Outsourcing is a new norm for many companies seeking affordable ways to speed up development, increase team productivity, and back their staff with high-skilled professionals, among other things.
The number of outsourcing cases is expected to rise by 70% between 2022 and 2023. If you plan to be among that 70%, you need to choose the best country to outsource software development. What should you consider to choose wisely?
UVIK, an outstaffing company with 10+ years of experience in the development industry, is ready to share a few recommendations you may use when choosing the right development team from the most suitable location. You will learn what factors make a country great for outsourcing, what the top outsourcing countries across the continents are, and how to make the right outsourcing decision. Let’s start!
What makes a country good for outsourcing?
There are plenty of factors that will — and should! — influence your decision regarding where to outsource your project. The list below indicates the aspects a business should consider before outsourcing as many will directly impact the total cost.
- Technical education and skills
- English language proficiency
- Timezone and location
- Developers’ ranking
- Resource availability
- Project-related experience
Let’s discuss why these criteria are important.
Let’s face the truth: choosing the best overseas software development countries will depend on… your budget. And you need to know how much the developer skills cost across the countries to choose the best option. Here’s what the average salary by job position looks like, according to Statista:
Please, keep in mind that the rates may differ based on the skills and experience of the developers. Plus, the outsourcing firm may charge extra for additional services (project management, HR fees, and so on).
Technical education and skills
Hands down, that’s one of the most important factors to pay attention to when searching for the best countries for offshore software development. You want your software product to show high performance, reliability, and security — and that’s only possible if the team working on it knows the most efficient ways to design it like that.
According to StackOverflow Survey 2020, 61.9% of employed software engineers have a Computer Science degree, whereas the other 38.1% are either self-taught or have a non-engineering education. Moreover, only 9.7% consider their degrees “critically important” for their job. And here comes the tricky part.
While the chances of hiring a professional grow exponentially if the country has the proper IT education, it’s not the biggest factor that may influence the cost. Plenty of software developers may not have a formal degree, but their practical skills and experience backed by portfolios, recommendations, and testimonials, will be a valid reason for higher salaries.
Project-related technology experience
While formal education isn’t the major requirement for software applicants, experience in the related project and technical skills are.
Whenever you hire a Python developer, cloud architect, or QA specialist, make sure to inquire about the developers’ experience on the related projects and technologies. It shouldn’t be a problem for your chosen tech vendor to provide you with testimonials from former clients and developers’ portfolio and even arrange a technical task and interview.
English language proficiency
English is a language of the global IT community, and you would want your team to speak it well enough to express their thoughts, concerns, and feedback clearly, and also — to understand you and your employees.
Fluent English is usually a must for project managers (PMs), data scientists, and business analysts as their work presupposes client interactions. Before hiring these specialists from non-English speaking countries, you should either request the certificates that prove their language proficiency level (TOEFL, IELTS, or similar), ask to do an English test, or arrange an interview. In any case, you should know that the developers you hire will be able to communicate effectively.
Here’s what the regional proficiency looks like, according to Education First’s English Proficiency Index report:
Source: Global Ranking of Countries and Regions by English skills, 2022
Timezone and location
As the State of European Tech Report shows, the startup founders and senior leaders noted the decreasing importance of location. Over 50% of respondents mentioned having a physical office, relocation option, and proximity to investors as less important for hiring an outsource team.
Source: State of European Tech 2021
However, there are a few reasons why you should consider timezone and locations before hiring the team.
- Different time zones may affect communication and collaboration. If you want to keep in touch with the developers’ team, the time difference might be an issue if you don’t coordinate and schedule calls beforehand.
- Your country may have legal requirements for the territory where the data collection and processing happen, usually referred to as “data residency”. Since data usage becomes increasingly regulated, countries force businesses to follow certain rules during the development of software that will process users’ data. For example, the GDPR laws require companies to keep the data of EU users securely inside the EU. In case of transfer, these data can only be transferred to countries or organizations that have similar data protection laws in action.
- You plan in-person meetings with the team. In case you want to meet with the team and videoconferencing isn’t an option, then consider hiring the team that’s located nearby or ready for the business trips.
The growing variety of tools and cloud development resources make the location less relevant than other factors, like skills, experience, and ranking. Let’s talk about the latter.
Developers’ ranking and rating
We rarely order food from a place nobody knows about. The same with services, specifically those that cost a lot of money.
Developers’ global rating and ranking help businesses choose from the best offshore software development countries based on the reviews and assessments of former clients, accurately collected by the data research centers. These agencies consider various factors like resource availability, customer satisfaction, frequency of hiring, delivery time, etc. you can use this data to narrow your search focus.
HackerRank is one of the platforms that analyze the state of tech industries. Here’s what their list of best countries for outsourcing looked like:
Resource availability is another essential factor to keep in mind when choosing an outsourcing location. And we don’t mean human resources only. Global corporations may change their service or product offerings in response to global events or stop providing them overall if there’s a reason.
For example, a lot of companies, including Apple and Google, restricted the use of their products for the residents of Russia because of the war they waged against Ukraine. Many of the developers’ tools are now unavailable in the Russian Federation, and they might be important for developing your product. In this case, you will either need to relocate the developer or search for another country to outsource the process to.
Now that we’ve covered the factors to consider, let’s explore the best countries for hiring offshore tech professionals. So, where to outsource software development?
Best countries for outsourcing software development
We’ve benchmarked the criteria above to make the list of top software outsourcing countries. Here’s how it looks.
- English proficiency: #13
- Number of IT professionals (as of 2019): 440,500
- Average salary: $40,511
- Time zone: GMT+1
- Advantages: great for development for EU region because of GDPR coverage, excellent English skills, talent variety, resource accessibility, great for outsourcing within Europe
- Disadvantages: high cost
Poland is one of the top outsourcing countries in Central Europe and is ranked the #1 outsourcing country by the IT Competitiveness index. In 2019, Poland had the highest number of IT professionals among European countries — 440,500.
Have a look at the stats that describe the development sector growth and performance:
- According to the IBISWorld report, Poland has 63,058 software development businesses, and the industry has experienced a 6% rise over the past year.
- Poland’s software development market size was €8.8bn, ranking #7 among the European countries
- Over 30% of Poles speak English fluently
Polish developers are known for excellent QA and usability services. PHP, Java, and .NET are the most widespread technologies the developers use here. Such companies as Brainly and Docplanner are among the top startups that obtained global recognition.
The country provides strong state support for the IT industry — from education to the business sector. Plenty of European high school students choose Poland for tech majors, with the University of Warsaw and AGH University of Science and Technology being the top choices.
- English proficiency: #35
- Number of IT developers (as of 2019): 289,200
- Average salary: $19,744
- Time zone: GMT+2
- Advantages: Affordable cost, variety of IT specialists with various skills, low taxes, good knowledge of English, the rapid growth of tech startups, strong state support of the industry, great for outsourcing within Europe, focus on blockchain and NFT
- Disadvantages: inconvenient for Transatlantic outsourcing due to time zone difference
Ukraine is among the best IT outsourcing countries in Central and Eastern Europe. According to the State of European Tech Report, Ukraine has the second-biggest number of tech companies that were established during the 2010s in Central and Eastern Europe. According to the Clutch report, many of them, like N-iX, IT Svit, and Intellias, are leading software developers globally.
This growth and success prove this region has a massive potential to become the top country for outsourcing. Plus, Ukraine ranked #61 among 190 economies for the ease of doing business in 2020. To compare: in 2013, it was ranked #78.
Source: State of European Tech 2021
Ukraine is home to various startups turned global companies like Grammarly and MacPaw. It’s ranked #11 in the IT Competitiveness Index by Emerging Europe. Despite Russia’s brutal war, 85% of all tech companies based in Ukraine continue to deliver their services. To fill the staffing shortage of IT specialists caused by the Russian invasion, the government and foreign investors launched the “IT generation” project to provide free IT-related courses for the Ukrainians.
The state support of the industry deserves a special mention here. In February 2022, the government launched Diia City, a special legal and tax regime for IT specialists. It includes not only low tax rates and simplified tax filing but also intellectual and business protection guarantees, favorable tax conditions, and administrative support for foreign investors. This action aimed to improve foreign IT investment in Ukraine and increase the IT share in the Ukrainian GDP from 4% to 10%.
Ukraine also shows a lot of interest in IoT. For example, recently, the engineers from Esper Bionics teamed up with software specialists to develop a robotic prosthetic hand, named Time’s invention of the year. Powered with AI, sensors, and cloud-based solutions, this hand helps the human to restore motor skills immediately and improves its performance along the way. This achievement is a milestone in healthcare IoT, which is booming globally.
- English proficiency: #52
- Number of IT professionals (as of 2021): 4.45 million
- Average salary: $23,854
- Time zone: GMT+5:30
- Advantages: favorable conditions for outsourcing, the biggest number of IT professionals, moderate price, great for outsourcing within Asia
- Disadvantages: insufficient English proficiency, knowledge gaps that may result in code bugs
India is one of the biggest exporters of IT services in the world, and that’s not only because of the second-biggest population. The Indian government creates favorable conditions for overseas companies to hire Indian developers, and they expect this export expansion to grow annually.
Source: Export value of IT software and services from India from the financial year 2017 to 2020, with an estimate for 2021, by type, Statista.
India’s IT services and development market is expected to reach $19,93 billion by 2025, making it one of the biggest IT markets globally. In 2022 only, international giants like Google, Amazon Web Services, PwC, and Experian signed multi-year strategic partnerships that will drive the development of cloud computing, NFT, and financial solutions.
The education system of India focuses heavily on STEM, with 31.7% of students enrolled in 2018, so it’s a safe bet to suggest that the country has a lot of professionals in various technologies. However, due to low English proficiency and cultural differences, businesses may feel reluctant to hire Indian developers.
Currently, the highest-earning IT positions in India are full-stack developer, data scientist, cloud engineer (DevOps), and machine learning engineer. The developers from India focus a lot on cloud solutions, ML, and AI.
- English proficiency: #30
- Number of IT specialists (as of 2019): 111,000
- Average salary: $23,985
- Time zone: GMT-3
- Advantages: great English skills, hire developer’s rating, excellent for outsourcing in LATAM and Spanish-speaking countries
- Disadvantages: inconvenient for Transatlantic outsourcing due to time zone difference
Argentina is ideal for outsourcing software development if you’re in or close to the LATAM region. First, the state focuses a lot on computer education throughout the school programs, contributing to Argentina being one of the biggest exporters of IT services. Argentinians speak English pretty well, which eliminates the language barrier issues.
The Argentinian developers are experts in various tech fields, with custom software and mobile application development, cloud computing, and DevOps being the most popular. Fintech specialists deserve a special mention, as Argentinian developers contribute heavily to payment technologies. For example, startup Ualá, a personal finance app powered by MasterCard, provides a prepaid card system and has recently introduced crypto payments.
These destinations are the most popular for software development outsourcing. Let’s see how to choose the best one for you!
Tips for Choosing a Country to Outsource
Follow these tips to choose among the best countries to outsource software development.
- Learn the requirements for the region you develop the software product for. It will narrow down the geography as you will consider the developers from countries with similar requirements to GDPR. This will help you avoid fines associated with data transfer and privacy.
- Ensure all the resources are available in the country where you outsource to. Your outsourcing company should have access to the development tools and a full-stack team to provide end-to-end services.
- See if there are any financial implications. Many countries have lower tax rates for IT specialists and thus may be more affordable for you to hire their IT specialists. Plus, pay attention to the overseas payment systems and any currency exchange expenses.
- Think about whether you need to arrange any in-person visits. You will cover the business trip expenses if you need the outsourcing team to meet your in-house employees regularly. In this case, consider hiring a team that will be easier to fly out.
- Research your outsourcing vendor. Google their website and social media, and don’t forget what the reviews at professional reviewing websites like Clutch have to say! Also, contact them directly and book a session, which is usually free of charge, to ask them questions you might have about their business, schedule, rate, and so on.
- Consider other staffing options. If you want to outsource product development because your in-house team lacks a few specialists with certain skills, you may also consider outstaffing. In outstaffing, you hire only the developers needed for a project that’s run under your IT department, so you have more control over how the development goes. Another reason why it might be a better solution is that outstaffing costs less than outsourcing. Our recent article describes other differences between the two practices, and this information might be helpful for you to choose the best option.
Considering these factors will help you make an informed decision on which country to choose for outsourcing and get the most benefit with less investment.
Not Sure Where to Outsource or Outstaff? UVIK Has an Offer!
Choosing the best country to outsource software development to isn’t hard if you know the advantages of each and what your project needs in terms of legal requirements. We created this guide for you to consider the countries that provide top offshoring development services in various regions, as well as the factors to pay attention to while choosing the one. And while outsourcing is one of the most popular staffing solutions, it’s not the only one.
We at UVIK have provided outstaffing solutions for over a decade and can suggest in which cases outstaffing would be a better choice economically and process-wise. Our team includes top-class Python, React.JS, React Native, and Django developers, AI/ML and blockchain specialists, DevOps, and many other skilled engineers ready to join your team and improve the development process. Plus, we cover the employee expenses, such as vacations, insurance, and sick leaves.
But don’t take it from us — read what our clients say about our services. Need more information to decide? Contact UVIK’s team to learn about outsourcing and outstaffing differences and see how we can help with your project!