Top software outsourcing countries in the world -In-depth report
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Top countries for outsourcing software development

Top software outsourcing countries - In-depth research by Saigon Technology

I. Asia

Billing rates

Skill ranking

Policy and legislation

Cultural compatibility and communication

Conclusion

II. Eastern Europe

Billing rates

Skill ranking

Policy and legislation

Cultural compatibility and communication

Conclusion

III. North America

Billing rates

Skill ranking

Policy and legislation

Cultural compatibility and communication

Conclusion

IV. Middle East

Billing rates

Skill ranking

Policy and legislation

Cultural compatibility and communication

Conclusion

V. Africa

Billing rates

Skill ranking

Policy and legislation

Cultural compatibility and communication

Conclusion

Hiring a bespoke software developer

Offshore outsourcing steals the show and becomes the hero for most companies in need of software development solutions. Already the trend of outsourcing prominently features in most businesses, and to an extent, it is becoming a near-necessity in this age of globalization. To that end, we are set to explore the major destinations that are emerging in 2019 as the most suitable countries to outsource for software development services. We aim to establish which economies offer the vibrancy and energy necessary to provide a fledgling outsourcing workforce. Here’s a more in-depth look at what set each destination apart in terms of the client’s outsourcing expectations.

Asia

Asia is practically the ‘tiger’ in the outsourcing software development jungle, and India remains the best place in terms of scale and availability of skills. The latest Tholons’ top 100 outsourcing cities further indicate China, Philippines, and Vietnam are leading the pack from Asia. Here’s an outlook of the overall destinations in Asia pegged as having the best services for software development solutions.

I. India

India is renowned as an inexpensive outsourcing destination with a large pool of low-cost software developers and programmers. Besides the little costs of $15/hour, the Indian urban population is also highly educated and semi-skilled in upcoming technical aspects. Their longtime experience in delivering IT services has also led the government to acknowledge the market growth in IT outsourcing and offers incentives in the best way they can. Also, the nation boasts of a vibrant technical background that has seen plenty of youths turn to acquire programming skills to an advanced level. TopCoder rating indicates India as the 12th most advanced country in terms of Programming skill rankings across the outsourcing locations.

II. Vietnam

Despite IT outsourcing being fairly young within Vietnam (20 years), the country is turning out to be a small but vibrant powerhouse for technology and software development outsourcing. The Asian-Pacific nation was the most improved in regards to the rank of software outsourcing servicing by the Global Services Location Index 201. Vietnam success was prominent with the country rising by five places, competitive enough to now host companies like IBM, Intel, Samsung, Microsoft, and Nokia. That is despite the nation’s history of being a socialist republic with a Communist political influence. Most clients find out that the country has a highly adaptive approach to upcoming software and tech developments. Some key players are FPT Software, TMA Solutions, Saigon Technology Solutions, CMC Software.

III. Philippines

The Philippines has also undergone a quiet revolution which has reshaped the outsourcing software development business to meet the demands of rising industries. The nation is culturally similar to most western countries while also boasting of being the third largest English-speaking nation in the world. The 94 percent English literacy rate coupled with a robust university system produces over 30,000 graduates who are technically proficient in  IT and other technical, specialized areas. Further, the Philippines software developers are costing a fifth of the cost of developers in western countries plus boasting of over 20 years in offering onshore and offshore outsourcing industries. The business process outsourcing industry (BPO) has a record rate of growth more than 25 percent a year in just the past decade.

IV. Thailand

Another talented player in the outsourcing software development sector is Thailand. According to a 2016 survey by A.T Kearney, Thailand holds the number 6 position among the ASEAN countries with an efficient offshore labor market. The state has an excellent infrastructure with a robust university and college system to boost the IT offshoring workforce each year. The improving use of the English language has also made Thailand heaven for foreign investors seeking IT services such as mobile application development, web design, IT consulting, digital marketing, software quality assurance, and testing. 

V. China

There is a strong indication to China offering some of the best tech and IT services not only in the region but also across the globe. Already a PwC report found that a growing number IT companies are setting up in China to take leverage of the knowledge base in UI, full-stack, mobile, enterprise and game software present within the country. The market size of the efficient software development services is estimated to be over 30,000 professionals with excellent skills that rank one and two according to the HackerRank Programming Olympics. The ranking offers a glimpse into China’s initiative to develop educational, training and other supportive infrastructure to help promote information technology and other tech-related services industries among its population.  

● Billing rates

The ASEAN outsourcing market offers some of the world cheapest services involving IT and software development. China leads the way in terms of the charges for software development rates with $50 and over for companies looking to onboard a bonafide software developer. However, outsourcing for an excellent software engineer from China would set you back almost $100 per hour in the charges rate. Vietnam and the Philippines follow suit with both sharing an average hourly rate of $30 and $20 respectively. Unsurprisingly, India lands as the last country with the cheapest hourly rates of $15 for software and IT development outsourcing services. 

● Skill ranking

Moreover, a key strength in outsourcing to these Asian countries is the availability of a vast pool of skilled developers and engineers providing clients with high-quality IT talent. Evidence of this is the growing number of graduates emerging from technical universities within these countries. For example, China and India graduate double the number of students with degrees from top IT engineering and science schools. Such a scenario is perhaps what fuel China and India to rank 2nd and 12th respectively in the global ranking of programming and technical skills. Established players such as the Philippines already enjoy a professional background of being a haven for call centers.  

● Policy and legislation

Only recently have countries such as India, China, and Thailand take the lead by establishing a pro-IT policy that boasts their outsourcing software development capabilities. Initially, these destinations had a considerable focus on hardware devices production, but now their emphasis lies on increasing the IT services. For instance, a broader strategy launched by China’s government sets in motion a 15-year plan for developing a robust IT economy based on science, innovation, and technology within the domestic and global industry. And since the country became a member of the World Trade Organization in 2001, China has established better measures to help protect patents and copyrights to software. However, most companies are still concerned with the IPR protection especially with the software development vendors having access to sensitive data. 

● Cultural compatibility and communication

Across Asia’s outsourcing software development destinations there is an obvious downside when it comes to the level of cultural compatibility with Western outsourcing clients. The Philippines has perhaps the most solid underlying of Westernization since it was a former American overseas colony. The English literacy rates are also quite high (over 90%), and with Christianity making up the largest religion, Philippines becomes an influential player with the sector. China also seems to be trying to catch up by increasing its percentage of English proficiency to reach 22%. Chinese, however, remains the dominant language of the communist state together with some dialects spoken to a lesser degree. This remains quite a challenge especially for software developing vendors looking to work with Western and Australasia clients.  

Conclusion

In the sum up to the best markets for outsourcing software development in Asia, India remains the most frequent world outsourcing destination. The country offers incredible infrastructure with experienced companies focused on the software outsourcing niche. But we also have to recognize that China is a nation offering keen competition to India especially with its technological innovation being its strong point. The past few years, in particular, saw the government sufficiently build the technology industry to become a competitor in software outsourcing services. Also, new entrants such as Vietnam and Thailand are also becoming a haven for growing talent pools of software service delivery.

Eastern Europe

Eastern Europe is emerging as a reliable outsourcing powerhouse regions preferred by companies looking to be cost-effective in regards to their software development outsourcing options. A 2017 Global Services Location Index survey by A.T Kearney indicates five countries from the region among the Top 20 IT Outsourcing services destination. 

I. Ukraine

Ukraine doubles up as the most promising country offering excellent software outsourcing services. The state does have a skill pool of almost 100,000 IT and Software professionals versed in the latest technology capabilities. Moreover, the education system boasts of graduating over 30,000 students in IT-related fields from the local universities. Already large corporations and companies such as Intel USA, Microsoft, Nokia, and even Reuters are importers of Ukraine’s software services. The operational, cultural and financial advantages make Ukraine a leading software outsourcing destination for companies looking for an excellent ratio of quality and price.

II. Romania

Corporations have also begun looking closer to home with outsourcing solutions and Romania has is offering continuous competition to developed countries like Poland, Bulgaria, and most of all Ukraine. The country boasts of over 60000 Romanians working in the local outsourcing sector, contributing to an almost 20% of the outsourced software development workforce in Central and East Europe. Romania’s software development process is also evident in the number of international companies like Dell, IBM, Oracle, Microsoft and Ubisoft having offices in the nation.

III. Poland

The immense talent pool of software development professionals within Poland encompasses perhaps everything that a company would want in an outsourcing base. The country boasts of having a large variety of IT labor force with a strong background in software development skills. Poland also ranks among the first Eastern European nations with cutting-edge technologies and affordable programming experts. 

IV. Czech Republic

The Czech Republic is home a high ranking IT outsourcing sector that boasts of attractive software development skills, availability and financially-affordable solutions for companies. Successful international corporations like IBM, NetSuite, Honeywell, and Google are known to have their office sites in the IT-developed country. Just like these large companies, small and medium enterprises can also leverage Czechia’s skilled IT workforce, language proficiency and quality policies for their software development needs.

V. Hungary

Despite its small size, Hungary has shown significant strides in the growth of its IT outsourcing sector over the last few years. Most recent data indicate that the country’s local IT market engages about 100,000 IT specialists, with software development being the most vibrant industries. A good indication is perhaps the many R&D centers' setup in Hungary by international companies including Siemens, Nokia, Ericsson, etc. 

Billing rates

In regards to the outsourcing software development rates, Easter Europe software developers are known to charge less in comparison to their counterparts in the Western Hemisphere. Currently, Poland sits on top with $50-100 an hour, lower than the charges in Western Europe. Romania, Ukraine, and Bulgaria follow suit with a medium price range of $25-50/hour for their software development services. Moldova records low charges for their software development services, with developers charging $20-25 an hour. 

Skill ranking

The technical skills of Eastern Europe developers are well-regarded and acknowledged throughout the world. Most of the countries were part of the Soviet Union, a state that helped establish relatively high-quality Technical Education towards STEM learning in learning institutions. As such, the countries from these regions have been able to churn out skilled software developers who use the latest tech in the IT industry. Poland, Romania, and Ukraine developers rank as the most proficient and experienced practitioners in custom software, web and app development.  On TopCoder and Hackerrank, Poland, Ukraine and Romania feature in a high ranking system that saw the countries’ top the list for most advanced software development skillset.

Policy and legislation

Geographically, all these Eastern European countries border each other and are also neighboring Western Europe to a close extent. Besides, a good number of these Easter Europe nations are members of the European Union and to comply with the organization standards in data, and IT matters. Hence, clients should expect European standards to feature majorly in their outsourcing software development agreements.

Cultural compatibility and communication

Eastern European outsourcing markets are well suited for software development services with businesses in Western Europe, North America, and even Australia. With only a 3-4 hour time overlap for Central and Eastern Europe, most of the US and Australian clients can confidently interact throughout with the external development team.

Additionally, the command of English is building up successful cooperation between these EE software developers and their offshore clients. A good grasp of English or at least good proficiency (B1 and B2) is becoming an essential requirement for international companies within the region. Besides, a majority of these Eastern-Europe developers are native speakers of the region’s German-Romanic languages, with Ukraine as an exemption. Still, this is an advantage since it helps them acquire a command of spoken English in terms of pronunciation.  

Conclusion

Ukraine still prominently features in the leading EU countries in the region that is continuously providing an array of IT development services based on high technical education and advanced programming capabilities. However, the progress of collaborative technologies and recent political turmoil has seen Ukraine lose the lead position to Poland. The nation is becoming attractive for companies willing to take their software development services abroad. A Tholon Rating Index attributed a large economy, solid technological footing, attractive tax incentives, convenient location, and cultural compatibility as the reasons for Poland positioning itself as the leading provider of technology services within the region.

North America

North America is also emerging as a preferred location for IT outsourcers seeking software development services with increased automation and digital transformation witnessed in the region. The need for U.S outsourcers to be close to the vendors is perhaps what is making the area an attractive option for service delivery. From 2012 to 2016, Everest Group estimates rise from 25 percent to 63 percent in the outsourcing of digital services. 

I. USA

The USA is perhaps the world’s largest technology hub due to several reasons. For starters, the IT and software developers of the region enjoy the apparent advantages of a perfect cultural match, English language skills, U.S laws, and regulations. The access to well-respected universities and colleges within the region ensures the IT talent pool remains broad enough to encompass different IT related fields. The area also hosts plenty of companies which are global leaders in the technology sector. IBM, Apple, Microsoft, Google, Nokia, and many others have made different cities within the USA their bases for operations.

II. Canada

Canada also seems to be catching up with the IT outsourcing craze. Generally, most of the nation’s clients are near shore customers from the USA and to a small percentage, software development outsourcers from Europe. The Ontario region, i.e., Toronto is perhaps the standout areas that is becoming the tech hub for hosting the IT and software development vendors. Culturally, most western clients consider Canada as having a ‘laid back’ reputation and this concerns customers especially when it comes to delivering the software projects in time.

● Billing rates

North America has the highest standards in the world of software development. And there are good reasons for this. For starters, the quality of the software service vendors is rarely in question, and you should expect them to deliver robust products and services that go beyond the boundaries of technology. For moderate software projects, the price range can go from $100-200 depending on the region. And there is very little room for negotiations since the marketplace for software developers is fast becoming scarce and as such the rates continue to increase, making software developers some of the best-paid people within the USA and Canada. 

● Skill ranking

Like aforementioned, the U.S boasts of having the best educational facilities focused on the STEM subjects. Centers such as the Massachusetts Institute of Technology portray the capability of the region to provide top-notch software programs and solutions for clients and the population alike. However, despite the increase in IT and engineering popularity, the percentage of graduates getting degrees is significantly lower compared to the per capita of the countries. That creates a shortage of the necessary IT and software skills, leading to premium rates for outsourcing the services.

● Policy and legislation

Regulations and laws for software outsourcing within North America are the most progressive in terms of offshoring software development. However, it remains worth our attention that the current administration within the USA is adamant on establishing complex tax laws for the offshore developers and their clients alike. Any company willing to take the option of hiring an offshore software developer in the USA would have to hire an experienced attorney who knows the mix of federal, state and local laws. It can be a confusing business environment which can restrict the corporation in terms of the type of software or to whom the services are going to.  Certain types of software are not exported as per the regulation within the United States. For example, encryption software is not sold or shipped to individual nations. 

● Cultural compatibility and communication

Overall, North America software developers enjoy the most cultural integration and westernization. Both USA and Canada boasts of advanced infrastructure in regards to their technology capabilities and overall development. Besides, English is a primary language in the U.S (79.2%) and Canada (58.1%). These statistics of native speakers make it easier for offshore clients to establish a constant and understandable communication to keep the software development process on course.

Conclusion

Both USA and Canada boast of having a sizeable market for offshore software development services. While the level of skills and education is unquestionable, there is a need to bring down the rates to increase the number of outsourcing clients available. The significant local competition for talent, premium rates, and labor shortage have not, however, stopped the USA software developers from becoming some of the most sort-after professionals in the field. 

Middle East

The IT market and software, in particular, are experiencing a huge boom and demand for services in the industry is increasing. Currently, Israel and the wider MENA region (UAE, Qatar, Kuwait, and Saudi Arabia) are becoming hubs for web design and software development services that are essential for many businesses, be it a startup or big company. Israel, for instance, stands out as a leading outsourcing development destination for its welcoming environment that has seen technology companies getting lured by the incentives and technological advancement.  

● Billing rates

On the business end of the software development, the Middle East counterparts charge hourly rates of roughly $20-$50 for an hour of software development. Israel remains far ahead by charging rates of approximately $25-$60 per hour. 

● Skill ranking

Despite having a tech-native youth within the Middle East, only Israel can boast of having a digital adoption rate and programming skills that are commendable. The country’s industrial environment has enabled a significant portion of Israelis aged 20-24 to enroll in institutions of higher learning and get the skills in software development and programming.

● Policy and legislation

While not much available about the MENA region software outsourcing policies, Israel seems to take an open approach to encompass more tech and software in the economy. Most of the businesses within the Middle East are yet to adopt new software technologies fully, and this makes the outsourcing market for vendors quite small. However, Israel, UAE, and Qatar government offer friendly policies and regulations that help promote the IT industry growth rate. However, the region is still experiencing challenges in the increased control and complex taxation systems present in each country.

● Cultural compatibility and communication

Cultural compatibility is a huge consideration, especially when looking to outsource from vendors in the Middle East region. Apart from Israel, the rest of the countries are predominantly Muslims with Arabic as the main language in use. Consequently, this presents a major hurdle in terms of communication, especially when working with offshore software outsourcers. Israel is perhaps the only multicultural nation that can easily identify as a perfect destination for companies with diverse backgrounds. The top languages include Hebrew (49%), Arabic (18%), Russian (15%) and Yiddish (2%). English is yet to catch up in Israel with only 2% of the educated population proficient in the language.

● Skill ranking

Despite having a tech-native youth within the Middle East, only Israel can boast of having a digital adoption rate and programming skills that are commendable. The country’s industrial environment has enabled a significant portion of Israelis aged 20-24 to enroll in institutions of higher learning and get the skills in software development and programming.

● Policy and legislation

While not much available about the MENA region software outsourcing policies, Israel seems to take an open approach to encompass more tech and software in the economy. Most of the businesses within the Middle East are yet to adopt new software technologies fully, and this makes the outsourcing market for vendors quite small. However, Israel, UAE, and Qatar government offer friendly policies and regulations that help promote the IT industry growth rate. However, the region is still experiencing challenges in the increased control and complex taxation systems present in each country.

● Cultural compatibility and communication

Cultural compatibility is a huge consideration, especially when looking to outsource from vendors in the Middle East region. Apart from Israel, the rest of the countries are predominantly Muslims with Arabic as the main language in use. Consequently, this presents a major hurdle in terms of communication, especially when working with offshore software outsourcers. Israel is perhaps the only multicultural nation that can easily identify as a perfect destination for companies with diverse backgrounds. The top languages include Hebrew (49%), Arabic (18%), Russian (15%) and Yiddish (2%). English is yet to catch up in Israel with only 2% of the educated population proficient in the language.

Conclusion

Israel confidently ranks number world in the offshore software development outsourcing sector within the Middle East. Its political stability, conducive business environment, and innovative IT services make it a strong-base for world-class IT and software solutions. Some of the world’s best technology outsource providers are setting shop here, hence anticipating much tech growth.

Africa

Africa is a potential frontier for IT outsourcing. As the rest of the world’s IT service sectors continue to mature, Africa scenario seems to be only beginning to blossom as a burgeoning market for outsourcing good software and web products. The potential is indeed huge with the continents young population expected to double by 2050. Already international tech brands such as IBM, Microsoft, and Facebook are making Nigeria, South Africa, Egypt, Morocco, and Kenya their hubs to breed software development. And with the number of countries gaining digital awareness in Africa increasing, there is an increasing transformation of the IT services from the continent.

● Billing rates

Africa is considered a rather cheap option for outsourcing your software development services. Concerning Kenya, Egypt, Morocco, and Nigeria- the software developer would charge an hourly rate of $20 or less at times. South Africa and Egypt would cost approximately $20-$50, since finding highly experienced software developer can be challenging. 

● Skill ranking

Education is another primary consideration when outsourcing software development services to Africa. Egypt receives the best skill ranking for its focus on effective higher education that promotes the IT industry. The country also ranks as the only Arab country with a high level of literacy ranking 16 in the world. On top of it, Egypt boasts of renowned universities that focus on technical subjects and sciences.

● Policy and legislation

From improving citizen engagement on policy changes to facilitating global trade, African governments quickly realize the unprecedented opportunities that digital technology. As such countries such as Egypt and Kenya have reimagined their adoption to new technologies. Egypt’s Information Technology Industry Development Agency (ITIDA) is an example of a partnership meant to boost the IT sector in terms of research and development. Such efforts by the government portray an environment, where firms can establish legitimate software development services.

● Cultural compatibility and communication

Outsourcing from North Africa and the Sub-Sahara region exposes clients to two different situations. Egypt, for example, is an Arab nation where Arabic is widely spoken despite English and French being secondary languages. Only 35% of the population in the country is proficient in English. On the flip side, the Sub-Saharan countries doubling in outsourcing software development have better cultural integration with Western clients since they are mostly of Christian backgrounds. English is also fast becoming a notable language for nations such as Nigeria, Kenya, and South Africa. It is the most widely spoken foreign language in Africa alongside French. 

Conclusion

Egypt and South Africa stand out for their history in the IT and outsourcing industry. Already these two have established themselves are prominent countries for IT in Africa. Even more so, software development companies are pushing Egypt to the frontier of technological advancement in Africa. To an extent, we also have to consider that there are plenty of hurdles in regards to infrastructure challenges, corruption, lack of widespread tech adoption and internet services within the Africa region.

Hiring a bespoke software developer

As you can see, there are plenty of locations to outsource your software development requirements. And from our assessment, the following countries stand out as valid options for your 2019 software development needs.

● China

● Ukraine

● Vietnam

● Poland

● India

● Egypt

While it's not outright which destination is the best, choosing for an offshore outsourcing option depends on the needs of the client. From location to costs, political stability and technical capabilities, there are different aspects to consider and weigh before choosing the right vendor. Ultimately, the software vendor should be an experienced partner to enable the establishment of a long term working relationship.

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