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!
Table of Contents
The offshore software development market will be worth $151.9 billion in 2025
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:
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%.
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:
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:
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
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.
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:
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.
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?
Here, we've compiled a list of the best countries for offshore software development and a quick guide on how to choose the right offshore development company.