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Cost analysis of hiring offshore versus US onsite developers for software development.

How Hiring Remote Offshore Developers Can Significantly Reduce Costs Compared To Hiring Developers from the USA

Onboarding offshore developers from countries like India defines a company's business acumen. It's worth a great deal for cash-strapped businesses searching for affordable development services. Moreover, hiring offshore development services also underscores another advantage.  It helps companies avoid setting up a new team of in-house developers. This, in turn, helps them reduce huge costs on business operations. 

From reduced overhead costs to top-of-the-line development services, India stands as a promising land for businesses looking for experienced developers.

Here’s our analysis broken down in step-by-step details. They will help you understand the concept of hiring offshore development services. You will also get the relative impacts of such services on businesses.

Why Does It Make Sense To Hire Offshore Developers?

It has been observed that hiring top-tier talent from the US involves an annual salary of $1,02,954. The figure takes an edge with $1,07,000 when you hire similar talent from Canada. 

Enterprises can manage to reduce these costs to a greater extent, if they hire remote offshore developers. Costs reduced this way can help them save on their budget greatly. It is even more essential, as cost is considered a key factor in any product development lifecycle.

Moreover, when you hire an offshore software development company or onboard remote developers, it also brings forth faster scalability of your business. The result is accompanied by reduced overhead costs and potential risks. In addition, you experience cutting-edge technology in a remote work ecosystem. As a result, you experience greater business productivity and improved employee retention. 

So, why put pressure on your budget? With talented offshore software developers at your disposal, it’s worth a deal to go for it. You will satisfy your business needs better without exceeding your budget limit.

Statistical Report on Offshore Development Market Size and Predictions

The demand for offshore mobile app development services is increasing without a doubt. According to the report published by Verified Market Research, the estimated value of the offshore software development market size was USD 122.25 Billion in 2021. Now the market size has a projected estimation of USD 283.45 billion by 2031, concluding to grow at a CAGR of 10.13% from 2021 to 2031.

Statistical Report on Offshore Development Market Size and Predictions

According to Statista, nearly 500 thousand software developers registered their involvement in offshore development in Brazil, in 2022. 

What Prompts Companies to Go For Offshoring Their Development Projects?

A report published by an American multinational corporation named ManpowerGroup revealed in its findings the dismal portrayal of global talent shortages in the field of technology and data industry, in countries such as America and China. 

The report claims that the demand for IT, Software, and Data roles in developed nations is increasing. However, there has equally been an insufficient talent supply to handle those demands. Hence, it is reportedly one of the reasons global companies look beyond geographies to find the right talent to serve their business interest best.

Since hiring a local development team often comes wrapped in various risks and expensive outlay, businesses, therefore, consider offshoring their development projects. 

Do Offshore Rates For Software Development Also Prompt Companies To Go For Offshoring?

Yes. It is believed that higher costs in software development are one of the most fundamental reasons prompting companies to consider offshoring their software development projects. A business can save up to 60 percent of the cost of completing the software development project at an offshore facility rather than hiring a local developer. 

Why Does The Cost Of Offshore Development Differ From Country To Country?

The cost of offshore software development differs from country to country. It relies on a host of different factors, including the cost of living in a particular country. As clear as it seems, the standard of living in the U.S. and European countries is more expensive. Hence, it makes these regions the costliest market landscapes for companies in pursuit of affordable software development services.

Why Should You Hire Overseas Programmers? Benefits of Offshore Software Development Service and Its Relative Cost-Effectiveness on Your Business

Cost-Effective Global Talent Acquisition

The cost of hiring developers from the USA, Canada, and other countries is significantly higher, piling more pressure on your business budget. However, if you choose to hire remote offshore developers, you generally have lower labor costs, thereby allowing you to work with the top talents at a fraction of the cost. Therefore, when you decide to hire an offshore development team, the decision would consequently help you save huge costs on the talent acquisition process.

Country

Frontend Developer

Backend Developer

Full-stack Developer

Mobile Developer

Ukraine

$25 – $45/hr

$28 – $48/hr

$30 – $48/hr

$25 – $45/hr

India

$15 – $30/hr

$15 – $32/hr

$18 – $40/hr

$15 – $35/hr

Vietnam

$18 – $38/hr

$18 – $38/hr

$20 – $43/hr

$18 – $38/hr

Poland

$35 – $65/hr

$35 – $65/hr

$40 – $70/hr

$35 – $65/hr

Top destinations for the U.S. companies to hire affordable offshore developers. 
Source: tateeda.com

The point to be noted here is that you will incur the average cost between $70-120 per hour for hiring software developers in countries, such as Canada and the USA. The cost could be even more, depending on the specific sort of talent you intend to hire for your business needs. Hence, mid-sized businesses with limited budgets can turn this opportunity of hiring remote offshore developers into great cost-saving benefits. 

An Intelligent Approach to Downsizing Overhead Costs By Up To 70%

It has been observed that companies that favor outsourced development generally end up saving 50-70% of costs on operational expenses and salaries. Hiring remote offshore developers allows you to work with a remote team-building ecosystem. This helps you downsize overhead costs related to various expenses, such as –
• Purchasing and maintaining hardware and software licenses
• Maintaining physical offices
• Ensuring proper maintenance of office supplies, amenities, etc.
• Maintaining staff-related overheads, like taxes, paid leaves, insurance, etc.
Therefore, hiring remote offshore developers is an intelligent business approach to avoiding these costs, coupled with those expenses associated with office space, IT system upkeep, and infrastructure maintenance.

Maximize Savings On Currency Exchange

For small businesses with limited budgets, hiring developers from countries like the USA could mean mounting more pressure on their overall budget. That’s because the current rate of the USA, for example, is far higher than countries, like India. If you reverse the situation, like hiring developers from countries such as India, the entire expenses appear more economical; from development services to salaries and other sundry costs. The benefit of currency exchange also positively influences the cost-effectiveness of your remote offshore development. Hence, it drives more improvements in the overall savings of your business.

Great Scalability and Flexibility

One of the most cost-effective upsides associated with hiring offshore developers is that you don’t have to get entangled with the long-term commitments of your service provider. All you have to do is to pay for the services corresponding to the usage. This sort of benefit will also help you avoid resource constraints in situations when project requirements fluctuate.
You can also scale your development efforts by bridging the talent gap, thus meeting your project requirements quickly. The degree of flexibility and scalability you experience with hiring remote offshore developers is amazing. For example, it unburdens your business with fixed costs involved in resource deployment and nurturing an in-house talent pool.

Cost Analysis of Hiring Offshore Developers from India vs. US

The Explicit Difference in Remunerations 

If you hire overseas developers from countries like America, the cost of onboarding the talent workforce would multiply the burden on your company’s overall budget. That’s because of the expensive cost of living in the U.S. Hence, for a client looking for a comparatively more affordable and experienced developer, the American market sounds like a costly deal.  

You will find a noticeable difference in developers’ salaries. An experienced developer in India draws less salary for the same skills and expertise as their counterparts in the U.S. take.  

Moreover, developer compensation also matters in this context, given how it saves costs on your budget. For example, offshore developer hourly rates in India may range from $20 to $25 relative to the range from $55 to $80 found in the U.S. As a result, when you hire offshore staff from countries like India, it drives potential savings of nearly 70 percent for your business. 

It seems more realistic to believe based on the fact that the U.S. has a salary level of USD 75K  for an average entry-level software engineer (INR 62 LPA) compared to approx. 18 LPA in India, thereby translating a huge cost difference for your business on hiring an experienced talent from India.

Reduced Business Expenses or Overhead Expenses

One of the key factors prompting businesses from around the world to consider hiring experienced developers from India lies in the fact of how it pans out saving their overall business expenses. This means companies can help themselves avoid costs on office space, equipment, and infrastructural costs. They avoid expenses on employee benefits and other costs which collectively pile more pressure on their overall business budget.  

However, keep in mind that saving overhead costs could depend on various factors, such as – 

• How many employees does a business offshore?

• What are the offshored roles, in terms of administrative or back office roles compared to a more specialized technical position? 

• Countries with lower costs of living usually help a company save big on overhead costs

In addition, it is also difficult to precisely gauge the specific percentage of overhead cost savings due to factors, including certain hidden costs. Another factor includes structural differences in a company in terms of its size, location, and industry. What you can consider in this regard is to factor in extra expenses related to offshoring. It may include considerations, such as traveling costs, communication tools, and research management fees.

Conclusion

Based on the aforementioned benefits and cost analysis, it is fair to say that hiring offshore developers affords great advantages for businesses with limited budgets. Not only cost is saved for your business, but this approach also helps you work with talented resources for long-term business engagement. That’s one of the reasons why the concept of hiring an offshore development team is considered an intelligent and cost-effective decision for organizations. 

Are you on the quest to hire a talented resource for your development project? 

Consider Ace Technologies as your qualified resource to work with its experienced development teams and save costs on your business budget. The company is well-equipped to handle development projects of whatever resource-intensiveness. It helps you receive quality-approved, reliable solutions by maintaining total adherence to the pre-agreed deadline. 

Timely delivery of highly affordable and cost-effective development solutions underscores Ace’s competitiveness. It portrays a distinct virtue of Ace Technologies as the most sought-after company for offshore development services for organizations of any business strength and size. Reduce overhead costs by a substantial margin and save big on talent acquisition through business engagement with Ace Technologies.

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