Articles | November 19, 2020
What are the Costs of Software Development Outsourcing Projects?
It is fairly common knowledge nowadays that outsourcing software development to other countries such as Eastern Europe (Poland, Romania etc.) will decrease costs. Of course, reducing the costs of your budget by going to different countries doesn’t always produce a cost-effective method.
We are an IT Software Development Outsourcing Company with 15+ years of experience in helping companies to grow that have a proven track record of results. However, finding a successful company such as ourselves to manage your project can be a challenge itself. Before choosing a company to outsource your software project to, you need to decide on a budget, which is a big topic.
What to Avoid?
There are many case studies of companies having bad experiences with expensive software development projects. For example, if you are a company that has paid a software company a large amount of money and they simply outsource the project themselves, you would not be happy.
What you want to do is ensure that the company themselves are not outsourcing the project. The contract should state that they will solely be developing the software and not a third party company. Alternatively, you can cut out the middleman and find the more cost-effective software development company yourself.
Outsourcing Software Development Cost
The cost of hiring software developers in your own country can vary and may sway the decision to outsource to foreign companies. For example, in 2020 the average software developer wages depending on the destination are as follows:
- San Francisco – $104,784
- Zurich – $98,160
- New York – $89,648
- Oslo – $61,430
- Sydney – $75,783
If you are planning to locally outsource development to these high paying cities, you must have a large budget. However, the quality of work may be the same in high paying cities to low paying cities. Central-Eastern Europe is currently the go-to place to get low-cost software developers that are highly skilled.
For example, according to PayScale, the average wage of a software developer in Poland amounts to $27,580. It is possible to get a software developer for 60.71 PLN ($16,03) per hour with the same skill set as a developer from San Francisco. That would be huge cost saving on large projects.
Of course, you can find even cheaper software developers in places such as India, with the lowest prices being approximately 10$ per hour. However, the quality of software development will be nowhere near that of CEE countries or the expensive cities. Morover, in 2020 offshoring strategy has turned out to be risky for companies, especially those relying on a single provider.
Outsourcing software development to Poland and other Eastern European countries is the most popular cost-effective method. It has seen a large growth in recent years with many good reports from countries worldwide. For example, Poland is ranked 3rd in terms of the best developers in the world, according to the Skill Value 2019 Report.
Why Outsourcing Software Development is Cost-Effective
Outsourcing can range from a few hundred to 5 figure sums, which can be a scary thought for many companies just starting off. However, the ROI (Return Of Investment) is much greater than hiring multiple software developers. The process of hiring developers and ensuring they are happy in the job along with other factors is timely and costly itself.
When you outsource IT services, you are simply paying for the time of the developers’ work and you are not committing your company to a team. There are many other software development company factors to consider but when you sit down and do the calculations, you will almost certainly achieve a profit by outsourcing.
All Software Development Projects are Different
If we stated a single figure that states the one of charge for all software projects, we would be lying. How long is a piece of string? It all differs based upon the software development size and complexity. Take your time to shop around various companies and ensure you sign a Non-Disclosure Agreement.
At Nearshore IT, we offer a cost-effective development process with a team of experienced software developers that are ready to take on all projects. Get in touch for a FREE quotation and discussion of your proposed project.