A Detailed Overview of Best Offshoring Destinations for Software Development

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Offshore development (offshoring) refers to outsourcing some or all development processes to a third-party vendor located at a remote location. It can involve outsourcing anything from a simple coding product design to custom software, web and mobile app development, or ongoing support and maintenance.

Offshore development is ideal for companies working on projects that require specific expertise and quality deliverables. In some cases, hiring IT experts with the skills to meet your expectations requires looking further than your backyard. 

Plus, if you are working on a shoestring budget – this seems like an impossible task.

Outsourcing software development to an offshore destination allows companies to find the best possible people for the job, first-grade services, and sometimes even at a lower hourly rate. 

Outsourcing also makes it possible to maintain cost-efficiency through the development process, allowing you to scale the team up or down per your needs. Last but not least, you can expect quicker turnaround times and faster project completion.

Searching for the land of opportunities 

For decades, Asia, Latin America, and Eastern Europe have been attractive outsourcing destinations due to the immense talent pool, flexibility, and competitive pricing (compared to the US and Western Europe). Now, even though finding the right people in one of the neighboring countries, there are times when you might need to travel a bit further away from home to ensure maximum return on investment.  

Should you decide to offshore to a remote team, know that it doesn’t come without its challenges:

  • Huge time differences may cause daily disruptions in the workflow, drag out the development process, and extend any deadline you set in advance. 
  • Cultural and language barriers can also affect project flow and cause communication issues, potentially affecting the quality of the result.
  • Security is always questioned, and measures must be taken to prevent data loss, theft, and leakages. Companies are also advised to draft outsourcing contracts to protect their data or intellectual property. 

Evidently, the cost is not the only factor involved. You’ll need to allocate a specific budget based on the team size, experience, the tech stack used, project duration, and more. 

To do so, prior to making any final hiring decisions, you’ll need to define project goals, timeframe and deadlines, development priorities, and tech stack requirements, as all will come into play when evaluating potential partners.  

4 most attractive offshoring regions

The US and Western Europe struggle with limited demand for skilled developers, which in turn results in an increase in industry salaries and intense rivalry for available talent. This is especially a problem for startups and SMBs, but even some of the bigger players are always on the lookout for the best value for the money. 

Currently, hourly rates range from $50 to $85 per hour in the US and between $50 and $90 in Western Europe, much higher than any popular offshoring destinations. 

The following section evaluates the most popular offshoring regions, taking into consideration several factors:

  • Time zones the region spans across
  • Average developer hourly rates (The numbers included are the median for junior and senior developers and different technologies)
  • Ease of doing business (max score 100)
  • Political stability (on a scale from -2.5 to 2.5)

  1. Africa
Africa Outsourcing stats

The African continent is an emerging market, but it has already indicated an enormous growth potential. 

North African countries, specifically Egypt, Morocco, and Tunisia, are already quite popular offshoring destinations. The time zone overlaps with Europe, making it attractive to European and US companies. Not to mention the added benefit of offshoring to Morocco and Tunisia where you can find developers who are highly proficient in English and French. 

Several countries in the south of Africa and Kenya in East Africa are also growing in popularity, but we are yet to explore the full potential of this continent. Unfortunately, Africa has displayed the lowest international skill rankings. 

  1. Asia (and Asia-Pacific)
Asia Outsourcing Stats

Asia is considered a pioneer of software outsourcing and, to this day, holds a top spot when it comes to the number of offshore developers. The most recent statistics indicate that there are over 10 million professionals skilled to take on a diverse range of IT projects.

India has always been the leader in offshoring, due to their vast talent pool and low cost of development services. However, the US is 10 hours and 30 minutes behind India, which is far from ideal, and certain cultural and linguistic barriers are known to affect the quality of collaboration significantly. 

China, too, is a strong contender as their government offers abundant support for the tech sector. As one of the most populous countries in the world, it produces a large number of tech graduates every year who are typically fluent in English. 

The Philippines is one of the fastest-growing IT regions, with over 200 offshore companies. They are known for their work ethics, competency, and linguistic skills. In fact, you can find Philipino developers proficient in both English and Spanish.

And let’s not forget Singapore, which is highly praised for its developers’ work quality and reliability. The country offers a competitive pool of multilingual software developers known for their exceptional problem-solving skills and drive for innovation. 

But although the low average hourly rate for an enviable skillset sounds appealing, the low ease of doing business index and political instability make Asia and Asia-Pacific a less favorable option than certain European offshoring destinations.

  1. Latin America
Latin America Outsourcing stats

Latin America is an outsourcing hotspot for US-based companies, with Argentina, Colombia, Mexico, and Peru at the forefront of the industry. We are also seeing a growing demand for Latin American IT experts among companies in Western Europe. 

What is driving this trend?

  • Global proximity to the US. Owing to the overlapping time zones and cultural similarities, the US companies prefer establishing offshoring partnerships with outsourcing partners in Latin America rather than the ones based in Asia. 
  • Low costs. At the moment, Latin American countries offer some of the lowest development rates in the world.
  • High language proficiency. Several Latin American countries have overtaken India and China regarding language proficiency. But we are not just talking about English here; the region is famous for its linguistic diversity, which makes it possible to hire developers fluent in Spanish, French, or Dutch. 
  • Tech education. Universities in Argentina, Chile, and Brazil have built strong IT departments and are producing highly skilled experts in computer sciences. As a result, Latin America has to offer many talented developers.  

Nevertheless, the Latin American region struggles with the same issues as Asia and Asia-Pacific: high political instability index and low ease of doing business rate. Ultimately, Eastern European countries remain one of the most favorable offshoring destinations. 

  1. Eastern Europe
Eastern Europe Outsourcing stats

There are over 1.3 million software developers in the Eastern European region and up to 40 thousand tech university graduates each year. It is popular for excellent educational facilities and for producing a lot of talented individuals, as well as state backing and low taxation for the IT sector

The region became a popular middle-ground for discovering great talent with excellent work ethics and high language proficiency at a reasonable cost. And yes, the prices are a bit higher than in some Asian and Latin American locations, but the quality and consistency of their work more than compensate for that. The overall cost of an average software development project is difficult to estimate since it depends on multiple factors, so it can be anywhere on the scale of $50,000 and $250,000. But one thing is certain: you will get the best value for the money, with minimum hassle. 

Best of all, the time zone is manageable no matter the location of the company headquarters. A part of Eastern European work hours always overlap with other regions: the Americas, Asia, Asia-Pacific, and Australia. 

Last year, Ukraine, Poland, and Romania were the leading software development centers, but other countries like the Czech Republic, Hungary, Bulgaria, and Serbia are growing in demand due to the immense outsourcing benefits they offer.

What makes Serbia a desirable offshoring destination?

Serbia Outsourcing stats

The past decade was marked by significant growth of the Serbian digital sector, culminating in its placement among the top 5 European IT outsourcing destinations

There’s a ton of government support for the IT sector, plus tax incentives for foreign investors and companies seeking to set up their base in Serbia. 

We are also seeing the Serbian education sector move forward in terms of investment in the IT and Computer Sciences. The University of Belgrade and Novi Sad offer a range of courses under Technology and Engineering Sciences, focusing on innovation and research. In addition to institutions offering ‘formal’ knowledge, there is a growing number of smaller IT Hubs intended to gather skilled and like-minded professionals.  

Time-zone overlaps with Western Europe, and work hours partially overlap with the US, which allows for real-time communication that is highly essential for the success of the software development project. When you add English proficiency to this mix, you know you can expect streamlined collaboration and quick resolution of any bugs.  

Finally, with the annual senior developer salary maintaining the average of $46,000, costs are significantly lower. 

What do you get? Unparalleled quality and excellent work ethics, in line with Western values

Photo by Suzy Hazelwood