How much does it cost to outsource software development?

Software Outsourcing and how much does it cost?

Software outsourcing is the talk of the town. Today companies are hiring remote resources to meet their software development needs. 

Outsourcing software development from offshore regions like Europe, Asia, South America, North America, etc. has proved to be a cost-effective method to deliver successful project submissions to clients. However, any CEO who wants to make an efficient decision about software outsourcing needs to understand and evaluate the necessary software outsourcing costs thoroughly to make the right decision.

Let’s first begin by understanding the types of Outsourcing models.

There are mainly three types of Outsourcing models

Software Outsourcing: Its models and hourly rates

1. IT Staff Augmentation: In this type of outsourcing model organizations hire external IT professionals. for a temporary duration and leverage their skills to help their in-house team. But, here the organizations instead of hiring external resources for a complete project, they hire them for meeting certain specific skill sets by collaborating them to work with the in-house team and fill the skill gaps if any.

Pros of IT Staff Augmentation

• Flexible Resource Allocation: Based on the project requirements the organization can up or down their workforce without the need of any long-term commitments.

• Expertise Acquisition: A diverse pool of expertise available in the external market allows organizations to find the best resources to meet the project requirements by hiring professionals with specialized skills and values.

• Knowledge Transfer: By hiring external professionals the in-house team and software developers can help themselves in learning new skills by working together with the external IT professionals.

Cons of IT Staff Augmentation

• Integration Challenges: The incorporation of external professionals with the company's culture and work processes might need a lot of time and effort.

• Communication & coordination: The collaboration of both in-house and external professionals might be a difficult task, caused due to lag in communication and coordination occurred due to differences in the time zone.

• Dependency on External Talent: As the dependency on external professionals gets increased the companies might find it difficult if the external professionals are not available for a longer duration.

• Hourly Rates: The companies pay predetermined hourly rates based on the hours and days worked by the Augmented IT Professionals.

2. Dedicated teams: As the name itself suggests, the companies in this model hire a group of dedicated IT professionals from the service providers to work on the companies' projects exclusively. The hired professionals here are totally focused towards working on one specific client and not on different clients at the same time.

Pros of Dedicated Teams:

• Commitment and Focus: Dedicated teams are fully focused towards one client’s work which ensures that they are fully focused towards delivering quality outcomes.

• Seamless integration: The external team that is hired by the organization becomes an integral part of the organization by mingling into the processes and culture of the organization and working closely with the in-house team of the organization.

Cons of Dedicated Teams:

• Higher Cost: Unlike other models, in a dedicated team model the cost is higher as the organization needs to hire the full remote team again in future.

• Management Overhead: The company needs to bear extra costs in order to manage the dedicated external team effectively.

Monthly Retainer: The clients here will pay a fixed monthly fee to retain the dedicated team next time, covering basic salary, benefits and administrative costs.

3. Outsourced Development Services: As the name suggests in this model the organizations outsource the complete software development project from an external service provider. In this project the companies delegate the entire development process from analyzing the project to deployment, everything to the software outsourcing company.

Pros of Outsourced Development Services:

• Expertise and Specialization: Outsourcing development services leverages access to some specialized skills which are absent inside an in-house team, doing this can ensure high-quality software development.

• Faster time to market: As the software development team is hired from offshore and as it is solely managed by the external team, faster completion of development process and cycle becomes possible and thus it results in early entry of the software in the market.

Cons of Outsourced Development Services:

• Communication & Coordination Challenges: Due to geographical and cultural differences, communication and coordination can become a difficult task, which can result in misinterpretation and delay in the execution.

• Loss of Direct Control: Delegating the complete process of development to the external teams means the company is giving full control to the external team for each process of the work, which might at times be risky as this requires a high level of trust and effective project management.

• Hourly Rates: The companies pay the charges based on the mutual discussion of fees determined based on the project requirements and specifications.

Software Outsourcing Cost: Based on different regions

The cost of outsourcing software development varies from region to region. But worry not, we have included the cost of different regions based on our research, to help you decide the best region to outsource Software development Services for your clients.

1. Western Europe: The western European countries have higher software development rates than the rest of the world. As there are more developed IT companies the rates intend to be higher as compared to others. Countries like the United Kingdom, France and Germany fall under this region and the average rates range from 150 USD to 300 USD per hour.

2. Eastern Europe: It is the popular destination for hiring offshore software development professionals due to the availability of a highly skilled workforce. Countries like Ukraine, Poland and Romania fall under this region. The average rates here range from 25 USD to 50 USD per hour.

3. Central/Western Asia: This region includes countries like India, Pakistan, Kazakhstan and the professionals from this region are more competitive based on their hourly rates. The rates in these regions are cheapest and ranges from 15 USD to 40 USD per hour based on the country and complexity of the project

4. East and South Asia: This region includes countries like China, Vietnam and Philippines. The rates in these regions range the same as that of the Central/Western region which is 15 USD to 40 USD per hour based on the country and complexity of the project.

5. North America: This region includes countries like the United States and Canada. They charge higher rates as compared to other regions. The average cost charged for Software Development by countries of this region ranges from 80 to 200 USD which can be determined based on the expertise required and the complexity of the project.

6. Latin America: Countries like Brazil, Argentina and Columbia fall under this region. They provide competitive charges which range from 25 USD to 40 USD per hour based on the country and the complexity of the project.

The difference between the prices of different regions shows a huge gap, so it can be considered that the charges mentioned above can vary based on different factors and thus every company can find the best fit based on their budget and requirements.

After knowing the charges and software outsourcing cost from different regions, let's find out which are the top 5 countries you can look to hire remote developers and also understand what are the points to be considered while choosing the best country to hire the services.

The list of top five countries are as follows:

1. Vietnam

2. Australia

3. Singapore

4. India

5. United States

Software Outsourcing: 7 points to choose the best country

There are many countries which are the best fit for software development outsourcing. The below tips will help you choose the best country as per your needs.

1. Expertise: Research the best country fit for meeting your offshore requirements based on the industry knowledge and experience they possess. By doing this you will be able to find the country that meets your requirements effectively.

2. Service offerings: By checking the alignment of the service offerings with your needs and wants you can easily identify and find the best fit country to outsource your software development requirements.

3. Cost: Analyzing the labor costs and project rates of different countries can help you to find the right offshore country that meets your budget.

4. Language barriers: Language proficiency is very important and crucial for effective communication. So, while deciding the best fit you should prefer the countries who are having skilled professionals that are fluent with your language.

5. Culture: Having a mutual culture can smoothen the collaboration between two countries. Finding the right culture fit can be difficult but it's very necessary as it can help you find the right compatibility for your project.

6. Time zones: In a scenario where you need to conduct meetings in real time it is necessary to outsource a country that meets or aligns with your time zone. For e.g. hiring India as an offshore country sitting in Brazil might not be a good idea but hiring a team of professionals from a country like Canada can be a good fit.

7. English skills: As English is considered to be the universal language, prioritizing English-speaking nations can be an effective idea for implementing smoother communication.

Selecting the suitable fit for outsourcing your software development requirements can be a critical decision but finding the best fit by considering the above points can be a game changer.

As you scroll and search for the best fit, consider Acquaint Softtech as an excellent choice to meet your software development outsourcing requirements.

Conclusion

When there are a lot of Software developments to be met but meeting deadlines is becoming a difficult task that’s when hiring a professional external software development outsourcing team becomes a necessary task being a founder of the organization.