“According to the Information Technology (IT) services spending forecast worldwide from 2008 to 2020 by Statista, the global spending on IT will rise to a whopping $1,034 billion by the end of 2019.”
A tough immigration policy imposed by the Trump administration, coupled with high cost of local talent, is making it difficult for tech companies to find the right people in the United States. The situation in the UK is no better post Brexit – The United Kingdom European Union referendum of 2016. A recent report published by Robert Walters, totaljobs, and Jobsite shows that UK’s technology sector is struggling with severe talent crunch.
Another report by Salesforce, investigating into how businesses are perceived in the UK and their role in the country’s overall prosperity, says that the majority of business leaders fear that talented IT workers will leave the country after United Kingdom’s withdrawal from the European Union, and the new ones would come at a much higher price.
While it is impossible to achieve business development and digital transformation without fresh talent, hiring programmers has never been more difficult for startups and large corporations alike, with an ever-increasing gap between tech talent supply and demand.
“The Bureau of Labor Statistics estimates that by 2026, the entire IT workforce requirement will exceed 1.2 million.”
“According to recent research conducted by Indeed, the US software job market currently faces a 472K tech talent shortage with 9 out of 10 business owners struggling to find and hire IT professionals.”
The lack of IT professionals in countries located across North America and Europe results in high developer rates. That is why most enterprises and startups in these countries prefer outsourced product development.
“As per American online publisher TechCrunch, a top software engineer is paid up to $250 per hour in the US while the average cost of hiring a similar resource is only about $20 in Indonesia.”
Hard-pressed to stay competitive in today’s marketplace, companies across scales are making a stupendous shift towards offshore software development, which enables them in bolstering efficiency, productivity, and innovation.
While offshore software development teams have become a critical resource, choosing the right offshore or nearshore IT partner, is a daunting task for businesses due to various complexities and challenges such as meeting deadlines, communicating across time zones, language and cultural inadequacies, etc.
Nevertheless, we have compiled a comprehensive offshore software development pricing guide which shall provide you valuable insights into topics such as region-wise offshore software development cost, choosing between offshoring and nearshoring, etc., along with divulging intricate details on what change and flourish offshore teams would usher in 2020 and beyond!
There’s a sea of options available if you wish to opt for an offshore software development model, with lot of variability in pricing.
The world’s biggest tech hubs to hire experienced software developers are Asia, Eastern Europe, Africa; Central and Southern America. Offshore software development prices range from $30 to $50 in Central and Southern America; in Eastern Europe from $25-$50, and in Asia and Africa, offshore developers charge $18-$40.
Role of Cooperation Model in Influencing Offshore Software Development Prices
Before we dig deeper into region-specific or offshore development country-wise rates, let’s understand how the cooperation model chosen by your outsourcing software vendor directly influences the IT outsourcing prices. There are two basic cooperation models, the project outsourcing model, and the extended team model.
Project Outsourcing Model
In the project outsourcing model, the vendor charges a fixed fee for the project plus additional cost in case you decide to change some functionality midway into the software development project. The fixed price includes fees for the services rendered by project managers, business analysts, and solution architects.
Extended Team Model
Under the extended team model, you pay the developers’ fixed monthly salaries, rent for vendor’s office space, and infrastructural costs such as acquiring workstations for the developers, expenditure on HR management, etc.
Which model is better, Project Outsourcing Model or Extended Team Model?
In the project outsourcing model, the hourly offshore software development rates you’ll end up paying will be higher than the hourly development rates for the same services under the extended team model. Another pitfall in the project outsourcing model is that you seldom get to know how skilled the developers working on your project really are, as you mostly communicate with the vendors. Some vendors exploit this situation to increase their profit margins by hiring inexperienced junior developers whose salaries are at the lower end of the spectrum but ask the client to pay the rates of experienced software developers.
Bear in mind that the region-wise price ranges provided in this software development pricing guide are indicative only and don’t take into account the variations arising out of choosing different cooperation models. To find out the real outsourcing rates, you must contact the vendors directly.