requirements, like:

  • Strict industry standards and regulations
  • High security standards
  • Scalability and high performance
  • Data accuracy and integrity
  • Integration with legacy systems
  • Fraud detection and prevention

Let’s say you want to build a fintech app. Here’s a snapshot of some of the common regulations you will have to follow:

Common fintech regulations

Compliance with these regulations costs a lot of money. And they show this sector is a high-stakes environment where failure is not an option.

Their trust in offshore teams proves that offshore companies can deliver secure and reliable solutions while following strict compliance standards.

And that’s a reassuring sign for companies in other sectors who want to try outsourcing offshore.

54% of U.S. companies that outsource development choose India

Another interesting statistic in the Market.us report is that 54% of U.S. companies that outsource development choose India as their preferred destination.

Now, this isn’t a surprise. When you think about offshore software development, India is one of the first countries that come to mind.

With a huge talent pool of over 5.2 million developers and an IT outsourcing market valued at $11.04 billion, it’s one of the top global outsourcing hubs. Here’s a quick overview of the key facts you need to know:

Offshore software development in India: overview

CategoryDetails
Average developer hourly rate$15-35
Most popular programming languagesPython, Java, C#, JavaScript
English proficiencyModerate (EF EPI: 60th/113)
Top startupsOla, Flock, Zomato
Top software development companiesAppinventiv, SDLC Corp, Space-O Technologies
Top IT hubsBengaluru, Hyderabad, Pune

Such a large talent pool and low costs of living mean that Indian companies can offer development at cut-rate prices compared to hiring in-house.

But, it does come with a downside, since the quality of work can vary wildly from vendor to vendor.

So, if you’re considering outsourcing to India, make sure to do your due diligence before you commit to a vendor.

92% of G2000 companies use IT outsourcing

According to ISG, 92% of G2000 companies, i.e. 2000 of the world’s largest companies, use IT outsourcing services.

The almost universal adoption of IT outsourcing among these companies shows how strategically important outsourcing truly is.

These global giants rely on outsourcing to access specialized skills, reduce operational costs, and focus on core business activities.

IT outsourcing helps them remain competitive in fast-changing industries by maintaining flexibility and helping them quickly scale operations when needed.

The fact that industry leaders, who have significant resources, choose to outsource highlights its value in optimizing efficiency and helping them achieve their business goals.

And for offshore service providers, working with these companies improves industry-wide standards for quality, security, and accountability.

60% of outsourced projects fail because of bad cultural compatibility

Managing cultural differences is one of the biggest challenges in offshore software development.

So, it’s no surprise that 60% of outsourced projects fail because of a bad culture fit.

Why outsourced projects fail

Differences in work culture and communication styles can completely derail projects.

This is a reminder you should focus on culture fit when choosing an offshore software development company.

You need to choose partners who understand your company’s values, expectations, and workflows. 

Frequent, open communication and on-site visits can also bridge those gaps and improve collaboration.

By addressing this early on, you’ll ensure smoother project execution and build a long-term relationship with your offshore partner.

And that’s exactly what you should be looking for.

70% of companies name cost as the main reason for outsourcing offshore

Cost reduction is the name of the game in offshore software development.

And in Deloitte’s Global Outsourcing Survey, 70% of companies named cost as the main reason why they choose to outsource development offshore.

Why companies outsource

Offshore development allows companies to achieve significant cost reductions compared to hiring local talent, especially in regions with high labor costs.

Lower labor costs are just one piece of the puzzle, though.

When you outsource development, you also minimize costs like:

  • Recruitment and training costs
  • Turnover costs
  • Employee benefits
  • Rent and office maintenance costs
  • Administrative costs

But, while lower costs remain a primary driver for offshore development, this is beginning to change – we’ll cover that next.

86% of business leaders prioritize service quality when choosing an outsourcing partner

According to SupportNinja’s State of Outsourcing 2024 report, 86% of business leaders view service quality as a critically important factor when choosing an outsourcing partner.

This statistic shows a new trend of focusing on value over cost when outsourcing development.

Business leaders now place greater emphasis on service quality, reliability, and the ability to meet specific project needs. 

While cost savings remain important, service quality is a critically important factor for long-term success.

When outsourcing, you should focus on evaluating vendors’ track records, client reviews, and project portfolios to find one that can reliably deliver high quality software.

80% of offshore companies will adopt low-code/no-code platforms in the next decade

Another interesting tidbit from the Market.us report is that within the next decade, 80% of offshore development companies will adopt low-code/no-code platforms.

We’ve also recognized it as a growing trend in offshore software development.

So, what are low-code/no-code platforms? And how will they shape offshore development in the coming years?

These platforms allow their users to build apps with pre-built components and connect them through a visual interface. Here are some of their key features:

Low-code/no-code platform features

These platforms will lower development costs and help offshore developers deliver projects faster.

And while they’re still relatively limited and can only create simpler apps, that’s likely to change in the future.

This means your offshore partners will be able to get your product to market even faster – all at a lower cost.

And that’s why they’re becoming so popular.

Offshore software development stats: FAQs

You should opt for offshore software development when:

  • You want to lower development costs
  • You have a tight budget
  • You need to plug skill gaps in your in-house team
  • You need an easily scalable team without hiring overhead

Project timelines depend on a number of factors like:

  • Project scope
  • Project complexity
  • Team size

Timelines can range from 2-4 months for simple apps while complex, enterprise-scale projects can take 9 months to over a year to build.

You should discuss a realistic timeline upfront and include buffer time for unforeseen delays.

To find and hire an offshore software development team, you need to:

  • Define your goals and requirements first
  • Choose the collaboration model you need
  • Search and shortlist offshore software development companies
  • Review their case studies and previous work
  • Sign a contract and kick-off the project

Need a reliable offshore software development partner?

Are you looking for a reliable offshore development partner but you’ve been burned before?

Well, that’s where we come in.

We’re a full-service, high-caliber software development company with 12+ years of experience building high-quality products for giants across different industries.

And we’re confident we can handle even the toughest challenges.

If you want to learn more, feel free to reach out and our team will get back to you and set up a meet to discuss your needs in more detail.

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Written by

Ante Baus

Chief Delivery Officer

Ante is a true expert. Another graduate from the Faculty of Electrical Engineering and Computing, he’s been a DECODEr from the very beginning. Ante is an experienced software engineer with an admirably wide knowledge of tech. But his superpower lies in iOS development, having gained valuable experience on projects in the fintech and telco industries. Ante is a man of many hobbies, but his top three are fishing, hunting, and again, fishing. He is also the state champ in curling, and represents Croatia on the national team. Impressive, right?

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