You just can’t beat offshore developer rates
Software development outsourcing by start-ups is expected to increase by 70% between 2022 and 2023 due to significant cost savings for new businesses looking to effectively manage budgets.
For starters, the hourly rates are often significantly lower than what you’d pay for a developer based in the U.S. or Western Europe.
The savings allow you to allocate funds to other essential areas of your business.
There are also fewer overhead expenses as there’s often no need for extra office space or equipment.
The team will work from their own location and with their own resources, saving you thousands of dollars in annual operational costs.
Software development agency roles and hourly rates in the United States
To put the potential cost-savings into perspective, let’s look at developer hourly rates in the United States and use them as a point of comparison.
Keep in mind that these are average rates and that the US is massive with significant regional differences.
| Role | Average Hourly Rate |
| Project Manager | $50-75 |
| Business Analyst | $40-60 |
| UX/UI Designer | $45-85 |
| Software Engineer | $60-100 |
| Quality Assurance Tester | $30-50 |
| System Administrator | $50-80 |
Now, let’s take a look at hourly rates in popular software offshoring locations worldwide.
Popular software development offshoring locations & hourly rates
| Location | Average Hourly Rate |
| India | $20 – $25 |
| Ukraine | $25 – $50 |
| Philippines | $20 – $40 |
| Russia | $20 – $35 |
| Poland | $25 – $50 |
| Argentina | $30 – $50 |
| Malaysia | $30 – $50 |
As a non-tech founder, navigating the world of software development can be challenging.
But with the right knowledge and understanding of offshore development, you can ensure you maximize cost savings without sacrificing quality.
Is Malaysia a good location to source offshore developers?
Since Upstack Studio is based in Malaysia, allow us to give a shoutout to our country.
Yes, absolutely! Malaysia is a great location to source offshore developers for the following reasons:
- Economically Competitive Rates: Malaysian developers charge competitive rates without compromising on the quality of work.
- Highly Skilled Workforce: The country is home to a highly educated and technically skilled workforce. The developers here are adept at various technologies and are known for their problem-solving capabilities.
- Language Proficiency: English is widely spoken in Malaysia, eliminating language barriers and facilitating smooth communication between you and your offshore team.
- Favorable Time Zone: Malaysia’s time zone is compatible with many countries, making real-time collaboration easier.
A Closer Look at Software Developer Rates in Malaysia:
Now that you know why Malaysia is a good location for offshore developers, let’s take a closer look at the developer rates in this region.
| Developer Type | Average Hourly Rate |
| Junior Developer | $15 – $25 |
| Mid-Level Developer | $25 – $40 |
| Senior Developer | $40 – $60 |
In conclusion, Malaysia’s competitive rates, highly skilled developers, language proficiency, and favourable time zones make it an excellent location for offshoring your software development needs.
Other factors when sourcing offshore developers
While cost is a significant factor in deciding where to hire offshore developers, it’s not the only factor.
This sums up other factors to consider and questions to ask when hiring offshore developers.
| Factor | Questions to Ask |
| Quality of Work | What’s the developer’s experience and skill level? Can they provide a portfolio of their work? |
| Communication | How good are their communication skills? How will they provide updates? |
| Time Zone Differences | How will time zone differences be managed? |
| Cultural Differences | Are there any potential cultural clashes that could affect work? |
| Infrastructure | Does the country have reliable internet and access to necessary software and tools? |
Remember, the goal is not just to save money but also to build a high-performing team that can help grow your business.
So, take your time, do your research, and make an informed decision.
When you should NOT use an offshore developer
As a non-tech founder, you might be considering hiring offshore developers due to their lower rates.
However, there are several instances where it might be in your best interest to stick with domestic developers.
Let’s explore these situations in detail:
You require frequent face-to-face communication
Offshoring can sometimes create communication barriers due to differences in time zones, languages, and cultural contexts.
If your software development project demands round-the-clock collaboration and real-time communication, it might be worth considering a local team.
Your software development project requires cultural understanding
Understanding cultural nuances can make a world of difference in how your software is developed and used by your target audience.
This aspect is particularly crucial if your software project involves any form of user interaction or is designed for a specific cultural market.
You can’t find sufficiently skilled offshore developers
While offshore developers can offer cost-effective solutions, the quality of work might not always match that of a local team.
If your focus is on high-quality output, domestic developers may be a better choice.
You need to protect sensitive data
If your project involves dealing with sensitive data, it’s crucial to consider data protection laws in different countries.
Local developers might be more familiar with your home country’s regulations and can help ensure compliance.
Conclusion: Offshore software development rates are unbeatable
Let’s summarize the key points covered about offshore software development rates in 2024.
Understanding these essentials can accelerate your desired outcomes of top-notch development services without breaking the bank.
- Cost Efficiency: Offshore development offers significant cost savings compared to local hiring, freeing up your budget for other crucial aspects of your business.
- Global Talent Pool: Going offshore gives you access to a vast pool of global talents, enabling you to scale your team with high-expertise developers.
- Rate Variations: Rates vary significantly among countries. For instance, developers in Eastern Europe charge lower rates compared to their North American counterparts while maintaining high-quality standards.
- Experience Level: The developer’s experience level influences their rate. More experienced developers charge higher fees, but their output often requires less debugging and offers better overall quality.
- Technology Stack: The technology stack used also influences the rates. Specialized or niche technologies tend to command higher rates due to the scarcity of experts.
- Time Zone Differences: While offshoring can present time zone challenges, proper management and communication tools can effectively mitigate this issue.
- Legal Considerations: Offshore development involves legal considerations such as intellectual property rights and data security, which need to be clearly outlined in your contract.
- Project Complexity: The complexity and scope of the project can affect the rates. Complex projects requiring advanced skills will typically cost more.
- Communication Skills: The developer’s communication skills are crucial for effective collaboration. Developers in regions with good English proficiency, such as Eastern Europe, may command slightly higher rates.
- Post-Development Support: Some offshore developers offer post-development support, which can be a cost-effective way to manage and maintain your software.
Remember, the cheapest rate doesn’t guarantee the best results. Consider the balance between cost, quality, and the specific needs of your project.
You’re now prepared to navigate the world of offshore development rates confidently!
🔑 Key Takeaways
- Remember, offshore development costs vary significantly based on location, developer competence, and project complexity. Paying highly for proficiency yields better results in most cases.
- Different countries offer different offshore development rates and it’s vital to balance cost with quality considerations.
- In addition to cost, consider other factors such as time zone differences, language barriers and the level of infrastructure in a region.
- Don’t shy away from negotiating rates with offshore developers if you are confident you know the average rate in the region.
- Simpler projects typically cost less, whereas complex or specialized projects demand higher rates due to the specialized skill sets needed.
- There will be certain times when it simply makes more sense to hire local developers or when you have no choice. It is what it is!
- Malaysia is a kickass location for software development offshoring.
FAQs About Offshore Developers and Offshore Developer Rates
- What does an offshore developer do?
💡Offshore developers are the same as ordinary developers, only they are based in a foreign country and work on your project remotely. - How do you hire an offshore software developer?
💡Make sure there are time zone overlaps and that the offshore developer has sufficient English proficiency and a trustworthy work history. Beyond that, send them an email asking for a meeting to discuss yyour project. Familiarize yourself with the average rates of different locations to avoid getting cheated. - Why hire offshore developers?
💡The main reason by far is the significant cost-savings due to lower hourly rates, but it is also possible that offshoring your development gives you access to talents not available locally. - Is offshore outsourcing cheaper?
💡Yes, but keep in mind that cost should not be your only consideration as the skillset of a developer should always be a more important consideration. - What is the best location to outsource software development?
💡There is no blanket statement to answer this, as the best outsourcing location always depends on the needs and circumstances of you, the client.
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