Cost to Outsource Software Development: Global Software Outsourcing Rates

There is a chance you are planning a new project that is going to become a breakthrough in the tech market. Business analysis is ready, as well as technical one. Finally, unless you have an in-house development team, it’s time to think about a team of dedicated developers and consider software development outsourcing rates.
At this point, you have a couple of choices that can lead you to totally different outcomes. When you want to outsource software development cost is one of the main deciding factors, along with the partner’s expertise and project conditions. Before you jump to any decisions, we want to let you have a quick look at the research we did specifically for this article. Now, let’s talk about these options and have a look at the cost of developers belonging to various locations, as well as choose the most suitable country for outsourcing.
Key Takeaways
- Outsourcing software development is a popular way to cut the costs of building products without sacrificing the quality of the end result.
- Outsourcing offers faster hiring, scalability, and access to specialized global talent, making it a strategic choice beyond just reducing expenses.
- The cost of outsourcing software development varies based on location, developer experience, and collaboration models like fixed price, time and material, or dedicated teams.
- Popular location to outsource software development include Latin America (Mexico, Brazil, Colombia, Argentina), Western Europe (Norway, Denmark, Germany), Eastern Europe (Ukraine, Poland, Hungary), and Asia (China, India).
- There are several trends that currently influence the attitude towards outsourcing and the market rates, including increased demand for specialized skills, growing dependence on AI and automation in development, and shift to outcome-based testing.
- Selecting a reliable outsourcing provider ensures project success, requiring due diligence on expertise, communication, and security compliance.
Software development outsourcing, when and where you need it.

Outsourcing a Software Development Project: The Basics
With the average cost of developing a relatively simple software application ranging between $60,000 and $150,000, according to Business.com, thousands of organizations around the world now use outsourcing services to build and test software. Companies that consider outsourcing software development as the best solution to turn the idea into reality have a choice to outsource:
- onshore (to the country of their location);
- nearshore (to the country that is close by or shares a border);
- offshore (to a far-distance country, usually overseas)
While making a decision, these options have to be investigated in terms of the initial goal because the price varies drastically. However, the opportunity to save with outsourcing is not the only reason why companies want to outsource in the first place. It also happens because nearshore and offshore dedicated teams have a proven ability to develop high-end products.
Now let’s look at the example of outsourcing software development cost in action. For instance, you need the code to be developed within 500 hours, for which you will need at least five middle-qualified programmers who have to be paid hourly. Taxes, benefits, office space, equipment, training, and travel costs have to be considered as well. The estimated cost will depend on the type of outsourcing you choose because the location defines the price for the service. The table below will help you to better visualize the outsource app development cost.
Feature | In-house or onshore developers (USA) | Dedicated development teams abroad |
Team size | 5 | 5 |
Man-hours needed | 500 | 500 |
Average price per hour (Middle level) | $55 | $25 |
Hiring & onboarding | $3,000 | $0 |
Benefits & insurance | $5,000 | $0 |
Taxes & other overhead costs | $7,000 | $0 |
Estimated project cost | $42,500 | $12,500 |
Naturally, this is not the final price of a custom software development project, as it’s also going to need the services of QA engineers, business analysts, UI/UX designers, system architects, and other specialists, depending on the specifics of the project. Still, the development part is usually the most expensive one; therefore, it’s the one we use for comparisons.
It’s also worth noting that offshore software development rates can vary greatly from country to country. Moreover, the rate for software development in a specific outsourcing region changes over time as some destinations lose popularity and others emerge. Still, what do the rates in 2025 look like? Here are the software development rates by country and region.
The Cost of Software Development Outsourcing in North America and Australia
It is not a surprise that the US, with its major tech hubs like Silicon Valley, Seattle, Boston, Atlanta, and Texas, is rightfully considered one of the most technologically developed countries and therefore a great place to look for software development services. Starting with web developers and ending with network communication architects, this region offers high-quality services that are believed to be among the best in the world. But with that opinion also comes the notion of high pricing, and this is the reason for many geeks wanting to relocate to these areas.
However, the very things that attract software specialists to the United States also mean a higher overall cost of software projects for US-based businesses. For American companies, the cost of hiring the right software development specialists may be a bit steep, even though quality usually prevails in the list of values. Until recently, the quality and reliability that US software development offers usually caused American companies to think twice before outsourcing development elsewhere. However, with the looming threat of a recession, offshore software development outsourcing becomes something that businesses are more likely to consider.
The United States is not exactly among the most popular destinations for outsourcing, at least among foreign companies. A US-based business, however, may consider searching for a software development partner — usually, for limited-time projects or when rare and niche technologies are involved. Indeed.com estimates that an American software developer, on average, earns $123,261 as a base salary, which can go all the way up to $185,025. Australia can also be mentioned here, for developers of the latter charge only 10-15% less than American ones — $90,000 on average, to be precise.
Pros
- No language barrier
- Strong work ethic
- Similar communication style
Cons
- High cost & overhead expenses
- Complicated tax system
- Strict employee-related laws
How Much Does It Cost to Outsource Software Development to South America?
A couple of years ago, this region wouldn’t have been considered a prime destination for finding an offshore software development company. However, the decision of many businesses to outsource development to South America is no longer surprising, as this place has one of the top outsourcing markets with high-quality services and reasonable salaries for software developers. Moreover, because of its close proximity to the US, Latin America is a popular choice among companies that prefer to meet their development partners in person.
These days, countries like Mexico, Colombia, Brazil, and Argentina are producing more and more professionals in the software development field by giving them better education and more job opportunities. Compared to Central and Western European prices, Latin America may be considered a good bargain for American companies as a nearshore type of outsourcing. Salary.com estimates that the average annual salary of a software engineer is $11,310 in Brazil and $14,035 in Mexico.
Pros
- Close proximity to the US
- Affordable hourly rates for IT services
- Job laws that favor employers
Cons
- Language and cultural differences
- Work ethic can be relaxed
- Costs are rising annually
Offshore Development Rates in Western Europe
Western Europe is a unique region in terms of software development outsourcing. On the one hand, it has high-class specialists who were raised there and therefore understand local business specifics; it also attracts expats from Eastern Europe, Asia, and even the US. On the other hand, labor in Western Europe is pretty expensive, so one of the main benefits of outsourcing, which is the ability to cut costs, can get lost if you plan to outsource to Western Europe.
Here are some software outsourcing rates by country in Western Europe. Payscale estimates that software developers in Norway earn around $53,000 annually, while Danish developers make significantly more than their Norwegian colleagues — over $84,000 annually. German developers are paid $69,000 annually on average. Overall, the outsourcing cost in Western Europe is rapidly catching up with North American rates, so hiring software development teams in this region is more of a question of logistics and prestige rather than an attempt at cost reduction.
Pros
- Well-educated engineers
- Excellent work ethic and time management
- Everyone strictly follows the law
Cons
- Vendors tend to favor long-term contracts
- High software developer rates
- Significant taxes and employee benefits
Outsourcing Market Rates in Eastern Europe
Even though Eastern Europe is not geographically far from Western Europe, the two regions are not that similar when it comes to outsourcing. The primary differences, of course, concern software development outsourcing prices. For example, a software developer in Ukraine has an annual salary of $24,000, which is similar to Romania, where an engineer makes about $26,000 annually. A software developer in Hungary earns about $34,000, and a Polish developer makes around $39,000 per year.
There is a clear difference between software development rates in North America and Eastern Europe. Do not be too skeptical though, because the quality of provided services is considered high. Thanks to in-depth and widely accessible physical, mathematical, and IT education, Eastern European countries provide the whole world with professionals who can work with complex coding, difficult data analysis, and hardware architecture. As a cultural peculiarity, people from Eastern Europe tend to appear very determined and curious about technological innovations, therefore quickly adapting to the newest technologies and tools. For example, for the past several years, Ukraine has been demonstrating excellent results on worldwide hackathons, which proves their level of professionalism over and over.
Pros
- Endless talent pool
- Lenient laws for foreign businesses
- Thriving IT industry
Cons
- Non-native English proficiency
- Different cultural values
- Time management differences
Software Development Cost When Outsourcing to Asia
Another huge area of the world to explore in terms of outsourcing rates is Asia. This is a popular destination among companies that want to take advantage of the lower cost of outsourcing software development while keeping the quality of the solution at an adequate level. For example, the services of Indian developers are rated among the most affordable ones in the whole world with an annual base pay of a little over $8,100. Developers from China, at the same time, earn just a little under $12,000.
Some Western companies have certain prejudices when it comes to the software development process and its outcomes, especially quality-wise, when working with a software outsourcing company from Asia, since lower costs are often associated with below-average software quality. However, this is simply the question of who you choose to outsource to. A precise approach to selecting the region for software development and the company can not only ensure project cost savings of up to 30%, but also give you the best outsourcing quality.
Pros
- Many emerging outsourcing hubs
- Developers cost less than anywhere else
- Wide range of IT services
Cons
- English proficiency can be limited
- Unclear outsourcing-related laws
- Different time zones
Software Development Hourly Rates Around the World: The Ultimate Comparison
Outsourcing is commonly chosen by companies to cut their expenses on development, but it’s clear that cost varies considerably based on the vendor’s location. Here is a table that will help you visualize the salaries of software developers around the world and choose the best location, particularly price-wise, for outsourcing your project.
Region | Country | Annual software developer salary (Middle) |
North America & Australia | United States | $123,261 |
Australia | $90,000 | |
South America | Brazil | $11,310 |
Mexico | $14,035 | |
Western Europe | Norway | $53,000 |
Denmark | $84,000 | |
Germany | $69,000 | |
Eastern Europe | Ukraine | $24,000 |
Romania | $26,000 | |
Hungary | $34,000 | |
Poland | $39,000 | |
Asia | China | $12,000 |
India | $8,000 |
Should You Hire Locally or Choose Offshore Software Development Instead?
While the ability of a company to cut costs with outsourcing is a big advantage in favor of the latter, the total cost of the project is not the only criterion you need to make the choice between outsourcing and hiring in-house specialists. Here is when to use outsourcing and when to hire an internal development team.
When to outsource | When to hire locally |
You need specific or rare expertise: niche programming languages, complex software architecture, etc | You are aiming for long-term collaboration that will involve cooperation with multiple in-house departments |
You only need assistance with one project and are not looking for long-term cooperation | Your project deals with a lot of confidential information and sensitive client data — in that case, ensuring all-around security can be challenging |
You are searching for a certain level of flexibility: e.g. to pause and resume cooperation as needed or scale the team up and down in a matter of a day | You are searching for someone to bring a new vision and develop your core business idea, so you want to make sure they’ll stick around |
At the same time, we want to point out that the complexity and quality of outsourcing services delivered by custom software development companies grow by the minute. While businesses would mostly use outsourcing for simple tasks a few years ago, now you can trust your outsourcing partner with pretty much anything. Software development outsourcing helps companies spend less on software while enjoying a much lower cost to hire compared to the local market. So, there is no reason to not at least give outsourcing a try.
Your idea plus our execution equals a flawless software product.

Current Trends and How They Impact Outsourcing Rates in Software Development
Even though software development outsourcing is as popular as ever, like any other domain, it’s subject to transformations with time and changing trends. Naturally, the emergence of new trends also impacts the software development outsourcing pricing in different ways. Here are the biggest trends in development outsourcing to watch out for in 2025 and how they reflect on the cost of outsourcing software development.
1. Nearshoring over offshoring
Many companies are shifting from offshore outsourcing — for example, Western companies hiring in India or the Philippines — to nearshore outsourcing — for example, Latin America for US companies or Eastern Europe for Western Europe. Nearshore locations often have higher labor costs than offshore destinations, leading to an increase in outsourcing rates. However, the cost is justified by better cultural alignment, fewer time zone challenges, and improved collaboration.
2. Demand for specialized skills
Companies are increasingly looking for experts who specialize in cutting-edge technologies, including AI/ML, blockchain, cybersecurity, and cloud computing rather than just general developers. It’s also worth noting that niche skills command premium prices. For example, an AI/ML developer in Eastern Europe may charge $60–$80/hour compared to $40–$50/hour for a general backend developer.
3. AI and use of automation in development
AI-powered tools like Copilot, ChatGPT, and automated code generation are improving developer productivity by automating the less challenging parts of software development and quality assurance, freeing up time for more complex tasks. In the context of offshore software development cost, this can lower the expenses by reducing project timelines, but highly skilled developers who can work alongside AI effectively are in greater demand, consistently pushing their rates higher.
4. Rising costs in traditional outsourcing hubs
Known for their reasonable rates, countries like India, Poland, and China still have seen salary inflation due to growing global demand and local economic factors. The increasing rates in these regions cause businesses to consider alternative destinations like Vietnam, Ukraine, or Latin America.
5. Shift to outcome-based pricing
More companies are moving from hourly-based models to milestone or value-based pricing, meaning that compensation is based on the value delivered and measurable outcomes, such as delivering a working MVP or implementing a new feature set, rather than the number of hours worked. This can lead to higher initial costs, but businesses still benefit from predictable budgets and better-defined deliverables.
QArea — Your Trusted Software Outsourcing Partner
We can go on for ages, listing the mobile and web development outsourcing price around the world, but one thing is clear: software development rates vary greatly, depending on the location of software development companies and other factors like the demand for the technology and the cooperation model. However, clients understandably want to receive high-quality end products without thousands of edits during the process. This is why it’s important to choose your development team based not only on the average hourly rate of each specialist, but also on things like product development experience, work ethic, and others. This is why more and more companies choose Ukraine as their outsourcing destination, and why we can become your reliable and cost-effective development partner.
- Key Takeaways
- Outsourcing a Software Development Project: The Basics
- The Cost of Software Development Outsourcing in North America and Australia
- How Much Does It Cost to Outsource Software Development to South America?
- Offshore Development Rates in Western Europe
- Outsourcing Market Rates in Eastern Europe
- Software Development Cost When Outsourcing to Asia
- Software Development Hourly Rates Around the World: The Ultimate Comparison
- Should You Hire Locally or Choose Offshore Software Development Instead?
- Current Trends and How They Impact Outsourcing Rates in Software Development
- QArea — Your Trusted Software Outsourcing Partner
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