Top 10 Best Countries to Outsource Software Development - Key Factors and Comparison
If you’re still hesitant about outsourcing your software development, it’s important to note that a significant number of U.S.-based software companies are currently outsourcing to countries offering cost advantages over the domestic U.S. market.
In fact, over 84% of global outsourcing agreements originate from the USA.
By seizing this opportunity, businesses can enjoy numerous competitive benefits, including faster development, increased availability, reduced costs, and occasionally even improved quality. However, the outcome depends on the specific country you select and the service provider you engage. There’s a risk of encountering lower quality, slow progress, or outdated technologies.
The data indicates that many of your competitors are already embracing outsourcing, and the rest are contemplating this approach. To gain an edge over your competition and achieve substantial cost savings in software development, the real question isn’t whether to outsource, but rather how to choose the right country and service provider.
Let’s dive right into the list of countries:
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Top 10 Countries for IT Outsourcing
See how our pick of the top-10 countries compares, and what are some unique factors to consider when sourcing software developers or IT outsourcing companies in each of them. Please note, the specific city within the country can have a huge impact on the salary. Our numbers vary from different sources, and show a rough average per country for you to get a feeling for it.
India – A Leading Destination for Software Development
As it ranks second globally in terms of population, with a substantial 2.6 million STEM graduates (Science, Technology, Engineering, and Mathematics), India is a leading destination for offshore software development. The only country surpassing it in this regard is obviously China, with 4.7 million STEM graduates.
Known all over the globe for its cost competitiveness, many get delighted about the hourly rates in India, but might end up disappointed with the final result.
India is a huge country, and it’s essential to remember that even though there’s a lot of skilled talent, there’s a wide range of quality and expertise. As price alone does not guarantee the project quality, it’s vital to carefully pick your team members. This way, you can ensure that you get the right mix of skills and experience for your project, which will lead to a successful and cost-effective partnership.
- Salary $7,725 per year
China – Leading The Rankings of Talented Developers
In a nation where a strong emphasis is placed on science and mathematics within the academic sphere, it’s no surprise that China consistently produces a substantial number of IT experts each year.
However, there are certain challenges to consider when contemplating outsourcing to China:
Communication Barrier: Many international employers encounter a significant communication barrier due to the fact that only a fraction of China’s vast population, approximately 10 million out of 1.3 billion residents, is proficient in English.
Intellectual Property (IP) Enforcement: China is known for having less stringent enforcement of Intellectual Property (IP) laws. To address this concern, it’s advisable to engage a reputable outsourcing agency and establish clear guidelines and protections before initiating collaborative work.
- Salary $23,790 per year
Russia – Future Growth of a High Tech Sector in Russia
Owing to its strong human capital and thriving startup culture, the Russian IT market achieved an impressive compound annual growth rate (CAGR) of 8.8% from 2016 to 2020. In 2020, the total revenue of the Russian IT services industry reached $19.5 billion.
However, recent events have cast doubt on this projection. The Western sanctions currently in place have imposed significant restrictions, posing a serious threat to the sustainability of Russia’s IT outsourcing industry
- Salary $23,737 per year
Taiwan – Talented Developers in Functional Programming
Taiwan is where you’ll find the seventh most talented developers globally, as per HackerRank. They exhibit impressive skills in areas like functional programming and data structures.
Taiwan is the perfect country for hiring offshore development teams, but not the ideal choice for everyone. If you are coming from English-speaking countries, language barriers in Taiwan could still pose a significant concern. It’s worth mentioning that Taiwan ranks 40th out of 80 non-English speaking countries (According to the English Proficiency Index), indicating potential communication challenges if you choose to outsource there.
However, Taiwan is presently discussing the possibility of making English one of their official national languages to address this issue.
- Salary $28,521 per year
Brazil – Promising Software Development Youth Force
With approximately 6.18 million fluent English speakers, Brazil stands out as a promising English-speaking country for outsourcing. In recent years, the government started actively investing in technology education, making it an emerging player in IT development outsourcing.
At this moment, Brazil has a very young programming youth force, with nearly 40% of people under 24 years old, making it an excellent place to find junior developers. On the other hand, not perfect if you are pursuing more advanced projects, as their results show an average score of 71.3% on HackerRank assessments.
- Salary $11,337 per year
Poland – Top Ranking Programmers Offering Well-Rounded Skill Set
If programming Olympics were a thing, Poland would be in the top 3 places, right after huge countries like China and Russia. To say the least, the two countries that contribute the greatest number of developers, India and the United States, don’t even place in the top half.
According to HackerRanks statistics, Poland is ranked first in Java, and also ranked in the top five for popular programming languages like Python, Shell, and Ruby. Many would agree that this is due to the fact that Polish programmers start their coding journey at a young age (7.7% begin between ages 5-10).
Poland presents additional advantages to employers in Western Europe and North America. The time zone provides substantial alignment with Western European and even U.S. time zones, and nearly 90% of the developer community in Poland is proficient in English.
- Salary $22,740 per year
Ukraine – Thriving Tech Industry
Even in the midst of full-scale conflict, Ukraine’s IT sector managed to increase its revenue. The Ukrainian government is committed to education and has nurtured a thriving tech industry within the country. Ukraine also boasts the distinction of having the world’s largest number of C++ programmers.
Ukrainian software developers hold the eleventh position among the world’s top software developers. Plus, the country is ranked second in the world for the best JavaScript developers and freelancers, right after Poland.
English isn’t widespread among the general population, but most of their IT community speaks English, so communication barriers are a minimal issue here.
- Salary $22,348 per year
The Philippines – Booming Programmer Market
Over 4 million skilled Filipino workers have prior experience in foreign companies, underscoring their high demand in the outsourcing industry.
The Philippines generates a workforce of over 40,000 IT and engineering graduates per year who possess expertise in Java, API development, .NET, and various other fields. This makes the country worth considering.
- Salary $7,936 per year
South Korea – World Famous Tech Pioneers
South Korea’s global prominence is linked with its tech giants, leading South Korean software companies such as Samsung, LG, and Hyundai to reign supreme in their respective industries.
This remarkable success owes much to the presence of a highly skilled and trained workforce of software engineers.
- Salary 38,508 per year
Vietnam – Rising Global IT Reputation
Vietnam – a country that is not unknown in the IT industry and especially for businesses seeking software outsourcing. It offers a compelling combination of factors, including a strong focus on knowledge education, expertise in software development, and a solid foundation in English.
Vietnamese software developers, in particular, stand out for their excellence in artificial software development projects.
- Salary $21,600 per year
If you’d like to learn more about the differences in pricing, we recommend reading our guide on hourly rates. Learn more about hourly rates for Offshore Software Development and IT Countries.
Sources: Codesubmit, Orientsoftware and Glassdoor
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How to Choose the Best Country?
Selecting the ideal offshore IT destination is a pivotal decision. Often, this choice receives less attention than it deserves, resulting in random supplier contacts or a rush to fulfill immediate job requirements. Yet, offshore engagements should be viewed as long-term collaborations.
Fixating solely on lower hourly rates can prove to be a costly or even detrimental error. You might pay for 1,000 hours of work but end up with an unsatisfactory product, whereas paying a higher hourly rate for 100 hours could lead to on-time project delivery and complete satisfaction.
Here are some of the factors to consider, other than pricing:
- Country and Economic Stability: Consider long-term economic stability, as rapid development can erode cost advantages.
- Business Culture: Aligning business cultures is crucial for successful collaboration.
- Cultural Readiness: Foster openness and readiness for cultural exchange within teams.
- Language Skills: Effective communication hinges on strong language skills.
- Time Zone: Align time zones or ensure meaningful overlap for effective collaboration.
What Makes Poland the Best Choice for Software Development Outsourcing?
If we say that companies like Google, IBM, Microsoft, Citibank, HSBC, UBS have all decided to outsource to Poland, we are sure they have done more meticulous research than we could ever do. In many ways, Poland is the ideal country for software development outsourcing, especially for Europe and USA.
The main reason Poland is the perfect software development outsourcing country is their level of English proficiency, matching time zones, shared cultural values and work ethic, as well as high standards of security and data protection.
Here are some of the reasons why Poland emerges as a winning choice in terms of price-quality.
Polish Programmers are Internationally Recognized:
- According to HackerRank, Polish developers rank 3rd in terms of success.
- Polish programmers stand out for their talent and qualifications, starting their coding journey at a young age (7.7% begin between ages 5-10).
- With approximately 70,000 IT graduates annually, Poland is guaranteeing a steady supply of skilled professionals for outsourcing projects.
Strong English Proficiency and Shared Cultural Values:
- Polish specialists exhibit strong English language skills, enabling smooth communication with international partners. Poland ranks #16 in the English Proficiency Index.
- Shared cultural values between Poland and countries like the US, as well as similar working culture, contributes to a deeper understanding and seamless cooperation.
High Standard of Security and Data Protection:
- As an EU member, Poland is ranked #6 globally in The Cyber Defense Index 2022/23.
- The US Chamber of Commerce’s IP Index 2020 awarded Poland a high score of 70.56 out of 100, recognizing it as one of the safest among popular outsourcing destinations.
- Polish firms have a strong grasp of intellectual property protection, copyright laws, and data security practices that align with US standards.
Excellent Cost-to-Results Ratio:
- Affordability and high-quality work with top ranking skills offered at a competitive price.
- Poland’s lower labor expenses, in contrast to other outsourcing locations, provide a cost-effective advantage.
Agile Approach to Software Development:
- High Proficiency of the Agile methodology, ensuring effective project management, punctual project delivery, and efficient execution.
- The country also hosts an annual Agile conference.
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