Outsourcing of software development is a diverse topic that includes many specific and difficult things that you need to keep in mind to get profitable results.
The first and the most important question is - “How much does it cost to develop software?”. This question starts your journey of searching for the right vendor that could deliver qualitative results for a reasonable cost.
This blog post may simplify it for you by providing some market research of global software development IT outsourcing.
In one of our previous articles, we discussed IT outsourcing in Ukraine and the costs of outsourcing software development for your business there. We will now take a closer look at cost of software globally.
We will provide comparative results of our IT market research in North America, Scandinavia, and Europe. The primary goal of this article is to find the most profitable ratio between the development cost and the quality of results that you’ll get.
We have chosen PayScale and Glassdoor as data sources for our survey and consider the hourly rate for software developers in every region as a base measurement. We will provide information related to both freelancers and software developers that work for companies.
Software development cost can vary depending on the specificity of technologies and programming languages that software developers are working with, as well as level of working experience will also be taken into consideration.
As these platforms provide information on developer salaries in national currency, we are using the current dollar exchange rate to compile this information.
USA. According to the Evans Data Corporation, there are around 4.4 million software developers in North America including hobbyists and professional engineers. The average hourly rate for software developer in the US varies from 30 to 100$+. Prices start from 30-35$ per hour, on average most US software developers earn 50-60$ per hour, and approximately 10% - 100$+.
Canada. The situation with rates here differs a little bit but stays in one price range. Cost of software development here varies from 28 to 100$+ per hour, 10% of all rates are 30-55$ per hour, and approximately 10% - 100$+.
Bulgaria. Approximately 24,000 software developers work in Bulgaria now. Their hourly rates vary from 13$ for the cheapest development services to 43$. The average software development costs in Bulgaria are 17-25$ per hour.
Romania. According to the YouTeam hourly rates of Romanian software engineers are 75% lower compared to similar services in Western European countries and even in Eastern European countries. Hourly rates here vary from 11$ to 45$ per hour.
Czech Republic is another profitable IT outsourcing destination. Depending on the level of seniority and technology stack it will be approximately two times cheaper to hire software developers here than in Southern Europe and the UK. Software costs in Czech Republic are 16$-47$ per hour.
Hungary. According to the Pentalog, approximately 80,000 software developers work in Hungary. Their hourly rates vary from 15$ to 40$. It is worth mentioning that the IT sector here is growing rapidly and according to some reports, it makes up approximately 6% of the country's economy.
Poland. Hourly rates of polish software engineers are not inferior to their colleagues from Central and Western Europe. The average price per hour is 30-50$.
There is a trend for the Scandinavian software development market that the demand for IT professionals here is much higher than supply. For example, Denmark will lack 19,000 software and electronics specialists by 2030. Scandinavian countries are not the cheapest outsourcing destination. Software development costing is at the high level here. For example, in Denmark approximately 30% of hourly rates are 80$+, it is twice as expensive as in Eastern Europe.
Software cost in Southern Europe and the UK vary from 20$ to 70$. Median and maximum prices are the highest here, and the UK is the most expensive on this chart.
Software development prices in Central and Western Europe varies from 22$ to 70$ per hour. More than a half of this rate accounts for the median price, which starts from 30$ to 60$. Switzerland is the most expensive country in this region.
As indicated we can observe the economic destinations for outsourcing software development which shows Eastern and Southern Europe can potentially provide savings. The regions in that came in second place are Central and Western Europe, which includes Scandinavia. Trailing behind North America takes the last spot in third place.