The Best Countries to Outsource Software Development
Outsourcing is a business process to a third-party contractor or vendor. Outsourcing can include both foreign or domestic contracting. Many companies today would outsource some of their business processes to foreign countries, with software development as one of the major process being outsourced. If you are planning to outsource your software development, the first thing you must consider is the country should you outsource to. We will dive into why companies outsource their software development process, and what are the best countries to outsource this process.
Why Companies Outsource Software Development to Other Countries
Let’s discuss the major factors why companies outsource their software development to other countries:
- Lower costs – Outsourcing software development can cut down the overall cost of a project because you don’t have to spend a lot of money to train your in-house team. This set-up is beneficial if your current IT team lacks the skills for a specific project, or you don’t have an IT staff on your own. It’s estimated that outsourcing reduces the software development costs by as much as 70% compared to an in-house team. For example, a software developer in the U.S. requires an average salary of $69,083 per year. A software developer in India doing the same type of work would require an average salary of Rs 390.970 ($5,427.12) per year, while a developer in the Philippines will require an average of PHP 367,066 ($6,789.89) per year. So, you get a lot of savings if you contract a Filipino or Indian software developer compared to the same developer in the U.S. There will be more efficiency because you can afford to add more developers to complete a project. You also save more money from expenses associated with hiring additional in-house employees such as health insurance, employee benefits, training, taxes, and other related costs.
- Get expertise that you lack – If your company does not have the expertise and resources for a new product, outsourcing is a practical and effective way to get the skills that you need. There is a wealth of outsourcing vendors or development contractors available in many countries. These companies specialize in various platforms and technologies, and hire the best developers with the proper experience and qualifications. They can provide you with skilled teams that have the necessary experience and resources to ensure that the job you give them is done right and finished on time. Many outsourced teams also have vast experience in working on different projects with various clients, business demands and countries. These teams effectively use the latest tools and technologies and ensure that their work conforms to international standards.
- Focus more on your core activities – Outsourcing allows your company to focus on its core expertise even if you are managing many projects simultaneously. For example, lower priority assignments can be performed by the outsourced team, while your in-house team concentrates on doing the most lucrative projects, especially if their competencies are closely related to these projects. The outsourced team can do portions of work that are outside of your core activities, while your in-house team can focus on further developing long-term projects from your clients. With outsourcing, you can allocate resources to tasks that generate the highest value and focus more on building your business and marketing your products or services.
- Save time, meet deadlines and budget – You can make efficient use of your time as the company owner since you can be as involved as you want in a project or focus more on building your business such as marketing, customer relations, human resources, and other support services. The offshore team will focus on the specific components of a project while the in-house team can focus on pacing up the delivery of the project. This results in efficient use of time, which is very important in deadline driven development projects. You can also meet the deadline and keep the budget because many outsourcing companies have processes in place that allow them to predict the necessary resources and the modifications needed to deliver the project on time. The outsourced developers have a better understanding of the resources needed to complete a project, which helps to establish the cost of the project and reduce any budget deviations.
- Obtain new technologies for projects – If your in-house team is unfamiliar with a new technology you want to use for a project, then you will save time and effort if you outsource to an external team that is already familiar with the technology you are planning to implement. This is true for contractors who employ coders and developers who are experts in specific technologies. This ensures you have resources available for short-term and long-term projects, improve project efficiency, save costs for research on new technology and hiring new in-house personnel.
The Best 8 Countries to Outsource Software Development
The following are the best eight countries to outsource software development. We’ll compare each country based on their manpower or skills availability, English proficiency according to the EF English Proficiency Index (ranking and score of countries for English skills), and average billing rates or yearly salaries. The countries listed are in no particular order.
- Philippines – The country’s public and private higher education systems produced about 703,327 graduates from 2016 – 2017 with 82,794 engineering and technology graduates and 73,646 information technology graduates. Since the offshoring industries in the Philippines have been operating for more than 26 years, it is estimated that more than 4 million trained workers have experienced working for foreign companies and servicing foreign customers. Offshoring companies like GigaBook and Stackify, and BPO companies such as Accenture, Convergys, JP Morgan, IBM Daksh, and Teleperformance have operations in major cities. For Full Scale, we’ve expanded to Cebu City. Many software developers in the Philippines are well-versed in programming languages such as .NET and Java, legacy application, and application development. A software developer in the Philippines earns an average pay of PHP 367,066 ($6,789.89) per year, while a software developer in the U.S. has an average of $69,083 per year. The Philippines has a 2017 EF English Proficiency Index score of 60.59 and rank #15 among 80 countries in the world.
- India – The second country in the world in 2016 to have the most STEM (science, technology, engineering) graduates with 2.6 million. At least 120,000 IT professionals are added to India’s IT talent pool every year with about 62% of this workforce having more than four years of experience and over 70% having an engineering degree. A software developer in India charges an average rate of $10 – $15 per hour, while a software developer in the U.S. charges an average of $60 per hour. India has a 2017 EF English Proficiency Index score of 56.12 and rank #27 among 80 countries in the world.
- Poland – Every year, about 80,000 students major in IT and IT related fields, and about 15,000 IT specialists graduate each year from 18 Polish technology colleges. According to infoShare – a yearly tech conference in Central and Eastern Europe, Poland has almost 250,000 software engineers with about 20% of them involved in outsourcing. There is a rich pool of offshore programmers in Java, Python and Ruby. According to PayScale, the average salary for a software developer in Poland is $23,912 per year while a software developer in the U.S. has an average salary of $69,083 per year. Poland has a 2017 EF English Proficiency Index score of 62.07 and rank #11 among 80 countries in the world.
- China – The school system focuses on science and mathematics. China had the most number of STEM graduates in the world in 2016 with 4.7 million. Pricewaterhouse Coopers, one of the largest professional services firm in the world, said in its 2016 Emerging Markets Top 30 Software Companies report that 13 software vendors from China are in the top 30 fastest growing software companies in the world. According to PayScale, the average salary of a software developer in China is CNY 131,560 ($19,232.05) per year, while a software developer in the U.S. earns an average of $69,083 per year. China has a 2017 EF English Proficiency Index score of 52.45 and rank #36 among 80 countries in the world.
- Bulgaria – About 3,500 IT specialists graduate from the country’s universities each year. Internationally, Bulgaria’s software developers are rank #12 for the best developers, while its Java and Python developers are rank #2 and #3 for best developers with domain expertise. The country’s software developers are well versed in C++ and Java. According to PayScale, the average pay of a software developer in Bulgaria is $20,830 per year compared to a software developer in the U.S. who has an average pay of $69,083 per year. Bulgaria has a 2017 EF English Proficiency Index score of 57.34 and rank #22 among 80 countries in the world.
- Romania – The country’s 41 technical universities produce about 5,000 engineers and computer science graduates each year. Their software developers are competent and experienced in various software methodologies, languages such as C, C++, .NET, Java, PHP, Mobile, and several niche technologies. According to PayScale, the average pay of a software developer in Romania is $24,665 per year compared to a software developer in the U.S. who has an average pay of $69,083 per year. Romania has a 2017 EF EnglishProficiency Index score of 59.13 and rank #17 among 80 countries in the world.
Listen to Episode 26 of the Startup Hustle Podcast – How I Ended Up in Cebu City