Looking for the best software development countries around the world, it may seem that today every corner has something to offer – that widespread outsourcing has become. In reality, with all the richness of choices, outsourcing can either be your golden ticket or a dead end – if you haven’t thoroughly researched the market, tech providers, and specifics of each region before testing the waters. Here we collected all the latest market data to track changes and updates that occurred on the market for you to find the best countries for software development outsourcing globally.
- What Is Outsource Software Development? Why to Outsource?
- How Outsourcing Covers The Problem With In-House Hiring
- What’s New in the Global Outsource Software Development Market in 2023?
- Regions and Best Countries to Outsource Software Development
- Top 5 Software Outsourcing Countries from Each Region
- How to Find an Outsourcing Partner
- Where We Are Available to Our Customers
What Is Outsource Software Development? Why to Outsource?
Today outsourcing is firmly established in the everyday business language and plans. With the high prices for in-house development and the urgent need for globalization worldwide, the demand for this approach rises dramatically. According to statistics, large organizations have increased the percentage of their IT budgets spent on outsourcing from 6.3% to 8.7% this year. Medium-sized companies too increased their budgets from 4.7% to 6.5%.
Outsourcing is the process of transferring certain processes or functions by a company to another organization. Outsourcing is the right choice for well-defined projects with a limited duration — when there is simply no need to hire a full-time team.
The use of external resources allows companies to:
- focus on their core business functions instead of spreading themselves too thin
- get economic benefits and the possibility of quick product scaling
- help businesses save a lot of money and time
- expand business and expert base
- reduce an HR burden associated with team management
How Outsourcing Covers The Problem With In-House Hiring
The process of engaging new professionals in IT becomes extremely complicated. When a company doesn’t have its own effective recruiting team, it is incredibly difficult for businesses to cover a rapid increase in hiring volumes. This may lead to not only financial loss but also to the best business opportunities.
In this regard, companies use outsourcing to focus on their core business functions, cover the gap in quality recruitment specialists and instantly respond to changes in market requirements.
Customers who choose to outsource typically are not involved in the product creation and administrative processes with customers. In this case, the client simply wants to get the product quickly and with minimum expenses and sacrifices.
Software development outsourcing services are provided by outsourced and outstaff vendors who have relevant expertise and access to the cream of the crop specialists with narrow specialization.
Responsibilities between the customer and the vendor during outsourcing are distributed as follows:
|No participation in the hiring process||Search and recruitment of personnel|
|No management or micromanagement of the team||Taxes and payroll|
|No working equipment provided||Onboarding and team training|
|Price is higher than in outstaffing, but lower than hiring in-house||Registration of social packages (vacation, sick leave, etc.)|
|The result is quick solution for a small project with minimal sacrifices||Responsibility for code quality|
Is There A Golden Mean: What is Outstaffing?
When the customer wants to be more involved in the project development process, it is better to turn to outstaffing as a solution. Outstaffing is the process of engaging third-party employees to work on the project under the customer’s full supervision. At the core, this is the expansion of the internal team with additional employees when it is needed without hiring them. Just like during outsourcing, in outstaffing, the service provider also takes care of all administrative tasks with the team. Instead, however, they carry less responsibility for the ready project. That’s why outstaffing starts with a detailed discussion of requirements that allows the extended team to be on the same page as your core one.
Responsibilities between the customer and the vendor during outstaffing are distributed as follows:
|Participates in the candidate selection process to find the most suitable fit for the project||Provides access to an international pool of talents|
|Directly communicates with the team and sets its workload||Learns the customer’s company, job description, and corporate culture|
|Provides feedback on remote employees work||Interview candidates|
|Manages a team to achieve results in line with business objectives||Takes care of administrative issues|
|Provides an environment for code, defect tracking, continuous integration, development, testing, staging, and production||Provides quick start to complex projects where developers with specific skills are required|
What’s New in the Global Outsource Software Development Market in 2023?
Pandemics, climate changes, and economic and global crises like the Russian-Ukrainian war have a major impact on the software development market. These major global changes force organizations to further expand into new markets, try on new cooperation models, make their business more cost-efficient, and reduce operating costs.
The volume of outsourcing services is growing and it requires ever more capacity in terms of skilled developers. According to an IMF report, the technical skills shortage will increase to more than 85 million workers by 2030, potentially resulting in more than $8 trillion in lost income per year.
This prediction looked especially realistic at the beginning of the war in Ukraine — one of the most popular outsourcing destinations globally. Home to almost 300,000 tech talents, before the war, Ukraine covered a large percentage of the world’s demand for software developers. Ukrainian specialists have a high level of engineering education and top-notch software skills necessary for the development and implementation of the most innovative solutions on the market. Thus at the beginning of the invasion, Ukraine had a significant impact on the technology industry of Europe and the United States.
Since then, the majority of Ukrainian developers have managed to continue almost uninterrupted work from safer places. However, the Ukrainian IT workforce still faces severe challenges, and that’s why a certain number of local professionals were forced to leave the country. Even though only 5–10% of clients were prepared to stop doing business with Ukrainian companies, some clients began to look at alternative directions for development.
The latter events affect outsourcing in the region and create an intriguing dynamic in the IT outsourcing market since Poland, as an equally attractive spot for outsourcing, received a strong influx of professional talents from Ukraine. According to a survey from DOU, 35.2% of respondents moved to Poland from Ukraine after February 24, 2022.
Also, a large number of Ukrainian companies and startups have opened offices in Poland to provide additional guarantees of the security of clients’ investments. Moreover, the majority of Polish IT companies say “yes” to hiring Ukrainian specialists.
As a result of the full-scale invasion, Germany, Portugal, the Netherlands, Turkey, Slovakia, the Czech Republic, Moldova, and Croatia also received an influx of Ukrainian IT specialists.
The results of such synergy will be revealed soon. However, we can already state the resilience of Ukrainians prevented the dynamics of the outsourcing market to slow down dramatically.
What Makes a Country a Good Spot for Software Development?
The top software development destinations in 2023 are Central and Eastern Europe, India, China, and South America. But what makes a country a good spot for outsourcing software development? What are the criteria for making this choice?
Cost reduction is the first motivation for those who choose software development outsourcing. That’s why the average rate of software developers in a certain country is a strong argument that makes the place lucrative.
Due to economic reasons, specialists from countries in Europe and North America have some of the highest rates among developers. According to Accelerance 2023 Global Software Outsourcing Trends and Rates Guide, developer’s services in the US may cost about $62-210 per hour, which is quite a lot compared to other regions.
2023 Global Software Outsourcing Rates | Accelerance 2023 Global Software Outsourcing Trends and Rates Guide
By contrast, Latin America can offer a more reasonable rate of $34-96 per hour. In South Asia, software development costs $24-71 per hour. As a result, collaboration with these regions may provide a significant cost reduction making them one the best spots for software outsourcing alongside Eastern Europe.
Programming languages and technologies
Choosing a country for software development outsourcing, customers also focus on the level of tech education. Countries that provide good education in computer science and information technologies, engineering, and mathematics are preferable. A solid background in these domains guarantees good programming skills among specialists and their ability to work with the latest technologies (AI, blockchain, IoT, etc.).
English is an international business language with over 1.3 billion people speaking it globally. That’s why proficiency in English is a core skill required when hiring dedicated developers. The most popular outsourcing countries like Netherlands, Austria, and Denmark placed first, second, and third overall in the global English proficiency index from Statista. Argentina has the highest English proficiency level in Latin America. In Eastern Europe, the highest level of English proficiency is Poland and the Baltic countries.
English Proficiency Index Around the World | Statista
Mentality and soft skills
Some people debate whether mentality matters when you work with an outsourced team. For recruiters at the MWDN, this is one of the key criteria when selecting a team that works permanently alongside the core team and should be a good fit into it in many ways.
To become a great match outsourcing and especially outstaffing should not only be a good extension of the team but also meet all the customer’s requirements and fit perfectly into the corporate culture of the company and its product. That is why it is sometimes easier for customers to engage in nearshoring because it is more likely to guarantee a good connection with the team.
Regions and Best Countries to Outsource Software Development
Latin America (Hourly rate $47-$71)
South America is one of the leading directions for software development in the industry. Above all, due to countries like Argentina and Brazil which offer services for a very reasonable price. However, not only the accessible prices attract customers to LATAM from all over the world, but also a large pool of professionals and solid skills of local developers. The major IT hubs in South America are Argentina, Brasil, Chile, Colombia, Costa Rica, Mexico, Panama, and Peru.
Top tech cities and rates
South America’s largest IT pool, Brazil, takes 9th place in the world for software and services, with a market of $18.6 billion. Brazil has a pool of half a million software developers. Since there is no single dominant country in the region, the prices across these regions do not differ much.
Software developers in Latin America have scored high across programmer skills. Speaking of Latin America, the most widely used here is Java Script. According to other sources, the equal popularity here has HTML, Python, and technologies like C# and C and technologies like Swift, Angular, and Ruby.
Latin American countries have uneven levels of English proficiency, ranging from high to very low. The highest level is observed in Argentina, Bolivia, Cuba, and Paraguay.
Mentality and soft skills
The neighborhood of Latin America with the United States guarantees the absence of lag, making it an ideal place for nearshoring. However, a convenient territorial location does not yet guarantee an eternal pass to the customers. Living in a country with such a wonderful climate, there’s always the temptation to choose outings over work — and it’s hard to blame someone for that. But it may be the reason why most of the complaints related to the developers from this region revolve around them not being able to complete the tasks on time and at the proper level, which was damaging to the campaign.
Asia (Hourly rate $30-$46)
Mobile phones and remote work become an integral part of the work culture. The Asian software market is gaining popularity, and the cloud is one of the most profitable segments of its deployment model. The high level of proficiency in the adoption of cloud and mobile applications guarantees the growth of the Asia-Pacific software market as the demand for operational efficiency and transparency in business processes rises.
According to Allied Market Research, in 2020, the leader in the Asia Pacific software development market was China with a market value of $19,398.8 million projected by 2027. The Japanese market is showcasing a CAGR of 25.1% during (2021 – 2027). Additionally, The Indian market is poised to grow at a CAGR of 26.5% during (2021 – 2027).
The Asian IT market and its top countries (China, Bangladesh, India, Nepal, Sri Lanka, Kazakhstan, and Uzbekistan) can offer one of the most affordable rates among software developers, convenient for the hypothetical customer.
However, the latter often complain about the insufficient level of knowledge and expertise if they need developers for complex projects, which can hardly be ignored. At the same time, if you have a rather simple project that needs to be implemented quickly and cheaply, then in this region you will be helped as best as possible.
Sometimes customers refuse to cooperate with the Asian market due to the low level of English proficiency in these countries. This prevents timely and correct communication and leads to project delays. Even in regions where the level of English is sufficient, the presence of a sharp accent can make communication difficult. In the 2022 English Proficiency Index only Singapore made it to the countries with a high level of English proficiency, most countries were in the category with a low to very low level.
Mentality and soft skills
People in Asian countries have their mentality and way of thinking like any other region. That’s why it may sometimes be difficult for them to join a team where Western thinking prevails. For example, a culture of low refusals and constructive criticism is often observed in these regions. Not all of the client’s ideas deserve to live and often the client needs an honest evaluation from the outside. In Asia, however, criticism of a customer can be viewed negatively, which is why it is more difficult to get a critical evaluation from them during work.
Western Europe (Hourly rate $100-$150)
Central Europe consists of developed countries with large economies and heavy taxes which results in high prices for many types of services. Local developers accumulated many years of expertise but at the same time, they have one of the highest rates in the industry. This way, Central Europe is a go-to location for companies that require strong expertise for their projects above cost reduction. Western Europe and its major IT hubs, Netherlands, Germany, Switzerland, Austria, UK, and Belgium are still one of the most trusted destinations for software development due to the high level of provided services.
Top tech cities and rates
Western Europe and its top tech cities in Germany, France, Italy, the Netherlands, Switzerland, etc., have some of the highest rates for IT services globally. Clutch reports that the average hourly rate for the majority of companies providing software development services in this area may be between $100 and $150.
Specialists in Western Europe have a deep proficiency in different programming languages. But Java is the dominant programming language in Western Europe. For instance, France, Germany, Italy, the UK and Northern Ireland have the highest volume in Java Script language. Equally popular in Europe is C/C++.
Western European countries such as the Netherlands, Austria and Norway also have one the highest scores in English proficiency worldwide.
Mentality and soft skills
Western European countries are among the most innovative countries in the world. They actively implement know-how and feel comfortable working with them. The team from this region will share advanced expertise with the customer and show the best way to implement the project. In addition, developers from this region are distinguished by a high level of expertise, discipline, and loyalty to the projects they work on.
Eastern Europe (Hourly rate $41-$71)
According to Statista, the Eastern European software outsourcing market size is steadily growing exceeding $103,9 bln in 2021 compared to $93,1 bln in 2016. In recent years Eastern Europe has become the top software development market introducing a wide pool of talents and exceptional quality for a reasonable price. Like in Western Europe, innovations are actively implemented here and local developers are pioneers in many of the most trendy technologies. However, the customer pays much less money for work in these regions than in Western Europe. In addition, Eastern European countries have a great higher education system, especially in tech fields. Many software engineers have technical degrees. For example, in Poland, over 22k students a year graduate in engineering, according to Statista.
Top tech cities and rates
Before the start of the full-scale invasion, Ukraine was not only one of the main technical hubs in Eastern Europe but also in the whole world. Despite being a fully functioning industry amid the war, Ukrainian specialists are also available in more safe zones for customers who may be careful hiring here. Thus Ukraine managed to hold its position amid countries that remain the top software development destinations. The equal popularity in the region, Ukraine shares with Poland, Hungry, The Czech Republic, and Romania.
Mentality and soft skills
Specialists in Eastern Europe share Western work ethics and have strong ties with the European Union. The latter establishes a better understanding of European work standards and provides funding from the EU. Developers from Eastern Europe are highly dedicated to the projects they work on, following a clear hierarchy and roles in the work process. The business culture among developers is quite similar to Western Europe and the U.S.
Top 5 Software Outsourcing Countries from Each Region
Brazil is not only the largest country in Latin America but also one of the top locations for software development, with over 10 billion dollars in the total income generated by the sector in 2021. Brazil is among the countries with the most rapid IT industry growth in the whole world and a pool of more than 500,000 professionals who work with top-notch technology. The enterprise software market segment, which generated almost 4 billion dollars, was the strongest, according to Statista. By 2026, the revenue across all segments of software development in Brazil is expected to increase to more than 16 million dollars.
Why Brazil is a good destination for outsourcing software development:
- A pool of almost 500 developers is available
- Digital-savvy developers who work with the most advanced technologies in the market
- Impressive IT infrastructure
- The reasonable average salary of Software Engineer in Sao Paulo: $8390 per year (Glassdoor)
- High retention rate on the projects
India also has one the biggest pool of programmers and developers in the world. In 2022, the industry crossed $200 Bn in total revenue and 5 Mn in the total workforce. In addition, India has the lowest outsourcing rates for software developers. Aceesble rate, however, has its drawback, the quality of work of local developers is often criticized, noticing inaccuracies in the code they produce.
Why India is a good destination for outsourcing software development:
- Low software developer salary
- Usage of the most popular programming languages (Python is the most popular)
- Advanced IT Infrastructure
- A satisfactory command of English
- Flexible outsourcing policies in the country
- Convenient time zone to have your team available 24/7: 5:30 (GMT) through to -12:30 (PDT)
Recently, this country has become a hot spot for outsourcing with a boom in the opening of technical centers. Portugal can offer talented local developers as well as skilled experts who moved here from Brazil. A pool of developers here includes more than 130,000 developers who have the best expertise due to the high level of education in the country. One of the most obvious advantages of Portugal for outsourcing is its convenient territorial location and time zone which greatly simplifies communication in remote teams in real-time.
Why Portugal is a good destination for outsourcing software development:
- Excellent quality for an average rate of $33 202 yearly (Salary Explorer)
- Advanced level of English proficiency
- One of the best countries to outsource web development
- GMT zone
- Communication in real-time
- A pool of developers from different countries with different cultural backgrounds
Eastern Europe is one of the most popular destinations for outsourcing. In 2023, Poland is expected to become the most popular destination in the region. We have already mentioned the influx of specialists from Ukraine, but even without it, Poland can offer many profitable options for outsourcing. Poland is a hotspot for outsourcing, delivering excellent web and mobile development services for the world’s leading enterprises. In the international market, IT outsourcing in Poland is now considered an effective and strategic approach.
Why Poland is a good destination for outsourcing software development:
- One of the top three countries with the world’s best programmers
- Advanced IT digital infrastructure
- Digital-savvy professionals working with the latest technologies
- Acknowledged education facilities in the country: 78,000 ICT students each year (Statista)
- 50,000+ IT professionals, 250,000 specialists in the developer’s pool (Ideamotive)
- Senior developers here have more than 10 years or more of experience
- Affordable developers rates: $13000 per year. (Glassdoor)
Looking for a developer in Poland? Hiring in Poland has its own specifics and requires knowledge of the market. Learn more about our expertise in the Polish market.
Ukraine continues to show great resilience on all fronts, including IT remaining one of the strongest markets in Eastern Europe. Before the war, Ukraine was the top destination for outsourcing in the world, offering excellent quality services at a very attractive price. Due to its continuous investments in digital technologies development, the digital infrastructure in the country is so advanced that the local IT business was hardly affected by the war.
According to the IT Ukraine Association, more than half of the companies have kept 100% of their contracts.
Why Ukraine is a good destination for outsourcing software development:
- World’s top outsourcing destination for IT (The British Global Sourcing Association)
- A pool of 172,000+ IT professionals
- 7th place in the level of Technology knowledge in the world
- 4th in number of certified IT experts worldwide
- Advanced high-tech infrastructure
- High command of English
- The average salary for a Software Engineer is $30 000 per year (Glassdoor)
- Uninterrupted communication even in war conditions
- Vast global presence of Ukrainian companies and specialists
Software Development Countries Overseas: How to Find an Outsourcing Partner
Software development companies around the world are popping up here and there, making it quite hard to select a truly reliable partner. To make the right choice and find the best countries for outsourcing software development, a customer should look a little bit beyond when choosing the one. It is recommended turning attention to acknowledged companies with impeccable business reputations. For over 20 years on the market, MWDN has had profound expertise in building first-class development teams for our customers. Our market profile is based on several pillars:
- Rich portfolio. Make sure that the company has real-world experience in similar projects as yours. MWDN offers professional assistance and helps across strategic and vital industries like telecom, healthcare, logistics, traveling, hospitality, and a few others with some impressive results. Check out our case studies to find out more about our expertise.
- Focus on cybersecurity and data analysis. MWDN complies with the latest data protection standards.
- Market recognition. MWDN can boast of client recognition and good customer feedback on Clutch or GoodFirms.
- High English proficiency. Our developers have a high level of English and soft skills, which allows them to fit into the customer’s team easily.
Where We Are Available to Our Customers
Most anxieties associated with offshoring software development revolve around geographic and cultural gaps that make communication harder. This includes different time zones, mentalities, (human) languages and accents, interaction and other soft skills. At MWDN, we solve this in several ways.
MWDN is available to customers around the world. We draw talent from different “pools”. Our developers are residing in different countries, interacting with a variety of different cultures and realities, while our HR facilitates English learning for those who need to perfect their communication skills. We also utilize Agile methodologies that leverage the human factor to improve efficiency inside teams.
With numerous IT hubs in Poland, Ukraine, Israel, and beyond, we can build a team for our customers in 2-4 weeks. For 20 years on the market, we developed a network of specialists that can be “pulled” in our talent pool once it is required.
Looking for the best software developers available on the global market, contact us today.