How much does it cost to outsource software development? This is a question thats difficult to answer, since it depends on several factors, including team location and size, the required time and the project requirements.

In this article, we will consider why businesses outsource and the factors that affect the cost of outsourcing software development projects. 

Are you planning to outsource your software development project? Well you're in the right place to find excellent development talent. At Deazy, we help businesses build the ideal software development team of pre-vetted developers that can handle any project. Book a call today!

Key Points

• Outsourcing your software development project helps to reduce costs because you can hire offshore or nearshore developers at competitive rates. Also, software outsourcing gives businesses access to a large talent pool and speeds up the development process.
• The three types of software outsourcing are onshore, offshore and nearshore development. When you outsource to an onshore team, you hire from your country. Offshoring is when a business hires from a far country, while nearshoring involves hiring from a nearby country.
• Some factors that affect the cost of software outsourcing are the project requirements, the required time to complete the project, the team size and location.
• The location of the outsourced team greatly affects the cost of building your software. Suppose you outsource to a team based in North America or Western Europe. In that case, you should expect to pay more than hiring a team in Eastern Europe, Asia or Latin America.

Why Outsource Your Software Development Project? 

Businesses outsource their software development project for many reasons. Here are a few.

Cost Saving

Outsourcing software development helps businesses to cut down on development costs. How? There is no need to hire an in-house team of developers when you can easily engage an outsourcing company and get all the necessary skills.

Also, there is no need to set up and equip office spaces for the developers and pay vacation and bonuses since they work from a remote location and are often self-employed or employed by a development house. 

Aside from that, outsourcing your project allows you to hire from a country where development rates are lower. 

High-Quality Development 

It is not easy to ensure high-quality software development unless you have a large team of QA engineers that can test every feature extensively before deployment. 

It is even harder for a startup with limited resources to hire a QA specialist and launch quickly. When you outsource to an external software development company, you have access to all the experts needed to build high-quality software for your business. 

Access to Talents 

Outsourcing software development gives you access to an infinite pool of talent. If you decide to hire an in-house team, your search is limited to geographic boundaries. But when you hire from an outsourced team, you can access talents globally. Aside from that, you can find software engineers with rare skills from an outsourced team and quickly start your project.

Hiring Speed

If you are a startup founder that wants to quickly build an MVP or a scale-up with a limited cash runway, going through the process of hiring local talents will slow you down. 

Time is money, especially when you have investors who want to see a return on their investment, constantly checking your progress and asking questions if you have nothing to show. 

The fastest way to build software and enter the market is by outsourcing to a development company with all the skills on the ground.

Type of Software Development Outsourcing 

When hiring an external agency to build your software, you can explore three software development outsourcing models. They are onshore, offshore and nearshore development. 

Knowing the difference between them is important because the model you choose affects the cost of outsourcing your development project.

Onshore Software Development

Onshore development is geographically the closest type of collaboration because you and your outsourcing partner are located in the same time zone and country.

Since you hire from within your country, the distance between you and the team isn't much, so you can decide to meet in person. 

But onshore software development is for startups and businesses willing to pay premium prices, because you will pay more to hire an outsourcing team than when you use the other hiring models. 

Cost aside, onshore software development makes it easy for the clients and outsourced team to collaborate in real time since they are in the same time zone. This will ensure that the developers quickly respond to messages and get tasks done or feedback implemented on time.

Offshore Software Development 

Offshore development is geographically the farthest type of collaboration because you and the outsourced team are located in different time zones. If you have an in-house team in the UK and decide to work with a team in India, you are offshoring your project. 

Offshore software development is the most cost-effective type of outsourcing because developers charge a lower rate than onshore. Since the cost of living in India is lower than in the UK, the team will charge less for your project than if you hire developers in your country. 

But you have to consider collaboration when choosing offshore development. Since the outsourced team is located in a faraway country, you don't share the same time zone. This will reduce the response time between you and the team and make collaborating on your project difficult. 

Nearshore Software Development

Nearshoring is when a business hires an outsourced team from a country with the same or similar time zone to their own. You are nearshoring if you are a tech business in Germany and hire an outsourced team in Poland. 

Since the time zone difference between Germany and Poland isn't much, it will be easy for the client and the outsourced team to collaborate on a project. While nearshoring isn't as cost-effective as offshoring, you will pay less than hiring onshore developers. 

If the cost of outsourcing software development is the most important thing to you, hiring an offshore dev team to handle your project will be the right choice. But if you want a cost-effective hiring model that encourages collaboration, nearshoring to a nearby country is the best option.

Factors that Affect the Cost of Outsourcing Software Development 

Developing software is a complex process with numerous factors affecting the cost. If you want to know how much to outsource your development project, you should know that the price depends on your project requirements, time, team size and location.

Project Requirements

The project requirements determine how much it costs to outsource software. A few facts you might want to consider when estimating cost include:

• What type of software do you want to develop?
• What problem do you want the software to solve?
• What features do you want in the software? 

Asking these questions will allow you to identify must-have features so that you can outsource to experts capable of handling your project. These requirements affect the complexity, so the more features your software has, the more the development cost. For example, an app that allows users to process payments and provide location-based tracking will be more expensive than a simple app with fewer features. 

Required Time 

This refers to the amount of time it takes to build your software. A simple mobile application or a small software development project can be ready within six months. 

Complex mobile apps or software can take up to 12 months to complete. The more functionalities, the more time the developers need to complete the project. This means that the more time needed to build your software, the more the cost. 

Of course, you can build complex software in less time, but remember that the outsourced team will raise the hourly rate if they are to work around the clock.

Team Size 

The number of specialists in your team also affects the cost of outsourcing software development. A single engineer rarely builds software; that is why a dev team consists of a business analyst, UI/UX engineer, project manager, developer and QA engineer. 

• Business analyst. The business analyst will be your point of contact when you outsource your software development project. This expert will help you list your MVP features, finalise the project requirements and estimate the development cost.  
• UI/UX designer. A professional UI/UX designer is part of a software development team. This expert is responsible for designing the user interface of your mobile application or website. The UI/UX designer designs widgets like buttons and forms and ensures colour consistency to improve user experience.
• Project manager. In a software development team, the project manager is in charge of the project. This expert is the link between the client and the development team and ensures that all requirements are met. The project manager will organise tasks, pass clients' demands and feedback to the team and ensure the project is completed on time.
• Developer. The software engineer is an important member of every development team. Whether it is a mobile app or a website you want to build, you need a developer to write the code and develop the core features of your product. The programmer must have the right tech stacks to build functional software. Usually, software developers receive the biggest pay in a development team, so they influence the cost of outsourcing software development.
• QA engineer. Bugs and vulnerabilities can ruin the user experience and result in data leaks. You need a QA engineer to detect and fix bugs and vulnerabilities to avoid issues after deploying the software.

Experience Level 

Depending on the complexity of your project, you can outsource to a team of senior, mid-level or junior developers. 

While junior and mid-level developers will charge less to work per hour, remember that senior programmers are more likely to produce higher-quality code. 

If you want junior developers in your team, you should ensure that a senior programmer will oversee tasks and provide support when necessary.

Developer's Rate 

The cost of outsourcing software development depends on your chosen hiring model. Always remember that you can outsource to an onshore, offshore or nearshore development team. 

Collaboration-wise, onshore development is the right option for big businesses but it is more expensive. 

For example, the hourly rate for developers in the United States is between $100 and $150 per hour, while devs in Eastern European countries like Poland will charge between $30 and $50 per hour. 

So, if you are a US business that outsources to an onshore team, you will pay more than offshoring to Poland. Note that cheaper rates don't mean lower quality; the difference is in living costs. 

Look at the cost comparison table of hiring developers from different regions.

Eastern Europe 

This is a promising area for software development outsourcing. Businesses can hire developers at lower rates and still get high-quality software products. 

On average, the regional software development rates range from $30 to $50 per hour. Countries in Eastern Europe where you can outsource software development at a reduced cost are Estonia, Poland, Lithuania, Hungary and Latvia. 

Ukraine 

Outsourcing software development to Ukraine guarantees reduced cost and high-quality software development. The largest IT hubs in Ukraine are Kyiv, Lviv, Odesa, Kharkiv and Dnipro. 

Also, you can find programmers across tech stacks, making it easy to build your software no matter the skill you need. Development outsourcing cost in Ukraine is between $25 and $50 per hour. 

Western Europe 

Western Europe has some of the best developers and the highest hourly rates. So, if you want to outsource to Western European countries like Germany, France or the Netherlands, you should be prepared to pay the developers between $100 and $200 per hour. 

Latin America

Latin America is another destination to find developers at lower rates if you want to outsource your software development project. Outsourcing to Latin America is convenient for customers in North America because they share similar time zones. 

Development agencies in this region offer competitive hourly rates of between $50 and $100 per hour for the services of highly skilled professionals. Top countries in Latin America you can outsource to are Argentina, Brazil and Peru. 

North America 

North America is the largest tech hub in the world. Software engineers based in North American countries like Canada and the United States of America charge the highest hourly rates in the world. So, if you outsource your software development project to a team in North America, you should expect the cost to be higher. 

Software development rates are between $100 and $150 per hour for USA and Canada and $25 to $50 per hour for Mexico. 

Asia

This region has many software outsourcing companies that can handle projects of any complexity. Top Asian countries you can outsource to are India, Vietnam and the Philippines. Software engineers in Asia charge between $20 and $45 per hour. 

Africa

Software development outsourcing to Africa is becoming popular due to the increase in developers. You can expect to pay between $20 and $40 per hour if you outsource to this region.

How Deazy Can Help You

Outsourcing software development is often the only way out for businesses and startups that want to launch quickly. While you can hire many outsourcing companies, remember that not all are made equal. 

Deazy is your go-to development outsourcing company for projects of any complexity. At Deazy, we don't offer a one-size-fits-all solution for software development; we know that each project is unique, so we strive to build a product that meets your business needs. 

We intelligently match pre-vetted nearshore developers from our ecosystem to work on your project based on your requirements. Hire developers from nearshore teams smartly and at a competitive rate when you outsource your software development to us. 

You can book a call with us here.

Conclusion

Software development outsourcing allows startups and big businesses to build software without hiring an in-house team. The cost to outsource software development varies depending on the project requirements, development team size and location and how long it takes to finish the project. 

You can engage offshore developers to reduce development costs because they usually charge a lower fee to build software than onshore programmers. But if collaboration is of the essence, you can engage nearshore developers. 

Nearshore developers charge a competitive fee for their services and produce higher-quality software. Also, communication and collaboration will be easy since they are in the same or similar time zone. 

Are you ready to build your software? Feel free to call us and let our expert estimate the cost of your software development project.

Frequently Asked Questions 

How much does outsourced development cost?

The cost to outsource software development varies on the region, project requirements and time. Suppose you outsource to developers in Eastern Europe, Asia and Latin America. In that case, the cost will be less because developers in those regions charge less than those in high-income countries like the USA and Western Europe. 

Is outsourcing software development a good idea?

Yes. The benefits of software outsourcing go beyond cost cutting. Startups and businesses outsource because it saves valuable time and energy. By delegating tasks to an external software development agency, you can focus on your business, access a talent pool and build software quickly. 

What is the hourly rate for software outsourcing? 

Software developers charge different hourly rates depending on their location. The hourly rate in North America starts from $150 per hour, while the rate in Latin America is $50 per hour. Developers in Eastern Europe and Asia charge $35 and $25 per hour.