There are several regions in the world where your business can find an outsourcing partner. While we've covered this subject in this article, here we'll take a deep dive into five countries whose outsourcing reputation, competitive costs, and up-to-date practices make them the best choices when looking to assemble a distributed software development team offshore or nearshore.
India is perhaps the first country that comes to mind when thinking about outsourcing. Traditionally, big companies have chosen this destination to outsource call centers and other similar practices.
However, there has been an increase in outsourcing software development teams to India in the last decade.
One of the main advantages of India is its cost-effectiveness. This country offers hourly rates among the most competitive globally, ranging from as low as 10 USD to 25 USD per hour.
India has one of the largest talent pools globally, producing approximately 1.5 million IT graduates every year.
In India, world-class cities like Delhi, Bangalore, Mumbai, and others offer state-of-the-art telecommunications infrastructure and connectivity. Other towns provide good infrastructure at a lesser cost.
There are some risks and possible drawbacks when outsourcing to India that your business should mitigate.
India is located in a dramatically different time zone than the US, on average more than a 10-hour difference.
Time zone mismatch can render team coordination and communication hard to nearly impossible, roughly cutting your efficiency in half.
Geographical distance is another factor. As the post-pandemic "new normal" approaches and businesses look to resume their travel practices, having your business partner on the other side of the world makes traveling expensive and time-consuming.
Lastly, you may encounter cultural and language barriers challenging to overcome. In this sense, there's a learning curve that both teams will have to traverse in other to reach efficiency.
If your project is critical or your timeframe is short, perhaps it is better to look for other destinations with a better cultural fit.
India's highlights as an outsourcing destination
- Very competitive costs, on average from 10 to 25 USD an hour
- Vast experience in outsourcing
- Robust communications infrastructure
- +10 hour time zone difference
- Possible cultural and language barriers
This destination is traditional among large manufacturing companies. In the last decades, China has positioned itself as an undisputed leader in this sense.
Software development is not an exception, with the country producing 4 million new IT graduates per year.
Chinese developers are among the best globally, and China is home to more than 35 thousand tech firms. All of this configures China as an outstanding outsourcing destination.
You will find developing tech hubs in main cities like Shanghai, Beijing, and Shenzhen in China.
Chinese tech professionals can handle a broad range of technological issues, from traditional Web development to complex Fintech solutions, Blockchain implementations, and AI-driven products.
All these strengths come with a few weaknesses too. It is estimated that less than 10% of the population speaks English fluently, so if you are located in the US or other English-speaking countries, this can pose a deal-breaker.
Hourly rates are cost-effective from a US point of view. In some cases, they may not be as competitive as India, with costs ranging from approximately 19 to 38 USD, depending on skills and seniority level.
The impact of time difference is even higher in the case of China, which is located 13 hours ahead of the US time zone.
China's highlights as an outsourcing destination
- Competitive costs, in a range of 19 to 38 USD hourly.
- Tradicional global leader in outsourced manufacturing
- Developers are ranked among the best in the world.
- Can handle complex technological problems like AI, Blockchain, and Fintech.
- 13-hour time zone difference
- The language barrier is a hard reality.
If you consider Western Europe an outsourcing destination, then Poland is a country to look at. This country is among the main outsourcing destinations in the region.
The top outsourcing cities in this country are Warsaw, Krakow, and Wroclaw, among others.
Tech outsourcing in Western Europe is booming, with Poland alone having more than half a million professionals employed in the technology sector and close to 20 thousand tech graduates every year.
Poland's developers are top 3 in HackerRank's competitions. They have good professional English proficiency. In the last year, both Google and Microsoft announced plans to invest billions of US dollars in data centers in the country. The talent pool in Poland is abundant, ranked in Europe's top six countries.
Regarding costs, Poland is also competitive. US businesses can save as much as 50% of labor costs when outsourcing to Poland.
Your business can hire experienced professionals at very competitive prices, while these top engineers are also paid an excellent salary.
Poland has a minimal time difference from the rest of the European countries. For US-based companies, while not ideal, this is entirely manageable.
Poland offers the possibility of real-time collaboration and coordination while keeping the cost benefits of having an outsourced team.
The country is also an EU member; this is important regarding data privacy regulations as GDPR and intellectual property best practices.
Hourly rates for software developers in Poland may vary considerably, being approximately 40 USD on average, can go as low as 25 USD an hour or as high as 99 USD per hour.
If you consider Eastern Europe and are looking for more aggressive labor cost savings, Poland may not be the best choice for your business.
Other Western European countries like Ukraine, for example, could offer a better cost-value relation in these cases.
Poland's highlights as an outsourcing destination
- Average costs at approximately 40 USD/hour
- Offers Top-tier developers
- Ideal time zone for European clients, manageable for US Businesses
- The talent pool is not as significant as other outsourcing destinations.
- Other Western European countries may be better for cost-critical projects, offering similar quality at lower prices.
Latin America has become a strong player in the global outsourcing game. Technology is booming in the region, with more than 30 tech unicorns with headquarters in Brazil, Argentina, and Mexico. This region offers a broad spectrum of skills and seniorities at competitive prices.
While hourly rates may not be as low as in Southeast Asia, there are several benefits in outsourcing to Latin America: excellent time zone alignment with the US, exceptional cultural match, and excellent English proficiency, to name a few.
The prominent players in the region are Argentina, Brazil, Mexico, and Colombia. However, there is another strong player in the field.
Uruguay has distinctive attributes that make the country a knowledgeable choice for your outsourcing strategy to Latin America.
Uruguay has one of the highest adult literacy rates in the region, nearly 99%. Better education, in general, directly translates to higher standards in IT education.
More than 700 tech companies have chosen Uruguay as their headquarters. The country has a high retention rate of software developers, excellent English proficiency, and a superior telecommunications infrastructure.
It is easy to conduct business in Uruguay. The government has implemented several strategic policies in this respect, such as 100% income tax exemptions on foreign payments for software companies, fast-track visas, and tax incentive programs that include years of stability and low taxation.
Countries like Uruguay have a strategic advantage in time zone differences with the US. While Eastern Europe has a 5-hour gap on average, or Southeast Asia ranges from +10 to +13 hours difference, Uruguay has excellent time zone alignment with the US, only 2 hours apart from NY time.
Uruguay is not a cheap option compared to other outsourcing destinations like Asia. However, compared to US labor costs, this is still amazingly competitive.
Interestingly enough, your business will find US-level quality and accountability standards when assembling a team with Uruguayan developers.
Uruguay's highlights as an outsourcing destination
- Very competitive prices compared to US labor costs, ranging from 20 to 50 USD per hour.
- Many tax incentives specifically target the software industry.
- US-level quality software engineers
- Excellent time zone alignment and English proficiency levels
If there's a leader in software development outsourcing from Latin America to the US, the name is Argentina.
Argentina has long known the value of a strong education. The country spends more than 5% of its GDP on education. That's higher than the United States. Moreover, Argentina's spending on education ranks 30th globally.
This policy directly translates to high skilled tech professionals. The University of Buenos Aires, the capital city of Argentina, is ranked top 100 globally.
The country has up-to-date data protection and privacy legislation and has pioneered software incentive laws in the region, with more than two decades of software-aware legislation.
Argentina offers the lowest hourly rates among the four largest economies in the region. While the country has a record of economic instability, this hasn't been a deterrent for multinational companies.
On the contrary, top-tier companies such as Google, Facebook, IBM, Intel, and others, continue to choose to operate in the country. Argentina is truly a hub for software development in Latin America.
The country's culture promotes innovation. Adaptability to change, welcoming new ideas, and openness to all kinds of people are embedded into the nation's DNA.
Developers in Argentina have the highest English proficiency in the region. According to Coursera's Global Skills Index, Argentina is a leader in cutting-edge technical skills.
Argentina's Internet connectivity is the third of the whole American continent.
Argentina's highlights as an outsourcing destination
- A long tradition of high-quality education
- Vast talent pool of high-tier engineers
- Hourly rates range from 20 to 50 USD per hour.
- Leader in innovation and adaptability to change
- Excellent time zone alignment
- Highest English proficiency level in the region
To sum up
This article covered the best countries to outsource from, from Southeast Asia to Eastern Europe to Latin America.
India is the traditional and most cost-competitive choice but may offer a cultural, language, and time zone clash.
The same happens with China for the US or European business. Eastern Europe and Latin America pose exciting choices. For US-based companies, Argentina and Uruguay offer a distinctive strategic advantage.
These countries host a large talent pool of top-tier engineers at competitive rates while also having an excellent cultural match and English language proficiency, making them the go-to choice for leveraging your software outsourcing strategy.
If you consider Latin America for your outsourcing development needs, contact us!