Offshore Software Development Cost Estimation Guide

In recent times, remote hiring has gained momentum as businesses have embraced working from home. Working from home-office became indispensable during the pandemic. There are other reasons as to why businesses are opting remote hires – cost-effectiveness and infinite global talent pool.Before assembling an offshore team, it is important to know the expenses associated with the project development by an offshore team. It is evident that managing an offshore team is cost-effective when compared to an onshore team’s expenses. But there are a few other expenses involved while hiring and managing a remote offshore team that businesses should be aware of.


Factors affecting the offshore software development costs


The hourly rates for developers differ a great deal based on the country & currency they live in. Developers from North America and Western Europe charge higher compared to their counterparts in other developing countries. The hourly rates in North America and Western Europe are as follows:

Location Hourly Rate
France $85
UK $74
Sweden $70
Netherlands $63
California $61.96
New York $60.44
Germany $59
Washington $57
Texas $49

The average hourly rates in Eastern European countries range between $22 – $54. The average hourly rates of countries in Africa range from $23 – $42. The average hourly rates in Latin American countries range from $30 – $50. Asian countries have average hourly rates that range from $19 – $45.

2. Tech stacks & Skills

The tech stack refers to all that is required to handle a project from programming languages, frameworks and tools to code and deliver the application. When new technologies are requirements of a project, a developer with prior knowledge of the tools, techniques & software are preferred to get definitive results. With technical expertise, the cost of hiring increases too.

3. Experience level of Developers

Developers with more experience in any field will be more knowledgeable. Experienced developers charge more which adds to the development costs, as they are expected to deliver a fully functioning project.

4.Time duration of the project

The duration of the project plays an important role in the development cost estimation. If the project is quite simple like web development, the project can be made ready in a short duration. But when the project requires additional features like online ordering, customer ratings, product price comparisons, similar product suggestions, etc will require more time for deployment. The larger the project, the more is the testing and experimentation involved. Moreover, there would be changes in requirements of the clients which has to be resolved. All these factors will add to the costs.

5. Salary of developers

The salary of the offshore team may depend on the region or country to which the team belongs. It also depends on the company that provides these developers. There are quite a lot of reputed companies (offshore vendors) who recruit some of the best developers with high technical expertise. If the developers belong to the tech hubs, they are likely to demand more salary.

6. Offshore partner fee

Offshore agencies like Centizen Talent Hub help businesses hire offshore developers at a very low cost. All you need to pay is just a one-time fee for the recruitment. This fee is inclusive of the recruitment costs, handling payroll, allowances, offering infrastructure, etc. There are no hidden costs, rather everything will be included in the fee. You might wonder why the salaries and the vendor’s fee are so much lower than hiring onshore development teams. The reason is the low cost of living in these countries.

7. Business Trips

Although technology has given us a lot of communication tools, nothing beats one-to-one communication. Especially when requirements are to be discussed with clients or important decisions are to be made in-person meetings become a necessity. Either the developers may have to meet their recruiters onsite or the recruiters may want to meet the developing team. Such meetings may incur travel costs that are unavoidable. Whatsoever, these costs will be far less than hiring an onshore team.

8. Cost of getting an SSL certificate for your product’s security

When developing a project offshore, protecting the businesses’ data and intellectual property becomes a priority. When you have a tie-up with an offshore service provider like ours- Centizen Talent Hub, consider everything regarding confidentiality sorted. Using proper end-point or network security systems, security breaches can be mitigated.

Final Thoughts

There may be numerous factors that affect offshore development costs. Changes in the cost estimate include delays, unexpected incidents, requirement changes, approvals, etc. Many businesses may need continued support for solving bugs, hosting, customer support which does not end with delivering the project to the client. So before deciding to hire an offshore development team it is crucial to be aware of the possible costs to get the desired outcome.