According to Verified Market Research, the offshore software development industry is expected to increase at a compound annual growth rate (CAGR) of 10.13% from its 2024 valuation of USD 122 billion to USD 283 billion by 2031. Why do businesses and entrepreneurs turn to offshore software development? The answer is simple—The most important factor to consider when it comes to offshore software development is cost.
Many businesses choose to outsource software development because it's often seen as a cost-effective option that helps companies deal with local talent shortages or high development costs by giving them access to skilled developers from tech hubs around the world.
But is that always true? Savings depend on where your partner is located. If there are differences in rates based on country or region, what do those differences look like? What influences the final cost of offshore development? How can you reduce risk when dealing with offshore software development rates? And are there other important factors to keep in mind when outsourcing?
Restaff with 20+ years of experience in delivering custom solutions to the software development outsourcing market. In this article, we will answer these questions, offering practical advice and a clear understanding of offshore software development rates, helping you make the best long-term, cost-effective decision.
What Is Offshore Software Development?
Offshore software development refers to the practice of outsourcing software development tasks to a team or company in a different country, often one where operational costs are lower than hiring locally. This approach is commonly used by organizations looking to save on labor expenses, access a larger talent pool, or focus on their core business activities while delegating technical projects to external experts. Offshore development centers handle coding, testing, and support, enabling companies to focus on core operations while benefiting from global expertise.
For example, a company based in the U.S. might hire a development team in India or Vietnam to create software applications. Offshore development centers are responsible for various services like coding, testing, app development, web design, software maintenance, quality assurance and support, allowing companies to concentrate on their core operations while leveraging global expertise.
According to Acropolium and Verified Market Research, the offshore software development industry is expected to increase at a compound annual growth rate (CAGR) of 10.13% from its 2024 valuation of USD 122 billion to USD 283 billion by 2031.
Read more here at: What is an Offshore Software Development Center & Key Insights?
What is Offshore Software Development Rates?
When discussing offshore software development rates, it refers to the price of employing software development services and talent in various nations worldwide. Because of a variety of factors, such as the local cost of living, labor supply and demand, economic conditions, and the level of expertise available, these rates can differ significantly between countries.
Choosing to outsource software development is frequently motivated by the goal of cutting expenses without sacrificing or raising the caliber of the output. In order to make an informed decision, it is essential to comprehend the prices that various nations offer and how they relate to the level of experience and caliber of services rendered.
Offshore Software Development Market Stats
To emphasize the value of IT offshore outsourcing for businesses, here are some key statistics:
Business Research Insights estimates that the offshore software development market was worth around $160.9 billion in 2024 and is expected to grow to $413 billion by 2033, with a 12.5% annual growth rate.
According to a Deloitte survey, 70% of companies outsource primarily to cut costs, highlighting the financial advantages of offshore development.
ISG Executive Insights reports that approximately 92% of G2000 companies use IT outsourcing services, showing the widespread adoption of offshore development to boost efficiency.
These figures demonstrate the growing popularity of IT offshore outsourcing, with cost being a major driving factor. Now, let’s dive deeper into the main topic and explore why offshore developers' rates can vary so much.
Why Do Offshore Developers' Rates Differ?
While IT outsourcing has become a common practice around the world, business owners often still question how rate fluctuations are tied to the location. Based on our industry experience and statistical analysis, we’ve identified several factors that affect offshore software development rates, such as:
High living standards make regions like the US and Western Europe the most expensive for software outsourcing.
The complexity, depth, and required skill level of the tech stack will drive up the cost of offshore development.
Companies with a larger history and stronger reputation tend to charge more.
Smaller companies often have lower costs due to fewer employees and reduced overhead.
Whether you choose to hire a company or work with a freelance engineer can significantly impact the price.
Global economic conditions, such as a financial crisis, can influence rates.
A shortage of tech talent can also drive up costs.
Ultimately, a software engineer’s hourly rate is influenced by these factors, along with personal considerations like experience, current market trends, and demand levels.
1. Location
Location plays a key role in offshore software development rates. Factors such as the local cost of living, political and economic stability, and the presence of tech hubs influence the rates. Countries like the USA, Canada, and those in Western Europe tend to have higher developer rates due to their high living standards and advanced technology sectors. On the other hand, regions like Eastern Europe, Latin America, and Asia generally offer lower rates, while still maintaining high-quality work.
2. Company Size
The size of a software development company affects how much they charge. Based on research from platforms like Clutch, GoodFirms, and SoftwareWorld, companies are divided into several categories:
Global Software Development CompaniesThese large companies work worldwide and have thousands of employees and development centers in many countries. Companies in the US and Europe usually charge high rates because they serve big corporations. However, companies with centers in places like Ukraine may charge around $35–$50 per hour.
Large Software Development Consulting These companies charge around $150 to $300 per hour. They are popular with medium to large businesses that have bigger budgets. While hiring local consultants in the US or Western Europe will cost more, offshore firms may charge less—around $20–70 per hour.
Small Software Development Companies These companies are a good choice for businesses that want to save money but still get a quality product. They typically have 10 to 100 employees and charge between $125 to $200 per hour in the US and Western Europe. Project costs usually start at $50,000 and can go up to $5 million.
Small-Market Companies These are smaller companies with up to 50 employees. They often focus on specific areas like mobile app development or particular programming languages and mostly work with local businesses or small companies.
Boutique Agencies These tiny agencies, usually with fewer than 10 developers, handle smaller projects for local startups or small businesses. Their hourly rates range from $75 to $300, with projects starting at around $10,000. In Ukraine, some boutique agencies focus on specific areas like web development or Ruby development.
3. Tech Expertise
Developers with specialized skills or experience in the latest technologies tend to charge higher rates than others. Industries such as aerospace, defense, healthcare, energy, and banking often see higher rates because the projects are more complex, and there’s a shortage of skilled professionals.
It’s usually recommended to look for business partners with experience in your industry. If your outsourcing partner has many years of experience, the skills you need are specialized, or if you want to use the latest technology, the rates will likely be higher.
4. Project Complexity
The rates will increase with the complexity of the project. As an example, let's look at a simple website or mobile application. Common tech stacks and minimal customization are frequently needed for these simple applications. The skills needed for the project are also frequently easily accessible.
Projects that are more complicated, such as those involving custom web apps or API integrations, can take longer to build and call for more specialized expertise. Billing hours will increase as a result.
5. Taxes
Like any other service, software products are taxed in many countries. Some countries apply a value-added tax (VAT), which can increase the overall outsourcing cost. For example, in India, Software as a Service (SaaS) products are taxed under GST at 18%. However, some countries offer tax incentives to attract businesses. In Vietnam, software products are taxed at 0% VAT, and companies can benefit from corporate income tax (CIT) incentives for up to 15 years, including:
A 10% tax rate for up to 15 years
4 years of tax exemption
A 50% tax reduction for the next nine years
6. Type of Cooperation
The way you work with a development team can affect the price. Here are the three most prevalent pricing models you will come across:
Fixed-Price Model: This model is best suited for small projects with predictable needs because it involves paying a set sum for a project with a defined scope, timeline, and deliverables. This paradigm provides cost certainty and minimal management, but it is rigid, making modifications challenging once development has begun.
Time and Material (T&M): Clients pay for actual work hours and resources because it provides flexibility in adjusting features, scaling resources, and adapting to changes in the market, this model works well for long-term projects with an unclear scope. Budget control becomes more difficult, though, because it necessitates the client's active participation and costs can change.
Dedicated Team Model: This model offers a permanent, remote staff that is only focused on your project. This model suits businesses needing ongoing development or niche expertise. It guarantees greater project knowledge, lowers hiring expenses, and permits scalability. However, scaling dedicated software teams and managing a remote team involves careful planning and efficient communication, which makes it inappropriate for short-term projects.
Restaff is a leader in providing the Dedicated Team Model, offering businesses seamless integration of skilled teams tailored to their specific needs.
With the time and material model, you pay for the hours worked and resources used, but this could go over budget. The fixed-price model helps you stick to a budget but offers less flexibility. Hiring a dedicated development team allows you to adjust resources as needed and is ideal for long-term projects.
7. Economic Characteristics of Offshore Destinations
The Human Development Index (HDI) measures a country's overall well-being, including healthcare and education. Countries like Australia, Canada, and the US rank high, while countries in Asia and Africa rank lower. The Human Capital Index (HCI) looks at future workforce potential, with countries like Singapore, Japan, and Canada at the top, and Eastern Europe and Latin America lower on the list.
8. Time Zone and Cultural Proximity
Being in similar time zones helps with real-time collaboration, easy communication, and fast decision-making. It’s also important to have a shared business culture with your outsourcing partner, as this leads to better understanding and smoother integration.
Offshore Software Development Rates by Country
There are hundreds of IT outsourcing hubs all over the world, they all differ. By their rates, development quality, culture, expertise, time differences and much more. So, to hire a remote development team, you should keep in mind all the scope of these characteristics, analyze them, and choose the best option for you.
Talking about rates and according to FULCRUM, we can identify two big pools of outsourcing destinations:
Countries/regions with high-quality life standards and a stable economy. Among them are the US, Australia, Western Europe, Israel, UAE etc. IT outsourcing rates are higher there generally varying from $50 to $100.
Regions with less developed local markets such as Latin America, Africa, Asia and Eastern Europe. These are often characterized by lower development rates and high quantity of specialists.
In this analysis, we will focus on regions with less developed local markets, such as Latin America, Africa, Asia, and Eastern Europe, due to emerging trends and new data available for these areas.
1. Key IT outsourcing hubs in Eastern Europe
In the past years, Eastern Europe has turned to one of the biggest IT outsourcing centers hosting about 1 million well-qualified developers. Its main outsourcing hubs include Ukraine, Poland, Romania, Belarus with average development rates ranging from $20 to $50. While the development costs are quite acceptable in the Eastern part of Europe, its quality is also well-promising. Being rich in technical educational institutions, this region offers a solid and proven by years expertise in IT. Another positive factor is pretty high language proficiency — most vendors here are English-speaking. Let’s get more detailed.
Ukraine
Rates: $25-45
Popular tech stack: Python, Java, Ruby
IT hubs: Kyiv, Lviv, Odesa, Kharkiv, Dnipro
Ukraine gained a leading position among IT outsourcing destinations not only in Eastern Europe but also worldwide. How is it? If summarized in one sentence: high-quality development for a good price. Which is on average $25-45 (while some junior developers can be as low as $18).
Kyiv, Odesa, Lviv, Kharkiv. These are only a few of Ukrainian IT hubs which play an important role in the global IT arena — 21 of Ukrainian companies are ranked among the best 100 IT outsourcing firms worldwide. Its IT potential is really impressive. Thus, last year the Ukrainian IT industry set a new record — it received an astounding $510 million of investments.
Its talent pool is also out of the discussion. Ukraine is a home for 192,000 developers. Most of whom are well-educated, skilled and in high demand. And these are only data for 2019. What can we expect of 2020? Strong expertise and solid tech education are what makes this destination so attractive. The country has around 50,000 tech graduates yearly. Being proficient at most of the programming languages, Ukrainian developers are in high demand far outside its borders.
Poland
Rates: $35-55
Popular tech stack: Java, SQL, Python, C++
IT hubs: Warsaw, Krakow, Wroclaw, Lodz
In Poland, developer cost per hour is little higher than in neighbouring Ukraine — somewhere around $35-55. Yet, such high rates can be explained by the good tech education in the country and higher living standards. Being one of the most developed IT industries, Polish outsourcing is also reached in both freelance specialists and established companies.
Belarus
Rates: $35-50
Popular tech stack: JavaScript, Java, .NET
IT hubs: Minsk, Gomel, Vitebsk, Mogilev
Recently, Belarus has recommended itself as a young & rapidly growing IT market. It’s has all the advantages of its neighbours such as solid educational foundation, language proficiency, relevant expertise. Offshore development rates vary there from $35 to $50.
Romania
Rates: $25-45
Tech stack: PHP, Java, JavaScript
IT hubs: Bucharest, Cluj-Napoca, Iasi
Don’t neglect this destination to outsource your development. The rates here are still pretty affordable ranging on average from $25 to $45 per hour. Yet, the expertise is one of the best: Romanian developers are proficient in the most complex databases, languages and algorithms.
2. Offshore development rates in Latin America
Hourly rates for software outsourcing: $30-50
The IT outsourcing market in Latin America should also be considered and reviewed while choosing a destination to hire a remote development team. For, it offers competitive talents, relatively good rates, and a convenient outsourcing location. If you decide to outsource your development to South America, be ready to pay $30 for a junior specialist, while a senior developer’s hour could cost around $50. Seems like a fair price. Latin America as an offshore development hub has been recognized only recently. Much due to the efforts of the local government. With all the economic instability and political insecurity, such countries as Argentina, Colombia, Brazil needed new ways of financing. Thus, national governments started to make big investments in tech education and IT infrastructure to develop the industry. The results are pretty good: right now these countries have lots of highly skilled talents who cooperate mostly with US companies. The prime reasons behind such US — Latin America outsourcing relations is a close location and insignificant time difference.
Argentina
Rates: $35-55
Tech stack: Java, Python, SQL
IT hubs: Buenos Aires
Argentina is one of the most advanced IT outsourcing markets in Latin America. It offers quite a wide pool of technical-savvy talents and is popular within Western Europe. Growing economically and culturally close to European countries, Argentina has marked a strong presence on the global IT arena. Offshore development rates here range from $35 for a junior programmer to $55 for a senior one.
Peru
Rates: $35-55
Tech stack: Node.js
IT hubs: Lima
At Peru Service Summit 2019, it was stated that the country gained $85 millions of global revenue. Expanding presence of the IT outsourcing market enables Peru to build and solidify their economy and better life standards. With average software development rates of $35-55, Peruvian developers are technically educated, fluent in English and well aware of US business processes.
Brazil
Rates: $30-50
Tech stack: Java, Python, SQL
IT hubs: Rio de Janeiro, Porto Alegre, Curitiba, Blumenau and Londrina
In Brazil, the average developer cost per hour goes around $30-50. The country is one of the leading IT outsourcing hubs in the world. In 2019, Tholons Services Globalization Index included Brazil in the top 50 IT nations. This region is also renowned by a high number of technical engineers: yearly Brazil has around 15,000 tech graduates.
Colombia
Rates: $30-50
Tech stack: JavaScript, HTML, Python
IT hubs: Medellin, Bogota
Development rates here are the same as for the rest of Latin America countries. While the tech talent pool is not small in Colombia, high criminal situations in the country as well as lack of English proficiency make this country less attractive among other IT outsourcing destinations.
3. Offshore Development Costs in Africa
Africa has only recently become a notable destination for offshore development. Following Microsoft’s $100 million investment in 2019 to support the continent’s developers, the African IT outsourcing market has rapidly expanded. Major IT hubs in Africa include Kenya, South Africa, Morocco, Egypt, and Nigeria, with development rates generally ranging from $20 to $45 per hour.
South Africa
Rates: $20–50
Tech Stack: Java, Python
IT Hubs: Western Cape, Gauteng, Durban
South Africa is the leader in the continent's IT sector. In 2021, Tholons ranked the country among the top 50 digital nations. Its strategic location, where its time zone aligns with much of Europe, also enhances its appeal as an offshore development destination.
East Africa
Rates: $20–50
Tech Stack: Python, JavaScript, PHP
IT Hubs: Mombasa, Kisumu, Eldoret
Kenya is the largest IT outsourcing hub in East Africa. In addition to affordable rates, Kenya stands out due to its strong English proficiency, a result of the country’s policies that made English an official language.
North Africa
Rates: $20–50
Tech Stack: PHP, Python
IT Hubs: Morocco, Egypt
North Africa, with key hubs in Morocco and Egypt, offers competitive offshore rates. Its time zone overlap with much of Europe is another advantage. Egypt, in particular, has attracted global telecommunications companies, such as Vodafone and Intel, that have set up R&D centers there.
West Africa
Rates: $20–50
Tech Stack: SQL, Java, Python
IT Hubs: Lagos
Nigeria is the main offshore development hub in West Africa. While its IT market is still developing, it shows significant growth potential and a large talent pool. The Nigerian government is heavily investing in the sector, supporting education and development initiatives for local developers.
4. Key IT outsourcing destinations in Asia
Offshore developer rates in Asia: $20-45
Until recently, Africa hasn’t been among popular offshore development destinations. After the biggest competitive advantage of this region is its lover development rates which sometime range from $18 to $45. With its 10 million tech specialists, Asia has a lot to offer Yet, affordable development costs and a wide talent pool are achieved at the expense of proper product quality, great cultural and time differences. The biggest IT outsourcing hubs in Asia are China, India, Vietnam, Malaysia, Indonesia, the Philippines and Bangladesh.
India
Rates: $25-$50
Tech stack: Java, C++, Python
IT hubs: Bangalore, Chennai, Mumbai, Kolkata
India is recognized as one of the biggest and most affordable IT outsourcing markets in the world. Its offshore development rates usually range from $25 to $50. English is widely spoken around the country. Which is a big advantage while choosing destination to outsource software development. Yet, the final product quality can be an issue. There is no quality standards in the country, so it totally depends on you’re lucky enough to find responsible and reliable developers.
China
Rates: $30-60
Tech stack: Python, Algorithm and Functional Development
IT hubs: Beijing, Shanghai, Shenzhen
The region boasts a rich talent pool of skilled developers, obviously. Chinese development rates are little higher than in other Asian countries — $ 30-60. The price is caused by a more advanced local economy and expertised specialists. Among main concerns for the companies looking for outsourcing destinations is language barrier. Recognizing poor English proficiency throughout the country, the Chinese government invested in numerous initiatives to educate the population.
Philippines
Rates: $25-50
Tech stack: PHP, ASP.NET, Ruby on Rails, ASP.NET Core
IT Hubs: Manila
The country’s developers have a pretty good level of English, strong tech foundation and an elaborated IT infrastructure. Besides, the stable political and economical situation in the country adds to its popularity among IT outsourcing seekers.
Vietnam
Rates: $20-40
Tech stack: Java, PHP, and .NET
IT Hubs: Hanoi, Ho Chi Minh City
Average offshore development costs are $20-40. The country has been regularly ranked among top global outsourcing destinations. Vietnam can be characterized by deep expertise, numerous technical specialists and high language proficiency.
What Are the Average Offshore Software Development Rates by Country?
The typical offshore development rates in various regions are summarized below, along with a breakdown of rates in some of the most well-liked outsourcing locations in each region.
Source from Orient
Eastern Europe (Poland, Ukraine, Lithuania, Czech Republic)
With more than one million software developers, 4,526 highly-rated software development companies, Eastern Europe is popular for its balance of cost and quality. It offers monthly salaries around $900-$2,100 for Junior, $2,500-$4,400 for Middle, and $4,400-$6,100 for Senior Engineers……
Pros and Cons of Top Asian Offshoring Destinations
A growing star on the globe of offshore outsourcing is Southeast Asia. Due to the region's expanding tech ecosystem, government assistance for the IT industry, and rising investments in digital infrastructure, it has become a popular option for businesses seeking an affordable solution without sacrificing quality. There is a vast pool of skilled developers and specialists available at a reduced cost in nations like China, Vietnam, the Philippines, and India.
Are You Overpaying for Software Outsourcing Services?
Most people agree that outsourcing services is a financially sensible move. This isn't always the case, though, particularly if you unintentionally spend money on shady vendor tactics or unreported inefficiencies. Ignoring the warning signs could lead to subpar outputs or even security threats. To make sure you're getting the most out of your assets, watch for these warning signs.
1. Duplicate Spending
When budgets are limited, the last thing you want is to pay the same vendor twice or pay for two services that do the same thing.
Duplicate payments are a bigger issue than you might think, especially when it comes to invoicing. According to Concur Invoice data, “The average small or midsize business (SMB) processes 450 invoices per month and has a 1.29% duplication rate… SMBs lose about $12,000 a month if each duplicate invoice is paid. And the larger the company, the bigger the loss.”
A common reason for duplicate spending is that vendors often send invoices through multiple payment channels. To prevent this, the head of purchasing should collaborate with vendors to set a single method for invoice submission and payment.
2. Decentralized Procurement
With so many SaaS vendors available, businesses often end up using several tools with overlapping functions. For example, sales teams might use Airtable to track the sales pipeline while marketing teams use Asana to manage content production.
As companies grow and departments become more isolated, decentralized procurement can become costly. To avoid this, small businesses should establish a streamlined, centralized approval process for selecting new software vendors.
3. Lack of Data and Success Metrics
Without proper measurement, procurement and vendor management can result in rising costs. It's crucial to have a clear picture of what you're paying each vendor, how much of the service you're using, and the business justification for each vendor relationship.
As Harvard Business Review points out: “Define success upfront and hold vendors accountable. Whether it’s new products or more customers, set the metrics early and resist the temptation to change them later.”
Sometimes, the return on investment is not immediately clear, or it may be intangible. Setting expectations and benchmarks from the start makes it easier to measure success and evaluate whether the vendor is providing good value.
4. Failing to Regularly Review Contracts
Over time, the value a vendor provides can change. This could be due to new competitors offering better services at lower prices or shifting business goals.
It’s essential to review and renegotiate contracts regularly to ensure they align with your company’s current priorities. By revisiting your vendor subscriptions and exploring alternatives, you gain an up-to-date perspective on the value each contract offers. You can then decide whether to renegotiate with current vendors or choose something that better fits your current needs at a more favorable price.
Conduct annual price comparisons and be ready to negotiate if the numbers don’t work for your business. Loyalty means giving your vendor a chance to match prices, not overpaying for the same services.
5. Relying on Vendor-Provided Pricing Data
Many businesses trust the pricing data provided by vendors too much. Vendors are not required to tell you if you’re overpaying for unused services and often lack the necessary data to reveal these insights. It’s not their responsibility to identify when you’re overpaying; it’s yours.
You should maintain your own accurate and clean view of pricing and utilization data, enabling your team to make better decisions regarding vendors. With careful analysis, you can pinpoint services you're overpaying for.
Encourage your procurement team to establish vendor management best practices and review them regularly, whether monthly or quarterly.
6. Not Investing in Vendor Management Resources
Investing in resources to manage procurement brings numerous benefits to your business. For business owners, delegation can relieve the stress of cost-reduction efforts and free up time for more strategic growth activities. For your company, assigning resources to vendor oversight enables specialization in managing costly vendor relationships that require the most attention.
According to Berlin Pacific, a key strategy is to designate a trusted person to oversee and constantly evaluate vendor relationships, helping you make informed decisions, research vendor options, and execute your plans.
Proper delegation allows for smoother vendor procurement and management, streamlining workflows and making it easier to approve proposals for current and potential vendors.
Reducing Costs for Offshore Development: The Best Tips
Let's delve deeper into how these factors influence offshore software development rates across different regions:
1. Avoid cheap vendors
While opting for the least expensive vendor may seem like a cost-saving decision, it often leads to the opposite outcome.
In reality, choosing a cheap vendor can set you up for significant challenges.
Low rates are typically indicative of one or more of the following:
Junior developers
Inefficient delivery processes
Poor communication
In many cases, all three factors are present, which can quickly deplete your budget. What begins as small issues—missed deadlines, unclear estimates, and rushed development—can escalate rapidly, resulting in larger costs. Eventually, you may find yourself paying for rewrites, bug fixes, or, in the worst-case scenario, having to rebuild the entire project with a new team.
The key takeaway is that you don’t save money by selecting a low-cost team. True savings come from ensuring the project is done right from the start. A McKinsey study revealed that 66% of large projects exceed their budgets due to poor planning and execution, which is often a result of choosing the lowest bidder.
Source: McKinsey-Oxford study on reference-class forecasting for IT projects
It can be tempting to compare rates and select the most affordable option, but lower hourly rates are irrelevant if the team takes twice as long to deliver or provides a subpar product. Instead of focusing on price alone, prioritize value. A well-organized and experienced team may have higher upfront costs, but they will provide clear communication, take ownership of the project, and deliver high-quality software. This approach ultimately leads to lower long-term costs.
It’s important to select a vendor that not only understands your business but also works transparently and treats your product with the same level of care and ownership as you do. This is the foundation of successful outsourcing. While it might seem that selecting the least expensive vendor will save money, this approach often leads to more problems than benefits.
In reality, opting for a low-cost vendor can result in significant challenges.
Lower rates are often associated with:
- Less experienced developers
- Inefficient delivery processes
- Poor communication
In many cases, all three factors are present, and they can quickly consume your budget. Initially, you might face small issues—missed deadlines, vague estimates, and rushed development—but these problems can escalate quickly.
Soon, you could find yourself paying for rework, bug fixes, or, at worst, rebuilding the entire project with a different team. The truth is that you don’t save money by choosing a cheap team; you save by ensuring the project is done correctly from the start.
A McKinsey study found that 66% of large projects exceed their budget due to poor planning and execution—issues often linked to selecting the lowest bid. It’s tempting to compare rates and choose the cheapest option, but lower hourly rates aren’t helpful if the team takes longer to deliver or produces subpar work.
Instead of focusing on price, prioritize value. An experienced, well-organized team may have higher initial costs, but they will provide clear communication, take ownership of the project, and deliver high-quality software, resulting in lower long-term costs.
Look for a vendor who understands your business needs, works transparently, and treats your product as their own. This is the foundation of successful outsourcing.
2. Validate Your Idea First
Even if you have flawless code, an appealing design, and meet every deadline, your project can still fail if you build the wrong product. Why? Because a great idea alone isn’t enough to guarantee success. You need proof that there’s a demand for what you’re building.
Without this validation, you’re essentially spending money based on assumptions, which is one of the quickest ways to exhaust your development budget. So, how do you validate your idea?
The answer is simple: product discovery. This phase involves testing your idea before you start development. Product discovery helps answer critical questions: Does this solve a real problem? Do users want it? Will they pay for it?
Here’s how to validate your idea:
- Engage with real users to understand their needs, rather than assuming what they want.
- Analyze competitors to identify what works and what doesn’t.
- Test basic prototypes and gather early feedback.
- Remove unnecessary features that don’t add real value.
Think of product discovery as the “pre-development” phase. It costs a fraction of the price of building a full product and helps determine whether your idea is worth pursuing.
Before you discuss technical details like tech stacks or timelines, make sure you’re building a product that truly matters. A good vendor will ensure your idea is worth building before committing to the project. This is how you save money when outsourcing.
3. Write Clear Requirements
Poorly written requirements are a significant risk. They can lead to misunderstandings, scope creep, and costly rework. In fact, 37% of projects fail due to unclear or incorrect requirements.
Your development team is only as good as the instructions you provide. If your requirements are vague, the team will have to guess, and guesswork rarely results in great software.
Your software requirements specification (SRS) document should include the following:
- Functional requirements: What the software needs to do.
- Non-functional requirements: How the software should perform.
It’s essential to collaborate with a vendor that knows how to write clear and precise requirements.
For example, instead of writing a vague requirement like “Add notifications,” specify:
- Functional requirement: Send an in-app notification when a user’s task is marked complete by another team member.
- Non-functional requirement: The notification should appear within 2 seconds of the task being marked complete.
These requirements are concise, clear, and focused, leaving no room for confusion.
Clear requirements benefit both developers and you, as they help control scope, budget, and priorities. Think of them as the blueprint for your development project. Without one, you’re building without a clear direction, which can quickly lead to budget overruns.
4. Choose a Vendor with Strong QA Processes
Quality is essential, but poor-quality work is even more costly to fix. Quality assurance (QA) should not be an afterthought; it should be an integral part of the development process. If your vendor does not prioritize QA, you will pay the price later. Poor software quality costs U.S. companies $2.42 trillion annually.
Moreover, the longer you wait to identify and resolve bugs, the more expensive they become. Fixing a bug after deployment can cost up to 100 times more than addressing it during development.
To ensure your vendor has strong QA processes, ask the following questions:
- Do you use automated testing?
- Do you have dedicated QA engineers, or do developers handle testing?
- Do you conduct testing throughout development or only at the end?
- How do you prioritize which bugs to fix first?
A vendor with robust QA practices will provide specific answers, mentioning unit and integration testing, testing throughout the development cycle, shared responsibility between developers and QA, and clear bug prioritization. A weaker vendor might only say, "Don’t worry, we handle QA."
Remember, quality is not just about making sure the software works—it's about ensuring it continues to work as it evolves.
Before finalizing a deal with any vendor, make sure they can explain their QA process in detail. If they can’t, it’s a red flag. Cutting corners on quality will cost you significantly in the long run.
5. Hire a Dedicated Team
Context switching kills focus, leading to delays, mistakes, and misunderstandings. If your developers are working on multiple projects simultaneously, yours will never get the attention it deserves.
Hiring a dedicated team addresses this issue. With a dedicated team, you gain developers who are fully committed to your product and focused solely on your project. It’s like having an in-house team without the overhead.
A dedicated team offers:
- Full focus on one project—no distractions or divided attention.
- Regular check-ins to keep you in the loop on progress.
- Direct access to the team members working on your project.
- Shared goals, ensuring the team cares about the outcome, not just completing tasks.
A dedicated team will proactively challenge ideas, ask insightful questions, and offer better solutions. This level of accountability is impossible to achieve from a team juggling multiple clients.
The best part? Dedicated teams typically offer the most cost-effective long-term solution, as costs are spread across the team and designed for long-term collaboration.
If you want the most cost-efficient outsourcing model over time, a dedicated team is your best option. Restaff specializes in providing dedicated offshore software development teams, focusing on integrating Norwegian work culture with Vietnamese talent. They offer scalable, transparent, and culturally aligned teams, ensuring long-term partnerships and high-quality results. Restaff acts as a bridge between cultures, managing HR and fostering employee growth while delivering cost-effective solutions.
How to Choose a Software Outsourcing Destination
With so many outsourcing options to choose from, it can be difficult to find the best fit for your software development needs. Don’t worry, though—by focusing on a few important factors, you’ll be able to make the right choice. As long as you carefully assess things like developer rates, the strength of the tech industry, time zone differences, and cultural alignment, you’ll be able to find a great offshore software development partner. Let’s take a closer look at each of these key considerations to help you make an informed decision for your next project.
Restaff specializes in providing dedicated offshore software development teams, focusing on integrating Norwegian work culture with Vietnamese talent. Businesses choose Restaff for their expertise in building long-term partnerships, transparent operations, and cultural alignment, ensuring high-quality, cost-effective results.
1. Compare Offshore Developer Rates Per Hour
When it comes to software outsourcing services, cost is frequently the most important factor. Since most firms want to cut expenses, they occasionally consider this as the sole deciding factor when deciding which nation or location to choose. Cost should undoubtedly be a primary consideration, but companies shouldn't depend just on it. Two other important considerations are the availability of talent and cultural fit, which we'll go into more depth about later. Finding IT talent, particularly specialized talent, is becoming more and more difficult. For this reason, you should confirm that the area or possible partners possess the technical expertise you seek. When you budget for your project, consider the availability of talent and hourly rates.
2. Assess the Tech Industry in Different Regions
Next, research the IT sector in the country you’re considering. Look at factors like the top technical universities where developers graduate, the popularity of the tech stack you need, and the number of developers available. If the region or country:
- Has a well-trained workforce that ensures high-quality work and up-to-date technical skills,
- Offers a large talent pool, increasing your chances of finding the right expertise
- Is a popular outsourcing destination for many businesses,
Then you’re on the right path. However, the situation becomes more complicated if your software development project requires a specialist with rare and niche technologies, you’ll need to do more in-depth research.
3. Consider Time Zone Differences
Some believe that the ideal time zone difference for smooth collaboration is 1 to 2 hours, especially when constant communication is essential.
If your outsourcing partner is in a significantly different time zone, you can use the "follow the sun" model. This approach ensures round-the-clock progress by passing tasks between teams in different time zones.
For example, a development team in Asia works during the day, and when their shift ends, a team in Europe picks up the work, reviews the progress, or continues development. This cycle continues with teams in different time zones, ensuring ongoing work, reducing delays, and speeding up time to market.
Like the situation between Onix located in Norway partnering with Restaff. Restaff facilitates long-term partnerships by providing dedicated, culturally aligned offshore software development teams that integrate seamlessly with clients' existing operations. This approach ensures sustained collaboration, knowledge retention, and continuous improvement and helped Onix scale their software dedicated team over time.
4. Evaluate Cultural Compatibility
Cultural compatibility can be a tricky topic, but it’s important to consider. There are a few steps you can take to make working with an overseas partner smoother.
Start by asking other business owners who have outsourced to the region or country you’re considering. With the internet and social media, finding feedback is easier than ever. You can also directly reach out to your potential partner and ask questions about communication practices, taxes, legal concerns, and other relevant topics.
While cultural fit is often overlooked, it is an important concern since it influences both the end product of your work and the establishment of a comfortable environment during the software development process.
Restaff - House of Norway excels at bridging cultural gaps, ensuring seamless integration of Norwegian management practices with diverse talent, as demonstrated by our successful partnerships in Vietnam. We prioritize understanding and aligning with their clients' work cultures, fostering effective communication and collaboration across different backgrounds. This ability to adapt culturally is crucial for building strong, long-term, and high-performing offshore development teams.
The 15 KPIs for Cross-Cultural Team Integration for measuring when hiring an offshore software dedicated team and a step by step guide How to Set Up an Offshore Development Center?
Why choose Restaff?
Businesses should choose Restaff’s services for your offshore software dedicated team due to our expertise in providing and managing such teams, particularly with a focus on the collaboration between Norwegian and Vietnamese professionals. Here are some key reasons:
- Experience and Specialization: Restaff specializes in providing dedicated software development teams to international businesses, primarily in Norway and Europe, since 2007. We focus on building long-term partnerships to help companies efficiently scale their development teams.
- Norwegian Work Culture Integration: We train our teams in Norwegian work values, ensuring seamless collaboration and communication with your in-house team. This includes principles like transparency, trust, and autonomy.
- Cultural Integration and Facilitation: We act as a bridge between Norwegian and Vietnamese work cultures, ensuring smooth communication and cooperation. We have a "cultural consultant model" to facilitate cultural adaptation, making our teams integral to clients' organizations. Martin Tran, Restaff's CEO, has a strong understanding of both cultures and business practices, which is a competitive advantage.
- Transparency: We emphasize clear communication, open reporting, and straightforward pricing. We bill our services accurately and on time with a clear description of payroll and service fees.
- Scalability and Flexibility: Restaff offers scalable resources, allowing businesses to increase or decrease software engineering resources based on their needs. This flexibility helps match engineering input to delivery capability for maximized company profits.
- Long-Term Commitment and Retention: We focus on building dedicated teams that grow with our clients, aiming to reduce turnover and preserve knowledge within the team. Our commitment to employee engagement ensures stable and reliable teams.
- Hybrid Resourcing Model: We utilize a blend of in-house development and external expertise, fostering faster innovation and mitigating silo thinking.
- Quality and Reliability: We aim to provide a trusted, high-quality outsourcing solution for core product development, overcoming concerns about quality, collaboration, security, and scalability.
- Human Resource Management: We effectively act as your human resource department in Vietnam, handling HR activities, focusing on employee growth, and ensuring employee satisfaction. We care about our people and want them to grow.
Testimonials from our satisfied clients like Onix, CodeIT and Schlumberger, highlight our contribution to their productivity, innovation, and overall success. We also have been recognized by ITviec Ltd as one of Vietnam's Top 15 Best IT Companies from 2019 to 2025. By choosing Restaff, you gain a partner with experience in building dedicated offshore teams, a strong focus on cultural and communicative alignment, transparent operations, and a track record of contributing to the success of our clients.
Having the Greatest Offshore Development Team with Restaff - House of Norway!
After exploring the various offshore software development rates by country, it's clear that cost is an important factor in choosing the right partner. However, the right partner also brings quality, experience, and cultural alignment to the table—ensuring that your project is successful without compromising on key factors like communication and scalability. Restaff - House of Norway offers a unique blend of competitive rates, expertise, and a deep understanding of both Norwegian and Vietnamese work cultures. With our experience in building dedicated offshore teams and our transparent approach, we can help you achieve your business goals while optimizing costs.
Now that it’s time to make the right choice for your business. Schedule a consultation with Restaff today for hiring a dedicated offshore team that offers both cost-effective solutions, high-quality results and takes your development to the next level!