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What Hourly Rate Should I Pay To My Offshore Software Development Team?

What hourly rate should I pay for my offshore software development? A question (rather a dilemma) we’ve all been through!  Outsourcing has been around for a decade now, and with some of the biggest names in the industry delving into it, it is more of a standard cost-effective technique for software development.

However, given that the market is vast and new companies come up every other day, deciding the ideal rates can be confusing. Further, different countries have different average work rates, making it a confusing affair. Additionally, factors like the development costs, project requirements, hiring model, and budgets to hire a team of offshore developers.

Therefore, to help you understand better, we’ll be looking into the different factors that affect the hourly pay of an offshore team and estimate realistic value for the same. Let’s get started!

Current IT Hiring’s Situation

Studies suggest that a majority of US-based startups prefer hiring senior software engineers for their operations. However, while there might be numerous reasons why organizations prefer senior developers as core team members, the supply is minimal.

This led to a massive charge of hiring developers, forcing organizations to hire talent from countries with lower living costs. However, this was a situation of the past decade. With the Covid-19 coming into action, leading to a sudden surge in the digital sector.

The boom in digitization also led to the increase in demand for already scarce software development services. And that is one of the primary reasons why offshore software development rates have reached new levels.

Now that we know what led to the change of rates and the current hiring situation let’s look at some numbers that denote the change of rates.

How Has The Market Changed Over Pandemic!

As mentioned earlier, the surge in market demand has led to a significant hike in development hourly rates for offshore developers. As per the latest stats, compensation rates for development services have increased by up to 7%. Further, for senior developers, the rate of services has witnessed a 10% hike.

To streamline the curve, technologies that received the most raise were ReactJS, Python, React Native, NodeJS, Java, Ruby on Rails, and PHP. Developers who held expertise in these programs received up to 15% increment when compared to the previous year.

To help you understand better, here’s a revised avg. rate chart for hourly rates of software development in different countries.

Region Average hourly rate for  software development Ease of doing business
Western Europe $66 80.3
North America $55 84
Latin America $50 65.7
Eastern Europe $37 73.7
Africa $31 66.1
Asia Pacific $28 65.5

Source: youteam.io

But, what if we told you that average rates could differ a lot from the actual rates? Wonder why? Let’s find out:

a. The average rate is an overall of the different technologies, some of which are less paid and mainstream, while others cost more and are unique.

b. Average cost equals the average of both senior and junior developers.

c. Developers with good communication skills are good with their English, and keep up with a proactive approach stay heavily in demand. And are therefore paid more than the average.

Okay, now I have an idea of the hourly rates. But, how do I find the ideal vendor or country for my development? Yes, this can be a confusing situation because finding your perfect vendor can be challenging even after the clarity of rates. Therefore, to help you out, we’ve listed a few takeaway tips.

Takeaway Tips To Choose The Right Country & Vendor

Cost-effectiveness is the top priority for any organization that outsources its development project. However, there are some other factors to keep in mind too. They are:

  • Hire vendors that have a proven work history and can deliver what they promise. Don’t go for cheap options!
  • Do your research! Proper research helps you find a reliable offshore team.
  • Ensure that you have a proper offshore cooperation model in place.
  • Understand the legalities of the region where you collaborate.
  • Do a background check on your vendor and ask for references from their previous projects.

Now You Know!

Deciding the hourly rates can be a genuinely confusing affair if you have no idea of the global markets. However, with the information provided above, we hope you won’t face any problems in deciding fair and just amounts for your team. All the best!

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Techlytical

Techlytical Process is meant to provide some insight into the exciting new world of information technology. It provides an introduction to information technology professionals and provides a brief overview of what it means to be a computer technician. It is important to note that the authors do not intend this book to be a complete description of all aspects of technology in the computer industry, but rather a concise and accessible introduction to a fairly broad subject matter that can serve as an introduction to a number of technologies.

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