The software development market is growing exponentially year by year. The increasing cost is mostly involved in making up the perfect software development team, and extending the process cycle. The man-hour cost for software developers, time involved in the process cycle, and the multi-dimensional software testing modules based on the functionalities are the key components that account for the software development rate.
However, offshore software development models arrived as a great relief to software development companies’ overheads for years. Plus, the line up of trusted software development outsourcing partners mitigated these haunting issues at scale.
In this blog, let’s see the global offshore software development rate trends and how to find the best partner.
Global Software Development and IT outsourcing Market Daya Insight
Gartner’s report reveals that global IT spending is reckoned to hit $4.07 billion, up 3.7% by 2021. Confining it to the software development and business spend software market, it is reported that by 2027, the software market is expected to hit $17.79 billion with a growth rate of 10.85%.
John Lovelock (chief forecaster for technology and service provider research at Gartner) says – The future of IT spending will be characterized by a combination of decreased spending on hardware devices and an increase in spending on software and services, including on the cloud.
The trend is moving largely from hardware to software, mostly to cloud-based software, as the whole world is adopting software solutions.
Anyhow, when we observe the rate of IT outsourcing trend and their market size today, we will understand the actual size of the IT and software market.
IT outsourcing’s global market size is estimated to reach $342.9 billion this year (2020). Besides, it is projected to hit $410.2 billion by 2027. A major portion of this spending would definitely go to offshore software development and IT services. Let see the reasons for such a huge surge in software development outsourcing and offshoring business practices.
Why Businesses are Opting Offshore Software Development?
Cost is the primary factor that businesses are increasingly offshoring their software development projects. The cost of completing a software product development on-site seems to be 60% higher than doing the same in an offshore facility. Thus, the demand for offshore software development has skyrocketed. And when high-quality products are made ready with lower operational costs, companies became more competent to accomplish projects without the overhead.
The high tech-skill availability and low cost of talents made all the outsourcing destinations attractive to companies. Plus, despite the cost of setting a full-fledged working facility in an offshoring hub, offshoring dramatically reduces the operational and developmental costs for companies.
Further, the total cost engagement, which constitutes the taxes, employee compensation, insurance, and all the tagging expenses, can be cut from the budget estimation.
To illustrate, let’s look at a sample cost chart comparison for on-site and offshore facility expenses involved in a company for a project that homes 20 developers and their costs.
|
(Name of the project) |
On-site Facility |
Offshore Facility |
| Number of Talent Resource | 20 | 20 |
| Total Man-Hours | 600 | 600 |
| Hourly Rate | $80 | $35 |
| Taxes | Obligatory | No Tax |
| Training | Training & Upskilling | No Training |
| Employee Benefits | Obligatory | No benefits |
| Insurance | Obligatory | No Insurance |
| Travel | No Travel | Int. travel Involved |
A quick analysis gives us a clear picture of the cost-benefits of setting up an offshore development center or partner with an offshore software development provider. Visibly, it is evident that at least the company can save up to 60% of the cost by offshoring the project.
However, the critical factors involved in deciding the cost of offshore development are location, industry-experience, and the time required for the project.
Comparatively, western countries have a higher cost margin than African and Asian countries. To illustrate, the average cost rage for hiring a software developer in the US is $50 – $300, and the same in India is $18- $40. The margin will vary based on the experience and the roles of the resources hired.
Software Development Specialist Rate Card (Approximate values)
Roles |
North America |
Latin America |
Eastern Europe |
South Asia |
| Senior Developer | $75- $125 | $30-$65 | $30-$60 | $225-$50 |
| Junior Developer | $55- $90 | $28-$55 | $20-$35 | $20-$30 |
| Architect | $110-$130 | $45-$75 | $45- $70 | $35-$80 |
| DevOps | $70- $100 | $35-$65 | $40-$60 | $20-$40 |
| Project Manager | $85- $100 | $40-$70 | $25-$65 | $30-$55 |
| Scrum Master | $50-$90 | $30-$70 | $25-$60 | $22-$65 |
| Senior Quality Analyst | $70-$90 | $40-$60 | $20-$60 | $20-$40 |
| UI/UX Design | $60-$0 | $45-$70 | $25-$60 | $20-$42 |
(The cost range mentioned above is the approximate value, and it can vary based on the project, experience, and requirements.)
How to Choose an Offshore Development Destination?
As we have seen from the infographics, there is plenty of offshore software development destinations. Based on the feasibility, companies can outsource their project to anywhere to their ideal partner. However, before making the decision, there are a few factors that you need to check about the offshoring destinations.
- Compare Cost and Quality: Research the average rate for software development professionals and the output quality. Don’t head for a much lower rate only to end up in poor quality. So move with an optimal coat plan that can offer you a balanced throughput.
- Observe the Country Rating: Keep an eye on the global services location index and check what countries are performing well and serve the businesses at scale. In Asia, the Indian Subcontinent retains the top position for the last three years in a row.
- Check the Time Zone Difference: While selecting the offshore development destination, double-check the most feasible time zone for a seamless project journey. You can opt for an 8-hour time difference zone to work continuously with two turns. But, if you need a real-time collaborative environment, a 1-3 hours difference is more suitable.
Location |
UTC |
Time Difference ( to the US) |
| Eastern Europe | UTC+1, UTC+2 | 6-7 hrs ahead of New York |
| Latin America | UTC-3, UTC-4, UTC-5, UTC-6 | 0-4 hrs ahead of New York |
| Asia | UTC+5, UTC+6, UTC+7, UTC+8 | 10-13 hrs ahead of New York |
| Africa | UTC, UTC+1, UTC+2 | 10-13 hrs ahead of New York |
- Resource Availability: Search tech-skill availability in that particular country. Analyze the demand for generic technologists and specialists to determine how easily you can avail the professionals and their standers.
- Cultural Proximity: Cultural proximity is a crucial factor determining the well-being of a project development team working in a collaborative environment. Please have a look at your country of choice’s culture and their legislative systems as well.
How to Choose Your Ideal Offshore Development Company?
Choosing your ideal offshore development company or partner is as intricate as choosing the best offshoring country. Hence you can start with profiling the offshore development partners and shortlist the most fitting partner to work with. However, to profiling the companies there are few things that we need to check
- Cooperation Model of the Partner: This is based on the way you need to work with the offshore team. If you want to have control of the development cycle within your team you can just set up a development team remotely. Else, you can set up a full-fledged offshore development facility and leave the whole responsibility on them.
- Quality Over Cost: Though cost is a key element to consider, we cannot compromise on quality. Many companies made this mistake only to end up in utter disappointment. As we know paying a bit more for the best quality outcome brings us more benefits in the go. It accelerates our reliability and reputation further.
- Strings Attached to the Price: Offshore development packages have different pricing plans. It also includes additional charges in spite of developer costs. So, check whether the cost structure is transparent and no hidden charges.
- Offshore Development Management: You can decide who would manage the project. But, make sure you have all the resource assets and tools, and methods to take control in full. However, if you don’t have a robust development team or plan you can find an offshore software development partner to outsource the project out-to-out. Where the partner gathers up all the requirements to deliver the project based on the contract.
- Predictability of Budget: Every project cannot go with a predictable budget plan. But, as the requirement changes, the productibility of our project budget shatters and more man-hours would be added. But you can mitigate this issue by setting up an offshore development center with a reliable offshore development partner and pay as the work progress.
How Much Does It Cost to Set up an Offshore Development Center in India?
India is a popular and cost-effective offshoring destination for big enterprises and international corporations. Similar to any outsourcing destination, the expense of building an offshore development center developers will vary depending on the level of expertise and the duration of the projects.
But, setting up an offshore development center in India will cost you around half the cost you spend in the USA. Plus, compared with the expenses clinging expenses to set up and run a company in the US you can save up to 60% in India.
The average salary of a senior programmer in India ranges between $2,500 and $5000 per year. In addition, the expenses involved in hiring, training, and retention of talents and the employee benefits are too slight. Thus, signing with a reliable offshore development partner will give you an operational and competitive advantage in all aspects.
Final Thought
Offshore Software development is no more an optional business model. Rather it is more than a quintessential competitive strategy for every IT business firm. In India, the surge for setting up offshore centers is spiking up day-by-day. The easy accessibility to tech talents and the cost-efficiency to run the centers are the most attractive factors. As a trusted offshore development center enabler ZiniosEdge is helping global businesses to build their development center in India for years. Here we provide all the adequate service and end-to-end support to bring out the best for your business.
Hence reach for all your offshore development requirements anytime.