- Why businesses outsource software development
- How to choose where to outsource software development?
- 20 best countries to outsource software development overview
- China
- Philippines
- Singapore
- Outsource software development to Eastern Europe
- Final thoughts about the best country to outsource software development
- FAQ
When digital projects need to be moved fast, business owners are on the lookout for new ways to find skilled software engineers. Out of all available talent sourcing models, outsourcing software development seems to be the most convenient and durable software development approach for numerous companies across various industries.
Hiring a dedicated team allows team leaders to kill multiple birds with one stone — fight talent shortage, cut development costs, and speed up product development.
In this post, we will take a look at outsourcing trends, the most popular destinations, and the best countries for outsourcing software development, trying to explain the benefits of each particular destination for sourcing a dedicated development team.
Why businesses outsource software development
Outsourcing is a flexible and scalable strategy currently implemented both by SME owners and corporations with billions in annual revenue. Most companies that choose to outsource software development are headquartered in North America or Western Europe. During the search process, they can easily find themselves looking for dedicated teams in distant locations like Eastern Europe, Africa, Latin America, or Asia.
Why are businesses willing to share in-house knowledge and practices with dedicated teams? According to Deloitte’s Global Outsourcing Survey, business owners outsource for the following reasons:
Achieving cost efficiency
Software outsourcing basically means cost savings. By choosing an external developers team, businesses can significantly reduce their development budgets without compromising quality, allowing them to allocate resources more effectively.
Streamlining core tasks
Hiring external developers frees up the in-house team to concentrate on core business tasks and strategic initiatives. Such an approach enables companies to maximize the productivity of the in-house team.
Accelerating project delivery
Outsourcing development brings in additional resources and expertise, boosting the company’s capacity and enabling faster project delivery. The increased speed to market gives businesses a tremendous competitive edge nowadays.
Enhancing tech operations as well as assessing new knowledge
Outsourcing provides access to new practices, technologies, and expertise. Collaboration with experienced software development partners allows companies to leverage the latest industry trends, improve their tech operations, and look at the project with an extra set of eyes.
Overcoming talent shortages
Software development outsourcing helps address talent shortage challenges. It allows businesses to tap into a global talent pool of skilled developers, ensuring they have the proper expertise and capabilities to tackle complex projects.
How to choose where to outsource software development?
With numerous options available around the globe, deciding where to outsource software development can be quite a challenging task. There are several key factors to consider when choosing an exact location. Of course, evaluating the cost-effectiveness of each option is the very first point of assessing; however, some criteria emerge from the very nature of the outsourcing software industry.
Time zone difference
Consider the geographical proximity and, consequently, time-zone differences between your location and outsourcing destination. Although the problem is not critical for companies with proper project management approaches, the absence of overlapping hours may impact the communication between parties, especially considering some urgent issues.
Cultural differences
Evaluate the cultural compatibility between your organization and the outsourcing destination. Understanding the background, cultural nuances, as well as management approaches will help foster effective collaboration and minimize potential conflicts.
Communication barriers
Determine the level of English fluency or other shared language proficiency in the outsourcing destination in order to ensure clear and effective communication.
Business ethics
It’s essential to understand the business values and work culture of the region or particular country in order to ensure alignment with your company’s goals and values. A shared vision and compatible values system contribute to a productive and successful outsourcing partnership.
Intellectual property protection and data security
Prioritize destination with robust and transparent legal frameworks and data protection regulations to safeguard your intellectual property and sensitive data. Evaluate the legal system of the state and also check the security approaches and compliance with industry standards to avoid undesirable consequences.
20 best countries to outsource software development overview
As the value of the global outsourcing market increases (for instance, it was estimated to be around $0.35 trillion in the past year, according to Statista), new software development markets and outsourcing countries emerge. As a result, the number of countries that outsource software development to supply people with jobs and improve citizens’ well-being increases. In fact, the phenomenon of so-called outsourcing countries is just the combination of three principal factors: modest cost of living, decent technical education level, and easy but transparent legal and tax systems.
Today, there are dozens of locations that business owners can choose from when it comes to IT outsourcing. Although there is no one simple answer to the question of the best country to outsource software development, we would like to begin our journey by comparing different destinations with a particular factor: the average hourly labor costs.
Depending on the region you choose, developers’ hourly rates may vary from $10 to $250. Although average salaries are not very informative indicators (as the development costs can significantly vary inside the same country depending on the particular company, outsourcing model, tech qualification of the team members, industry, and the specific field of the development), they allow somewhat better understand the overall picture.
| Country | Hourly rate |
| UK | $60-95 |
| Norway | $60-120 |
| France | $55-95 |
| Belgium | $55-90 |
| Estonia | $35-75 |
| Romania | $30-70 |
| Ukraine | $25-65 |
| Poland | $35-75 |
| India | $15-60 |
| China | $20-60 |
| Philippines | $20-60 |
| Singapore | $35-80 |
| Mexico | $25-60 |
| Chile | $30-60 |
| Costa Rica | $35-65 |
| Colombia | $30-60 |
| South Africa | $30-60 |
| Nigeria | $30-55 |
| Ethiopia | $20-55 |
| Kenya | $25-55 |
However, cost-effectiveness is not the only factor to consider, as we told previously. We prepared a short overview of the best countries to outsource software development based on the region, juxtaposing them with the neighboring countries and comparing them by several factors.
Before diving into the topic, there is one thing to clarify. All of the facts provided below are based on different statistical sources, and you can check all the data written here. We used the EF English Proficiency Index to provide information about English level proficiency; several sources like Clutch, YouTeam, Glassdoor, and local market overviews served as a basis for hourly rates estimations; education level by EdStat rankings from WiseVoter, and world digital competitiveness ranking by IMD.
Western Europe
Top destinations: UK, Norway, France, Belgium, and other Western European Countries
Average hourly rate: $75-80
Top tech skills: Web and software development, mobile app design, game development, fintech, data science
Average English proficiency score: Highest among all not-native speakers regions, especially when it comes to Scandinavian countries
Readiness as a market for outsourced software development: Highest
Big companies that outsource to this region: Google, Facebook, Amazon
Western European companies are a safe bet for business owners. Most regional outsourcing destinations have a robust tech education infrastructure, including those in emerging fields like AI and Data Science. However, most countries have salaries almost similar to North American ones. Western European countries themselves often look for software outsourcing services in other regions of the world. A reliable choice for nearly any case; however not that cost-effective.
| Country | Hourly rate | English proficiency | Time zone | Education level | Digital competitiveness ranking |
| UK | $60-99 | – | GMT | 93/100 | 86/100 |
| Norway | $60-120 | 627/1000 | GMT+1 | 93/100 | 93/100 |
| France | $55-95 | 541/1000 | GMT+1 | 82/100 | 81/100 |
| Belgium | $55-90 | 620/1000 | GMT+1 | 90/100 | 81/100 |
Eastern Europe
Best countries to outsource software development in Eastern Europe: Estonia, Romania, Ukraine, Poland
Average hourly rate: $50
Top tech skills: Web and software development, mobile app design, testing, support, DevOps
Average English proficiency score: High
Readiness as a market for outsourced software development: High
Big companies that outsource to this region: Microsoft, Samsung, Oracle
Eastern Europe is one of the leading outsourcing regions in terms of development cost and software development technical skills. In contrast to other destinations, the people here have a cultural affinity to Western values. Since cultural similarity exists, the collaboration process is smooth and effortless, complemented by lower development prices than in Western countries.
As shown above, there are several Eastern European regions that business owners should consider outsourcing. They look for a workforce in the Baltic as a compelling choice between offshore software development countries: Latvia, Lithuania, and, of course, Estonia; Balkan countries, such as Romania, Croatia, Slovenia, Bosnia and Herzegovina, and Serbia, are other popular destinations.
Strong outsourcing communities also emerge in the far eastern countries — Moldova, Ukraine, Russia, Belarus, and Armenia, as well as central Eastern Europe — Poland, Czech Republic, Hungary, and Slovakia. Here, we should say that almost all region countries have above-average levels of IT outsourcing markets.
Depending on which Eastern European region a developer chooses, average hourly rates and talent skills may vary, as seen in the table below.
| Country | Hourly rate | English proficiency | Time zone | Education level | Digital competitiveness ranking |
| Estonia | $35-70 | 570/1000 | GMT+2 | 88/100 | 85/100 |
| Romania | $30-70 | 595/1000 | GMT+2 | 77/100 | 58/100 |
| Ukraine | $25-65 | 539/1000 | GMT+2 | 80/100 | 51/100* |
| Poland | $60-70 | 600/1000 | GMT+1 | 87/100 | 63/100 |
Eastern Europe is undoubtedly a promising destination. Development hubs like Ukraine do an excellent job at offering affordable software developer rates and combining Eastern and Western technological know-how in order to build reliable, revenue-driving solutions.
Poland
Polish developers have gained a strong reputation in software development outsourcing due to their technical expertise, professionalism, and cost-effectiveness. Poland has a robust educational system and a growing tech ecosystem, emerging as one of the most popular destinations. The country has over 400,000 tech specialists known for their proficiency in a wide range of programming languages, agile methodologies, and ability to deliver high-quality solutions within tight deadlines. Also, it should be said that Poland and Estonia are the most popular destinations for relocations for companies from further East (Ukraine, Belarus, Kazakhstan), making prices even more competitive.
Ukraine
Ukraine is a rapidly growing tech hub in Eastern Europe with affordable prices (the lowest in the region), a smart taxation system (most of the paperwork is digitalized, and you can open the business just in a few clicks), and an excellent technical education level. Although the country is experiencing hard times, the Ukrainian digital tech sector grew even in the second year of the war compared to previous years. Combining Eastern and Western approaches, low prices, and strong tech and communication skills, outsourcing companies in Ukraine seem to be a decent choice for any company looking for software development.
Estonia
Estonians have significantly impacted the IT outsourcing market with advanced technical skills, innovation, and efficiency. Estonia’s strong focus on digitalization and tech-savvy workforce have positioned Estonia as a sought-after destination for IT outsourcing. Skype, the most popular communication application at the beginning of the century, was initially created in Estonia. Still, Estonian developers are known for their expertise in cutting-edge technologies such as blockchain, cybersecurity, and artificial intelligence, making them valuable partners for complex projects.
Romania
Romanian developers gained recognition due to their high adaptability and competitive rates. Romania has a thriving IT industry with a large pool of skilled developers, making it an attractive choice as an outsourcing destination for Western software development companies. The Romanian market excels in web/mobile app development and QA testing, creating a reputation as a trustworthy outsourcing hotspot.
Asia
Best countries for outsourcing software development in Asia: India, China, Philippines, Singapore, Indonesia, Malaysia
Average hourly rate: $40-45
Top tech skills: Tech support, software development, testing, web development
Average English proficiency score: Medium
Outsourced software development market readiness: High
Big companies that outsource to this region: IBM, Microsoft, Dell
Emerging Asian economies have a strong presence in the IT sector. While Japan, China, and India remain established outsourcing players, new regions, like Malaysia, Indonesia, Singapore, and the Philippines, also appear.
| Country | Hourly rate | English proficiency | Time zone | Education level | Digital competitiveness ranking |
| India | $15-60 | 516/1000 | GMT+5:30 | 56/100 | 64/100 |
| China | $20-60 | 498/1000 | GMT+8 | High* | 86/100 |
| Philippines | $20-60 | 578/1000 | GMT+8 | 68/100 | 53/100 |
| Singapore | $35-80 | 642/1000 | GMT+8 | 92/100 | 99/100 |
India
Being one of the most popular destinations for IT outsourcing, the country is well-known for the world’s largest pool of software developers. With a strong emphasis on tech education and the rapid growth of infrastructure, India offers an extensive range of services, from customer support to full-stack development. It’s an efficient and scalable outsourcing solution; however, time zones and cultural differences may require special attention.
China
China has emerged as a competitive country for software outsourcing, leveraging the vast pool of tech-savvy developers with growing expertise across various technological domains and cost-effective rates. With a strong focus on STEM education and a rapidly expanding outsourcing industry, Chinese developers are now incredibly successful in large-scale projects and innovative fields such as IoT and AI. However, the language barrier can still be a big problem for the country’s tech industry.
Philippines
Filipino developers offer a wide range of software development services and, just like in India, a well-developed IT support industry. The country’s cultural affinity with Western countries and strong English and Spanish languages enable seamless communication and collaboration with most clients. However, cultural differences, infrastructure limitations, and political instability are some of the challenges you may face when outsourcing to this beautiful Asian country.
Singapore
Singapore is a highly regarded destination for software outsourcing due to its advanced infrastructure, highly-skilled workforce, and emphasis on technology, especially in Blockchain, Fintech, and Logistics. Singapore is undoubtedly one of the best countries for outsourcing software development in these spheres. Generally, it seems more like a Western European country by most indicators, where the quality is excellent; however, it is not that cheap compared to other Asian countries.
Latin America
Best countries to outsource software development in the LatAm region: Mexico, Chile, Costa Rica, Colombia
Average hourly rate: $40-50
Top tech skills: Web development, QA testing, tech support
Average English proficiency score: Above average
Outsourced software development market readiness: Medium
Big companies that outsource to this region: Amazon, Alibaba, Toptal
Latin America has been one of the leading outsourcing powers since the 1980s. The relative proximity of the region to the US facilitates the collaboration process and offers Latin American developers a steady stream of projects to work with.
Aside from the most popular outsourcing software development countries, such as Mexico, Chile, Argentina, Brazil, and Colombia, markets like Panama and Ecuador have also started to make a noticeable mark on the global IT outsourcing map.
| Country | Hourly rate | English proficiency | Time zone | Education level | Digital competitiveness ranking |
| Mexico | $25-60 | 447/1000 | GMT-6 | 70/100 | 55/100 |
| Chile | $30-60 | 524/1000 | GMT-3 | 81/100 | 66/100 |
| Costa Rica | $35-65 | 536/1000 | GMT-6 | 73/100 | 62/100* |
| Colombia | $30-60 | 477/1000 | GMT-5 | 68/100 | 49/100 |
Africa
Best countries to outsource software development in Africa: South Africa, Nigeria, Kenya, Ethiopia
Average hourly rate: $35-40
Top tech skills: Web and software development, QA testing
Average English proficiency score: Below average
Outsourced software development market readiness: Low
Big companies that outsource to the region: Accenture, HP, IBM
Africa is considered one of the world’s fastest-growing economies — especially countries such as Nigeria and Ethiopia. The area offers an affordable workforce and has started to adapt to globalization, adopting the latest tech practices and innovations.
A growing number of large-scale corporations have Africa-based vendors — Atlassian, HP, IBM, and many more. Look at the comparative table for Africa’s leading outsourcing destinations to clarify the region’s full potential.
| Country | Hourly rate | English proficiency | Time zone | Education level | Digital competitiveness ranking |
| South Africa | $30-60 | 609/1000 | GMT+2 | 72/100 | 52/100 |
| Nigeria | $30-55 | 564/1000 | GMT+1 | 50/100 | – * |
| Kenya | $25-55 | 582/1000 | GMT+3 | 53/100 | – * |
| Ethiopia | $20-55 | 490/1000 | GMT+3 | 34/100 | – * |
Outsource software development to Eastern Europe
Final thoughts about the best country to outsource software development
As you choose your next outsourcing destination, there are a lot of details to account for. Business owners need to select a region with skilled and affordable tech talent, as well as a high level of English proficiency and cultural compatibility. At the same time, cost-efficiency is often the primary reason for outsourcing, so you should consider this factor. In fact, that’s more about the balance between affordability, skills, and development costs.
Well, there is no specific and straightforward solution regarding which country is clearly the best, as soon as each region has its pros and cons. However, in our opinion, Eastern Europe seems to be the well-balanced one, all things considered. Development hubs like Ukraine offer affordable software developer rates and combine Eastern and Western technological know-how to build reliable, revenue-driving solutions.
Consider contacting ELITEX, an experienced outsourcer based in Ukraine, in order to hire a skilled development team for your project or in case you want to find out more about the specifics of the particular market. We offer software development and testing services to SMEs as well as large-scale corporations from all over the world.
In case you have any questions regarding software development or want to know how we can be of assistance for your digital project, please contact us, and a representative will reach out to you in no time!
FAQ
What are the best countries to outsource software development?
There is no single answer to this question. The list of “traditionally considered” best countries to outsource software development usually includes India, Ukraine, Poland, Estonia, China, Philippines, Chile, and other countries, depending on the project’s specific requirements, budget, and expectations. The best option is always about finding the perfect balance between cost-effectiveness, tech expertise, and a smooth collaboration process.
What are the main factors to consider when selecting a region for outsourcing software development?
The key factors to consider when looking for the appropriate outsourcing region for your project include cost, quality of talent, English language proficiency, and cultural and management approach compatibility.
What are the best countries for outsourcing software development in Eastern Europe?
Poland, Ukraine, Romania, and Estonia are Eastern Europe’s best countries for outsourcing software development. These countries are well-known due to their skilled tech workforce, competitive pricing, proximity to Western European markets, and decent quality of services.
How can companies ensure effective communication and collaboration with offshore software development teams?
Effective communication and cooperation with offshore software development teams can be provided through several easy steps: well-defined project scope, clear communication channels, regular feedback and updates, and fostering a culture of honesty and transparency.
How can companies mitigate the risks of intellectual property theft when outsourcing software development to other countries?
Companies can reduce overall safety and intellectual property risks by choosing a country with a decent information/privacy law system. Also, you can sign non-disclosure agreements (NDAs), conduct due diligence, implement data security protocols and measures, and make regular monitoring of the situation.
What are some recommended strategies for managing and mitigating the challenges of language barriers when working with offshore development teams?
Strategies for managing barriers between two parties that can be located thousands of miles from each other include bilingual project managers, thorough staff selection, and establishing clear documentation and communication protocols. However, this problem is not widespread in case you choose an experienced and trusted development partner.
What are emerging trends and technologies shaping the landscape of outsourced software development?
Artificial intelligence (AI), machine learning, blockchain, DevOps, cloud practices, and the Internet of Things (IoT) are some of the most promising technologies in the outsourcing market.
Let’s talk about your project
Drop us a line! We would love to hear from you.