Offshore software development is the practice of outsourcing software development to a third-party provider in a different country that is other than the one in which you are based. Offshore software development has become a popular way to outsource work in recent years. The stats showed that the global IT outsourcing market is foreseen to reach $425.19 billion in revenue from 2021 to 2026.
By outsourcing work to a foreign country, companies can reap a wide range of advantages and typically save money on labour costs. But not all countries are the same in terms of quality, price, and others when it comes to offshore development.
Some countries have better infrastructure and more skilled workers than others. In this blog post, we will explore the top 5 best countries for offshore software development. We will look at the pros and cons of each country, as well as the cost of doing business there.
Why outsource offshore software development?
Offshore software development is rising not only as a trend but also as a necessity for many companies today. The main reasons behind this are reduced costs, increased flexibility, and access to new markets and technologies.
The benefits of outsourcing offshore software development are many and varied. Perhaps the most obvious benefit of all is cost savings that can be achieved by utilizing lower-cost labour in another country. However, there are other benefits, too, such as accessing a larger pool of skilled workers, taking advantage of time zone differences to get work done around the clock, and benefiting from the local knowledge and expertise of an offshore development team.
One of the key benefits of outsourcing software development is the ability to access a larger pool of skilled workers. In different cases, it can be hard to find the right skillset locally, but by outsourcing to another country, you can tap into a much wider talent pool. This can be especially useful for niche skillsets or technologies that are in high demand.
Another important advantage of outsourcing software development is the ability to take advantage of time zone differences. If you own an offshore development team in a different time zone, they can work on your project while you are asleep, meaning that you can get work done around the clock. This can be such a huge advantage when you are trying to meet tight deadlines or working on a tight budget.
Finally, another significant benefit of outsourcing software development is the ability to benefit from the local knowledge and expertise of an offshore development team. In many cases, offshore teams will have a better understanding of the local market and the needs of your target audience. This shall be extremely useful when you are going to launch the product right in the country you are outsourcing to.
Top 5 Countries for offshore software development 2022
The following are the top 5 countries for offshore software development that are popular in 2022 and maybe in the future.
The giant of Asia needs no introduction when it comes to outsourcing software development services. This world’s most populous country for offshore outsourcing is also the global manufacturing powerhouse, and it has a vast pool of human resources (around 30,000 professionals per year) with a burgeoning middle class that aspires to global living standards, which creates a big domestic market for all sorts of products and services, including software development outsourcing.
China has many advantages as an outsourcing destination. In addition to its large population, China also boasts a well-educated workforce with a strong work ethic with reasonable rates ($20-$50 per hour). The country also has a very business-friendly environment, with a large number of Special Economic Zones that offer tax breaks and other kinds of incentives to foreign companies.
The main downside of outsourcing to China is the language barrier – although Mandarin is the official language, there are many dialects spoken in different parts of the country, which can make communication difficult. There is also a risk of intellectual property theft, so it’s important to have strong contractual protections in place.
India is the other IT outsourcing giant in Asia, and it’s also a very popular destination for offshore software development outsourcing. India has many of the same advantages as China, including a large population, a well-educated and emerging workforce (120,000 IT professionals each year), and good rates ($10 – $15 per hour). The main difference between India and China is that English is the official language in India, which makes communication much easier.
There is also a lower risk of intellectual property theft, although this is still a concern. The main downside of outsourcing to India is the infrastructural bottlenecks that can make it difficult to do business. There are also some obstacles to the quality of the education system, which produces grads who may not be adequately prepared for the workforce. However, the more businesses outsource to India; the higher competitive pressure will be on the hiring costs, quality, and services.
Vietnam is rising as the top IT outsourcing hotspot in Asia for many reasons. The country boasts a large talent pool of new 40,000software developers who graduate each year, with competitive wages of around $15-$40 per hour depending on the expertise and experience and a business-friendly environment with global working culture and English proficiency. Moreover, the government is also supportive of the IT industry with various initiatives and policies.
More importantly, the offshoring outsourcing cost to Vietnam is 30% to 40% fewer expenses than in China and much less in comparison to the U.S. and Western Europe. The Vietnamese IT professionals are highly committed to deadlines, and the local outsourcing companies usually deliver the project right on time with good quality and within the budget. That explains the reason why a lot of IT businesses worldwide are heading to offshore software development in Vietnam.
The Philippines is a popular IT outsourcing destination for offshore software development due to its large English-speaking population and great IT talent pool of 30,000 new graduates each year. The country has a well-educated workforce but in exchange for an affordable rate of $10 to $50 per hour. And, unlike China and India, the Philippines is a democracy, which provides greater political stability.
The main downside of outsourcing to the Philippines is the infrastructure. The country has a number of power outages and a lack of reliable broadband internet, which can make it difficult to do business. Like others, there are also concerns about the quality of the education system, which produces grads who may not be adequately prepared for the workforce.
Thailand is often overlooked as an outsourcing destination, but it actually has a lot to offer. This country has a large and young population of over 60 million people, and it’s well-educated, with a literacy rate of 93%. It also has a strong work ethic and competitive wages ($15 to $40 per hour). The main downside of outsourcing to Thailand is the language barrier – although Thai is the official language, English is not widely spoken.