As the demand for software continues growing, you need to look outside your home country for your business needs. Technology has made it convenient to collaborate and stay in touch with people worldwide. Statista says that the software development outsourcing market reached a value of $92.5 billion in 2019.
There are various reasons for outsourcing I.T., and the most common ones include saving money, accessing skilled labor, enhancing focus on the core business ideas, etc.
Here's what research says about why people outsource I.T. services.
Doing business with people you have never met face-to-face requires special care and attention. You don't want to deal with an unstable nation and lack English Proficiency or dedication to quality coding. There are several vital factors you can look at when determining where your business should outsource its next big software project.
So, What to Look for in a Software Outsourcing Nation?
Well, the most critical factors include the following:
- Talent Pool
- Hourly Rate of Developers
- Political Stability
- Culture Compatibility
- English Language Proficiency
- Time-zone differences
Let's explore the significance of these factors in detail.
A Large Pool of Talent Provides Higher Options
A developer's population of 100K+ or more is a plus point. The larger population of developers means you have more options to go for. Hiring will cost more because fewer options are available with a lower developer population. However, also consider the quality of coding.
For example, out of 300K developer candidates, only 10k can develop at the required skill level. From an outsourcer perspective, there is no difference between 20k developers and 40k developer candidates.
It all comes down to bell curve distribution where the minimum talent exists at one end (excellent) and a large chunk at the other end (semi-experienced). If ideal candidates are unavailable, there is always a possibility of moving them up from the semi-experienced category by paying more.
Cost-effective Hourly Rate of Developers Reducing Development Cost
An important consideration while choosing an offshoring destination is how much they charge per development hour. This rate varies from country to country. You can quickly get to know about it by searching on Google about any particular country's hourly rate or the average salary of developers.
Depending upon various factors, the range is from $20 per hour to $50 per hour. The significant ones include seniority level, training, and experience of developers, tax structure, supply chain cost structure in that country, etc.
When looking at developing nations, consider their cost of living, which affects both labor costs and taxes. Inexpensive countries will have lower labor costs, but they'll also charge more taxes.
Excellent Political Stability Eliminating Project Stagnation Risk
An international location's government and political structure can have lasting impacts on your ability to complete your project as intended. A country experiencing political upheaval is not healthy for business, and we don't recommend choosing it as your software outsourcing hub.
Political instability also increases hidden costs like currency volatility, legal risk, and confusion regarding property rights and personal freedoms that may lead you to incur unexpected expenses. For example, Egypt's 2011 revolution caused a cost of up to $450 billion to online businesses.
Compatible Culture ensuring Greater Collaboration
When choosing an outsourced company, it is vital that you feel comfortable with its culture. Communication styles and behaviors are often more different than people realize, so if you're used to a slower, more methodical pace of conversation, you might be frustrated by an agency that likes fast-paced business interactions.
The key is understanding what methods of communication work best for each company—and how well those methods will work with your team. To get started, ask about internal and external communication channels, and try to gauge how business gets done at your potential partner's organization before signing on any dotted lines.
Proficiency in the English Language for Smooth Communication
The first rule of thumb is that you should always go with a company whose employees speak English well. Otherwise, they will fail to communicate with your team and understand what you want them to do.
Remember, we speak about highly technical services here, where every detail matters. On top of that, if there's no common language between you and your provider—especially when it comes to negotiating deadlines and prices—you might have problems down the road.
It can cause delays, which are never suitable for anyone involved. So make sure your partners will speak fluent English before deciding on one service provider over another.
Compatible Time-Zone Facilitating Meetings
Your time zone must match your developer's time zone. If you feel it is not crucial, then you can ignore it. Avoid a country whose time zone differs too much from yours. It leads to many confusions & difficulties while communicating with your developer, which may hamper all future dealings between you two.
On the bright side, most outsourcing nations work 24/7 bridging the time-zone gap effectively. So your choice of time zone is not so important after all. Just remember that you must choose a country whose time zone does not overlap with significant business hours of the USA, U.K. & Europe to prevent too much workload on your developer.
Here are the Top 10 Outsourcing/Offshoring Nations for Software Development:
1) China - The Largest Outsourcing Market
Let's start with China, which is undoubtedly one of the most prominent outsourcing destinations in today's world. China is responsible for approximately 68% of all outsourced work, as reported by various survey-based reports (including Statista) released in 2021. Along with its low costs, experts predict that there will be some significant changes in outsourcing markets in China over time.
According to the latest studies by Failory, India has taken over from China as the most sought-after destination for overseas business owners looking to outsource their work while keeping their costs low.
- Developers Population: 7 Million+
- Hourly Rate of Developers: $40 to $100 per hour
- English Language Proficiency: 0.9% of the total population
- Time-zone Differences: 15 hours ahead of the U.S.
2) India - The Second-Largest Country by Number of I.T. Workers
India is second in technology workforce only to China and is often counted among the best countries for software engineers hiring. More than half a million developers are working on outsourced projects for U.S.-based companies. Software engineers in India get paid significantly less than most other outsourcing nations.
The Indian government offers education funding, land grants, and tax concessions. All of it makes India a top destination for outsourcing firms looking to capitalize on highly skilled workers at a fraction of U.S. salaries.
- Developers Population: 3 Million+
- Hourly Rate of Developers: $15 to $60 per hour
- English Language Proficiency: 14.18% of the total population
- Time-zone Differences: 10 hours & 30 minutes ahead of the U.S.
3) Mexico - Experienced in Software Testing
Mexico's economy is highly dependent on remittances, especially from the U.S., according to ProMigración Mexico. As per Intra-Americas Information Network Inc, the second-largest U.S. export to Mexico is computers, followed by computer parts and accessories, which make up 12 percent of exports.
As a result, many software testing companies in Mexico are more experienced than in other countries as they have already tested several programs for an American market.
- Developers Population: 100K+ Developers
- Hourly Rate of Developers: $30 to $100 per hour
- English Language Proficiency: 12.9% of the total population
- Time-zone Differences: 1 hour behind the U.S.
4) Malaysia - A Stronger Focus on Technology & Digital Skills
Malaysia, often known as Asia's new outsourcing hotspot, focuses on technology and digital skills. In Malaysia, you can leverage these strengths with an offshore development center specializing in building mobile apps, enterprise apps, and customized software development.
Specializing in tech, Malaysia is an excellent choice for enterprise software development. Like other countries, Malaysia has plenty of entry-level coders available to build prototype products or assist with basic coding needs.
- Developers Population: 100K+ Developers
- Hourly Rate of Developers: $30 to $50 per hour
- English Language Proficiency: 62.57% of the total population
- Time-zone Differences:13 hours ahead of the U.S.
5) Singapore - An Excellent Workplace for Women
According to the World Bank, about 41% of Singapore's workforce comprises women. Companies adhere to an affirmative action policy where local employers must provide equal employment opportunities for women. Not only that but there are few restrictions on part-time jobs for working mothers. Plus, high-quality international schools are a great place to raise children.
However, English proficiency can be challenging to attain, and there are very few industries left where you can compete against workers abroad. The island is also subject to earthquakes due to its location near Indonesia.
- Developers Population: 200K+ Developers
- Hourly Rate of Developers: $40 to $60 per hour
- English Language Proficiency: 83.10% of the total population
- Time-zone Differences: 13 hours ahead of the U.S.
6) Philippines - Among the Highest Average Wage in Asia
The Philippines tops our list of top outsourcing nations. While a developing country with a poverty rate around 20 percent, its average wage is very competitive compared to other major outsourcing destinations in Asia like India, Nepal, Vietnam, and China. Filipinos are also very English-proficient.
Around 95 percent of businesspeople can read, write, and speak fluent English, which means you won't have any trouble communicating your specific project requirements to them. This high level of fluency makes Filipinos an ideal outsourcing option for any business with customers or employees who speak English as their primary language—even if you have no previous experience working in Southeast Asia.
- Developers Population: 190K+ Developers
- Hourly Rate of Developers: $40 to $60 per hour
- English Language Proficiency: 58.2% of the total population
- Time-zone Differences:13 hours ahead of the U.S.
7) Vietnam - Taking Advantage of Low Costs And Technological Advances
According to various reports, Vietnam is a top outsourcing destination for several reasons. First off, companies looking to outsource are attracted by the country's low labor cost. Workers in many Vietnamese cities can work for $600 to $800 per month—almost 30 percent less than workers in China.
Additionally, due to technological advances such as cloud-based computing and videoconferencing, Vietnam has access to a skilled workforce without having them located in one central office.
- Developers Population: 50K+ Developers
- Hourly Rate of Developers: $20 to $50 per hour
- English Language Proficiency: 53.81% of the total population
- Time-zone Differences: 12 hours ahead of the U.S.
8) Brazil - Ongoing Growth in I.T. Services Firms
Brazil has a history of outsourcing I.T. services to other countries, particularly India. That's changing quickly, however, as Brazil's economy grows exponentially every year. Brazil had one of its most vital years in 2020 as far as technology growth is concerned—and it should continue to grow in 2022.
The country's network infrastructure continues to improve, making it an attractive destination for international investment firms looking to outsource their software development and I.T. infrastructure needs.
- Developers Population: 500K+ Developers
- Hourly Rate of Developers: $20 to $50 per hour
- English Language Proficiency: 5% of the total population
- Time-zone Differences: 2 hours ahead of the U.S.
9) Romania - Increasing Influence as a Western European Location
Many Western European countries, including Germany, France, Britain, etc., prefer outsourcing to Romania due to its low living costs and salaries and its culture's proximity to Western Europe. Romanian employees are more accessible to supervise than workers in other countries in Central or Eastern Europe and provide much decent quality of life.
It is especially true for non-skilled labor (i.e., call center workers) given Romania's high unemployment rate and consequently lower standards for these positions.
- Developers Population: 100K+ developers
- Hourly Rate of Developers: $30 to $60 per hour
- English Language Proficiency: 31% of the total population
- Time-zone Differences: 7 hours ahead of the U.S.
10) Argentina - Close Ties to Developed Markets
Argentina's proximity to developed markets in South America and its membership in Mercosur, a Latin American economic integration group that allows for trade with Brazil, Uruguay, Paraguay, and Venezuela, help position it well to provide outsourced services.
It also benefits from a sizable domestic I.T. market that could be ripe for offshoring by foreign firms. In addition, skilled labor is plentiful, and costs are much lower than in many other top outsourcing countries, including China.
- Developers Population: 100K+ developers
- Hourly Rate of Developers: $20 to $60 per hour
- English Language Proficiency: 6.52% of the total population
- Time-zone Differences: 2 hours ahead of the U.S.
Note: The English Language Proficiency of all the nations has been taken from- Wikipedia.
The table below offers concise insights into the above discussion.
So, Which Nations are your Best Options?
From the detailed discussion, undoubtedly, India & Brazil are ideal options for hiring software developers.
Wrapping Up
Choosing to outsource your business doesn't necessarily mean losing control of it. When you choose wisely, outsourcing brings new sources of knowledge, skills, and expertise into your company—and greater profits as a result.
As long as you keep your focus on costs and set clear expectations at every stage of working with remote professionals, you should have no trouble finding success through outsourcing. As we said before, there's a big world out there; whether you decide to go it alone or outsource some help is up to you!
Connect with a leading outsourcing company to make the most of your project at an affordable budget.