IT outsourcing has its dark side (it's hard to deny that it has a lot of bad rap). I’m sure you’ve heard a lot of chilling stories of startup founders decided to hire a digital team in a distant country. Just type "outsourcing" in Google search, and you'll find out that there are as many alarming as good articles about hiring a software agency instead of an in-house team. The reason for this bad image is one. People who want snazzy, high-quality piece of code for a song and their "the cheapest the better" attitude. Making price the number one and disappointed with a poor quality of software service, they give up on offshoring.
I don't want to lump every dev together, but usually, the cheapest developers are also the weakest ones. So, how much should you pay for software outsourcing and still get splendid, high-quality code?
Offshoring vs domestic outsourcing
What's the point in offshoring and nearshoring of IT services? Labor and livings costs are the answer. If you're startup founder who works in high living cost country, you probably learned the hard way how costly domestic outsourcing can be. It shouldn't be a surprise - after all, homegrown software houses need to bear all of the same costs you would if you decided to hire your own, in-house team (including operational, marketing and management costs).
Don't also forget that they need to earn money and make a profit! In this point, we go back to offshoring and nearshoring (if you are afraid of a long distance). The question is: where should I look for an experienced IT whiz? Here you have a comparison of expected costs in different regions of Europe.
|The Region of Europe||Hourly Cost|
|Post-Soviet (Belarus, Ukraine, Russia, Armenia, Moldavia)||$36,2|
|Baltics (Lithuania, Latvia, Estonia)||$44,2|
|Eastern Europe (Bulgaria, Romania, Czech Republic, Slovakia, Hungary, Poland)||$40,1|
|The Balkans (Albania, Bosnia, Croatia, Greece Macedonia, Serbia, Slovenia)||$39,5|
|Scandinavia (Denmark, Finland, Norway, Sweden)||$55,4|
|Central and Western Europe ( Austria, Belgium, France, Germany, Netherlands, Switzerland)||$56,7|
|Southern Europe (Italy, Portugal, Spain)||$46,3|
|The UK and Ireland||$51,7|
In a nutshell, the cheapest regions in Europe when it comes to software development services are post-Soviet countries and the Balkans. The most expensive ones are Scandinavia, Central and Western Europe, and the UK.
What it's interesting, the most competitive area is the Post-Soviet market. It's because of the size: there are almost twice as many representatives of the IT industry as in any other region.
How much should you pay to achieve satisfying quality with offshore software development outsourcing?
If you still want to focus on price, and it's your priority, you can find some software houses and freelancers in low living cost countries such as India. Believe me; it will be really low... even as low as $10. But looking at various opinions, it can end up in a disaster and low quality of code you'll get. What does it mean for you? Additional hours you'll have to invest to touch it up. As a result, you should be prepared for spending more time and money on your project.
Don't be afraid! There is an alternative! One thing you have to do is to shake your "the cheaper, the better" attitude. Try to look for some IT outsourcing provider in low living cost countries but don't go overboard. Check out Central-Eastern Europe and countries such as Poland, where hourly cost is about $35-$45.
Software development outsourcing has many benefits. You gain access to talented world-class developers, save money and don't have to hire an in-house team (what takes time and money). But if you want to be delivered with snazzy, high-quality digital product, you need to take into consideration more factors than just cost of outsourcing services. With the right attitude, you can hire the best remote team, get a masterpiece of software development and still save money.