As an American or Western European business owner, you might be aware of how expensive it is to hire a skilled software developer for a project; however, depending on where you look for talent, there are different definitions of ‘expensive’ when talking about developers salaries and rates.
Software development rates are highly influenced by the country’s median cost of living, its demand for an IT workforce, and the skill set of local talent. Looking beyond the local talent pool and considering offshore software development gives multiple tech giants, as well as emerging startups, an opportunity to cut software development costs and bring products to the market considerably faster.
In this post, we will compare software development pricing in America and Eastern Europe and review both talent markets.
Table of Contents
- Software Development Rates: Why US Specialists Charge More
- US Market Overview
- Eastern Europe Market Overview
- Developers Salaries: Conclusion
Software Development Rates: Why US Specialists Charge More
There are plenty of factors that establish software developers salaries. While some are obvious — education, level of skill, or experience — others are more convoluted like the type of company a developer works for, demand for programmers in the local market, etc.
The difference in developers salaries all over the world is drastic — while an American programmer makes $81,000 per year, an Eastern European specialist earns somewhere around $42,000 or less, depending on their country of residence.
Here are the reasons for such a gap in pay:
- US tech splurge. Right now, the US is the largest tech market worldwide, with an overall value of $1.7 trillion. The economic impact of the sector exceeds that of other major industries — transportation, retail, construction, and others. Business owners and well known tech giants in the United States are constantly investing in new tech projects, startups, and even software developers — and the numbers only keep going up from there.
- Higher demand. According to statistics published by the Bureau of Labor in 2018, the United States currently employs people in 1,365,500 tech development jobs. In the next ten years, the field is estimated to grow by 21% which is ‘much faster than average.’ The growing demand for tech specialists results in increasing salaries, putting US tech specialists among the highest-paid ones in the world.
- High cost of living. Some American cities regularly make it to the top of the list of the most expensive places to live worldwide — in 2019, both New York and Los Angeles made it to the top 10. On the contrary, most Eastern European cities are featured as relatively affordable places to live, which contributes to a lower freelance software developer hourly rate in Eastern Europe.
- Rigorous tax system. The US has a robust taxation system — an average household has to pay a wide range of taxes. There are property and Medicare taxes, some states even ask for a return on clothing and groceries. An average California resident, for example, is expected to pay somewhere around $15,600 in taxes per year. Therefore, software developers in the US have higher software development rates by default — to have a decent after-tax income. This, in turn, increases the median paycheck of an American professional in general.
US Market Overview
If you are considering hiring American tech talent, it’s helpful to understand which market trends and salary practices you will need to account for. Here’s a concise review of the local tech market in the United States:
- Number of software development professionals: 1,183,900 *
- Number of development job openings: 227,447 **
- Top tech hubs: Seattle, San Diego, Boston, NYC, San Francisco
* — according to Statista
** — according to Burning Glass Labor Insights
Here’s the rundown on annual developers salaries for American specialists working in different fields.
- Project manager — $100,000
- Software developer — $98,000
- .NET — $96,500
- Python — $158,200
- Java — $93,200
- C++ — $77,900
- UI/UX Designer — $73,900
- Quality assurance — $56,000
These numbers were compiled from a study of data provided by PayScale.com, Indeed.com, Zippia.com and Salary.com.
Eastern Europe Market Overview
Eastern Europe is a vast market, with over 500,000 available developers. The major markets that US business owners normally outsource their projects to are Poland, the Czech Republic, Romania and Ukraine. So, if you are looking to outsource your project development, consider these countries first:
- Total number of professionals: 279,000
- Most popular technologies: Python, PHP, Java, JS, SQL
- Most popular IT hubs: Krakow, Warsaw, Lodz, Wroclaw
- Total number of professionals: 96,100
- Most popular technologies: SQL, Python, Java, JS
- Most popular IT hubs: Prague, Brno, Ostrava
- Total number of professionals: 116,000
- Most popular technologies: JS, Java, Python, SQL
- Most popular IT hubs: Bucharest, Timișoara, Napoca
- Total number of professionals: 191,800
- Most popular technologies: Java, JS, SQL, Python
- Most popular IT hubs: Kyiv, Kharkiv, Lviv, Dnipro, Odessa
After getting a data-driven understanding of the American tech market, let’s compare US-based professionals to their Eastern European counterparts. Here’s a review of annual median offshore software development rates by country for Eastern Europe.
This data was compiled from an in-depth study of such resources as SalaryExplorer.com, Glassdoor.com, Dou.ua and Work.ua.
As you can tell, the median custom software development rate of an Eastern European tech professional is significantly lower than that of an American specialist. To offer a clear view of the developers’ salaries in both markets, we have decided to compare them side-by-side.
Taking into account that Ukraine is the most affordable country in Eastern Europe for software development outsourcing in terms of rates and pricing, here’s a comparison chart with the salaries of American and Ukrainian specialists in the most popular tech fields.
Developers Salaries: Conclusion
It turns out, if you choose the right software development market, the process of building a product and bringing it to the market doesn’t have to be expensive. Instead of looking for talent in first-world countries with a more expensive and sought-after workforce, business owners should consider international destinations, such as Eastern Europe.
Here, developers are taught in line with international coding practices and standards. They master modern technologies, have a high level of English proficiency, and are capable of bringing quality products to the market.
Due to a considerably lower cost of living and tax rates, Eastern European developers do not follow the path of high software developer hourly rates like Western European or American developers do.
To find a skilled and affordable workforce for your project, contact us at Elitex.Systems. We assist business owners with web software development, UI development, and quality assurance.
If you have an idea for your project but are struggling to find a reliable team of software developers, we are here to help. To onboard our developers for your projects — leave us a message. We are looking forward to helping you fully leverage your company’s potential!