Top 10 Countries for Outsourcing Software Development: A Comparison

Companies around the world need highly competent IT personnel to apply innovative solutions to real world challenges. However, finding the right skills locally can be difficult. So the demand for outsourcing software development continues to grow. According to Gartner, there will be an eight percent growth in global IT spending, with a projected growth to US$512.50bn in 2024 in the IT outsourced market alone.

When it comes to optimising development projects, it is less a question of whether to outsource or not, and more a question of which country to find your outsourced partner in.

First, What are the Benefits of Partnering with Offshore Developers?

1. Get Access to a Larger Pool of Talent

The competition for development skills is incredibly high. Finding and hiring the right fit, at the right price, can be a challenge. By outsourcing software development offshore, you bypass the entire issue and open up a world of talent  – literally. With geographical barriers removed, you have access to a world-class pool of talent. 

2. Reduced Labour Costs

Many software development partners offer skilled professionals at a more affordable cost than local talent would cost. This gives businesses a chance to streamline development expenses. In addition, there are savings from not needing to invest in infrastructure and tools. While these are great advantages for growing businesses, it’s important to prioritise quality alongside cost savings. The right software development partner ensures you get excellent work at a reasonable price.

3. Flexibility to Scale Resources Up and Down

A key reason that organisations choose outsourcing software development with offshore partners is the ease of scalability to cover peak periods or high-demand projects.

When working with an outsourcing software development partner you don’t need to hire developers on a full-time basis. You can build a team depending on the workload and current tasks. This removes a major headache for CTOs.

It’s important to remember that outsourced software development teams can work alongside, and complement, in-house teams to compliment smaller teams or departments.

4. Gain Expert Domain Knowledge

More than software development, companies should consider domain expertise. It is important that developers and engineers understand the industry and its requirements.

Good software development partners often work with businesses in a few specific industries which means they gain invaluable domain expertise.

For example, at Saratoga Software, we have a long and strong history working with Insurance and FinTech companies. This has allowed us to gain a huge amount of domain expertise. This in turn allows us to  understand the market from a user’s perspective and build better products.  

5. Quicker to Market

If you can get your product to market before your competitors, it could be a significant and lasting competitive advantage. If you build an in-house team from the ground up and don’t have the people infrastructure in place for this, a huge amount of time can be wasted on interviews, admin, hiring, training, and onboarding.

With an outsourced software development team, you can scale up your development capabilities at speed, and get project work started almost immediately. This allows teams to move faster, and deploy quicker.

6. Latest Technological Advancements

When you partner with trusted software development companies, you should get access to knowledge and experience relating to the latest technologies (artificial intelligence, machine learning, big data, etc.) and development methodologies (E.g., Agile, DevOps, etc.). These firms invest in mastering the tools and trends to stay competitive, which means you benefit from modern solutions that can easily support your goals.

A Comparison of Destinations for Outsourcing Software Development by Country

If cost is your only consideration, then here is a high level view of average cost rates by hour. We’ve used reliable resources such as PayScale, SalaryExpert, Indeed, Upwork, TopTal to assess average costs.

 

Region	Average Rate/hr	Countries	Ease of Doing Business*
Northern Europe	$66	France, Germany, Netherlands, United Kingdom	Europe: 71.8 United Kingdom: 83.6
Central and Eastern Europe	$57	Ukraine, Romania, Poland, Bulgaria, Hungary, Czech Republic, Slovakia, Belarus	Central and Eastern Europe : 71.8 Poland: 76.9
Latin America	$50	Argentina, Brazil, Mexico, Colombia, Peru, Chile	Latin America: 58.8 Brazil: 58.6
Africa	$31	South Africa, Morocco, Kenya, Nigeria, Egypt	Sub-Saharan Africa: 50.9. South Africa: 66.7
Asia	$28	India, China, Indonesia, Philippines, Vietnam, Pakistan, Malaysia, Bangladesh	South Asia: 56.3 India: 67.5

 

*According to the World Bank, the max score is 100.

 

However, there is often much more to consider than a financial quote when it comes to the buying decision for custom software, and determining the probability of success of your next project.

 

Here then is an overview of destinations for outsourcing software development, by region.

Asia | India

When you think about outsourcing to Asia, the first thought is India. As the leading software development outsourcing country in Asia, it is well known as the outsourcing capital of the world. According to our research, TCS is the largest software development company in India.

 

Pros	Cons
Low-cost services If cost is your only factor, then India is the most cost-efficient country, with competitive pricing ranging from $20 to $60 per hour.	Linguistic barriers Despite English being the second state language, some professionals do not use it very often, and may have difficulty understanding accents and nuances.
Vast talent pool Every year, more than 1.5M IT specialists graduate from the country’s tech universities.	Cultural barriers It is generally considered impolite to deny someone. So, if you make a difficult or impossible request to developers, you are unlikely to get a straightforward answer, and may just end up with delays and noncompliant results.
Advanced infrastructure and technology Agencies in India make it a point to give teams the latest tech, training, and resources they need to leverage high demand.	Time difference The time difference between India and the UK, US, and other European countries can hamper effective communication, project deadline delivery, and increase frustration levels and delays.
E-commerce leadership Many e-commerce companies have set up software development centres, as well as their customer service and support hubs, in India.	Reduced quality Given the low cost of their services, developers often work on several projects at the same time, and your project may not be the priority. Similarly, rushed work might mean quality control is not highest on the agenda.
	Lack of creativity in design When the main objective is price and speed, it often comes at the expense of creativity and innovation. However, if that is not your main goal, then the frequently found practice of applying changes to a well-known site or application will meet that end.
	Lack of strategic oversight In many cases, the software development teams have a limited view of the wider business ecosystem. In which case, they are unlikely to guide you in how to improve the product from a professional point of view, or how to reach your primary objective more effectively.

 

Eastern and Central Europe | Poland, Ukraine, Czech Republic and Romania

Eastern Europe is on the rise when it comes to outsourcing software development, and is acknowledged for its skilled workforce, competitive pricing (from $25 to $100 per hour), and robust IT infrastructure. Its location and time zone facilitate easier collaborations with Western countries​. Our research shows that Instictools.com is a leading software development company in Poland.

 

Pros	Cons
Cost-effective services The foremost advantage is the cost. IT outsourcing to Eastern Europe can be significantly cheaper compared to Western countries.	Communication barriers Communication may be challenging, depending on the provider.
Rich talent pool Eastern Europe hosts around 1.3 million developers, with Poland dominating with 607,000 developers according to recent findings.	Potential inferior quality The risk exists that – while some providers might employ highly skilled professionals – some countries are better at certain verticals than others. For example, Poland is known for its expertise in agriculture and healthcare. Ukraine has a strong track record in marketing, finance, and healthcare. Romania is noted for capabilities in automotive, logistics, and healthcare. The challenge is, then, to find an outsourced provider with domain expertise in your field of industry, so that there is little time wasted in onboarding.
Time difference There is very little time difference with the UK and other European countries.	Geopolitical challenges The Eastern European outsourcing market, which was previously dominated by Ukraine and Belarus, has seen a major shift as a result of the war. Sanctions on Russia and Belarus have led to a decline in outsourcing opportunities in those countries. Ukrainian IT companies have demonstrated remarkable resilience, with  60 major Ukrainian firms (not just in IT) maintaining 90-95% of their normal operational capacity despite the chaos of war, risk remains high, and mobility and productivity challenges continue due to the frequent need to relocate

 

Latin America | Brazil

With its growing skilled workforce and advantageous time zones, Latin America offers a compelling case for outsourcing software development. Over the past decade, this region has grown as a hub for IT services, customer support, finance, and more.

 

Pros	Cons
Cost-effective services Once again, outsourcing to Latin American countries is more cost effective than hiring directly in the US or EU. However, this is true for most software development partners offshore.	Language barriers While English is generally widely spoken, variations in accents and language fluency exist.
Improved talent Mexico and South American countries have significantly improved their higher education systems to produce graduates with strong technical and professional skills.	Cultural challenges While Latin America has closer affiliations with American culture, there are still many differences that could bring challenges to communications and project delivery if not understood and managed.
Government support Many Latin American countries have incentives from their governments to attract international investment.	Infrastructural limitations Infrastructure (particularly technological) can sometimes be less developed or stable in some Latin American countries, particularly in rural areas.
	Quality and consistency concerns Quality control and consistency are a key concern in this area, and will require vigilant review.

 

Africa | Cape Town, South Africa

It’s known that South Africa, and particularly Cape Town, has been gaining attention as an emerging hub for technology and software development. Thanks to insignificant time zone differences, high proficiency in English, advantageous exchange rate, and mature infrastructure – Cape Town is registered on Tholons Digital Nations and Super Cities rankings – South African developers are in high demand, thanks to their skill and work ethic.

In South Africa, the trusted name in software development is Saratoga Software.

 

Pros	Cons
Quality, expertise in your industry This is where quality, delivery, and cost meet. While South Africa is not as cost-effective as Asia, it is high on the skills and ease-of-work metric. South Africans have a track record – especially in software development companies – of a hard-working work ethic that ensures projects are delivered on time, and cost-effectively.	Cost effectiveness While not the lowest globally, the cost of outsourcing in Cape Town is competitive, especially considering the skill level and the quality of work.
Access to skilled workforce Cape Town is becoming well-known for its growth in tech graduates and skilled developers. Experts in Python, C#, TypeScript, Go, JavaScript, Java, Rust, C++ and more continue to lead the way and solve business problems. Plus, South Africa is home to the top six universities in Africa, the top two of which are in Cape Town. And, the Cape Town tech ecosystem is the most productive on the continent.	Geopolitical risk management The evolving geopolitical landscape, characterised by tensions between major global powers like the US and China, as well as the general elections the country faces in 2024, can introduce uncertainties.
Language compatibility English is a first language in South Africa – spoken, written, and in all other ways. This is ideal for optimal communication with companies from the EU and US.	Economic stability Geopolitical tensions can affect economic stability, currency fluctuations, and investment climates, which in turn impact the cost-effectiveness and competitiveness of software development outsourcing services in South Africa. This is compounded by fluctuating electricity availability locally known as loadshedding. However, most companies have alternative power resources in place to mitigate this disruption.
Cultural compatibility South Africa’s culture is closely aligned with European cultures. More than that, South Africans are well known for their outstanding work ethics, and their ‘can do’ approach when it comes to tackling challenges.
Favourable time zone Cape Town’s time zone is favourable for companies in Europe and can also facilitate work with businesses in other regions.

 

Partner with the Experts. In Their Domain, as Well as Yours.

Reviewing the above, and when it is considered that – no matter what country or region you choose outside of the EU and US – there is a cost reduction, it is safe to say that other factors should be carefully considered.

Factors such as ease of doing business, communication and cultural similarities, skills availability, testimonials, reputation, and domain experience.

A further step would be to review if software development providers have offices in your country. This makes it that much easier to communicate and do business locally but with the offshore benefits. Companies such as Instinctools who have offices in the US, Germany, and Poland. Or Saratoga with offices in Cape Town, South Africa, as well as in the UK. 

To be honest, at Saratoga, we are not actually academic research experts on outsourcing.

Not at all, in fact.

Rather, we are real-world experts at solving business problems with world-class software development, data, AI, and communication management solutions. We offer tech, trust, transparency, and talent through the advantageous offshore partnering known as outsourcing.

This is what we’ve done for over two decades. We do it extremely well. And we’re still innovating.

How do we do it? Well, we recruit the best talent, we invest in their skills upkeep, we push the boundaries on the latest tech, and we insist on compliance with optimal software delivery processes, so that you get software solutions that make sense. For you. And your business.

If you’re ready to see how we can help you deliver on your next project and you want world-class outsourced software development, let’s talk.