7 Best Countries to Outsource Software Development

Outsourcing software development is contracting out IT-related tasks to third-party firms or self-employed professionals. This strategy is well-suited when businesses aim to streamline operations, accelerate the hiring process, and get efficient tech services at great value for money. Equipped with global talent, you can access specialized skills, boost project timelines, and contribute more to your core business activities.

In terms of benefits, outsourcing software development vendors have a lot to offer. Cost savings are their significant advantage, particularly as outsourcing to countries with lower labor costs allows companies to reduce their overall expenses without compromising quality. Following this strategy, you gain access to a vast talent pool of dedicated professionals. You gain borderless opportunities and can tap into a diverse range of expertise and innovation that might not be available locally. External teams are a reliable method to handle the technical aspects of software development which will allow you to focus on critical sectors of your business.

But how can you make the most out of your outsourcing software development endeavors? What regions to apply to and find a trusted IT vendor with a qualified team? In this article, we’ll highlight the best countries for outsourcing software development. By identifying top destinations, we’ll help you make the most relevant decision about where to find reliable and skilled tech partners, ensuring your projects are completed efficiently and flawlessly. Learn about top destinations like Ukraine, India, Poland, and many others and find the perfect fit for your business needs to maximize cost savings, access global talent, and streamline your projects.

Criteria for Choosing a Country for Outsourcing

Why do companies outsource to other countries? What indicators do you use to find a credible tech vendor? When selecting a country for outsourcing software development, we should base our assessment on critical factors to ensure successful collaboration and project outcomes. These criteria help you identify the most suitable locations for your specific needs and priorities.

Cost-effectiveness

The primary benefit of this cooperation model lies in advantageous offshore software development costs. In addition to eliminating the need to hire your own staff, outsourcing development to offshore locations can cut down your outgoings even more. Evaluate the average hourly rates for software developers in different countries, as they will significantly impact the overall budget. Nonetheless, it’s critical to balance cost with quality to avoid compromising the project’s quality and further prosperity.

Talent pool and skill level

The global availability of skilled developers with expertise in various technologies and programming languages can make your software development process more efficient. To have a broader choice, select countries with a strong educational infrastructure and a focus on technology. Such regions tend to produce a large number of competent software professionals. Thus, it’s important to assess the depth and breadth of the talent pool in potential outsourcing destinations. 

English proficiency

Seamless communication is vital for the cohesive partnership and success of your outsourced projects. Countries with a high level of English Proficiency Index are more likely to facilitate smoother interactions, cut down any potential misunderstandings, and achieve clear articulation of requirements and feedback. This way, you can obtain more efficient project management and enhanced results.

Time zone compatibility

Coordinating work across different time zones can become a complex aspect. To turn this peculiarity into a feature rather than a drawback, you should select a country with a time zone that overlaps with your own and can help facilitate cohesive communication and collaboration. Make sure there are adequate windows for real-time interactions, which can be vital for timely decision-making and troubleshooting.

Cultural compatibility

Awareness and alignment with the cultural nuances of the outsourcing country can enhance collaboration and teamwork. Countries with similar work ethics, business practices, and communication styles can promote faster onboarding, as well as more productive and efficient working relationships.

Legal and IP protection

Your outsourcing destination should have robust legal frameworks to protect intellectual property (IP) and sensitive data. Countries with stringent IP laws and strong legal systems can deliver greater peace of mind and security for your proprietary information and technology.

Don’t neglect carefully considering these criteria so you can select the most suitable country and receive the maximum benefits of offshore software development outsourcing, leading to successful partnerships and high-quality project outcomes.

Top Countries for Outsourcing Software Development

When considering an outsourcing location, you should make a choice based on your individual business needs and project requirements. Explore the specific strengths and challenges of the top outsourcing countries to make an informed decision that aligns with your strategic goals. 

India

India is one of the major destination hubs for outsourcing software development. Recent research indicates that the software industry in India is expanding at a rate of 60% annually. Over the past three decades, the software development market in India has grown by more than 30%. Currently, India exports its software services to approximately 100 countries. According to the Software Sector Analysis Report, Indian developers are highly profound IT graduates. Moreover, the software market in India is five times more cost-effective than in North American countries. The country has a well-established IT industry, with cities like Bangalore, Hyderabad, and Pune emerging as global technology hubs. India’s tech sector is supported by a robust educational system that produces a large number of engineers and IT professionals annually. 

Key benefits

• Large pool of skilled developers. India offers a vast talent pool with millions of software developers proficient in various programming languages and technologies. The country’s strong contribution to STEM (Science, Technology, Engineering, and Mathematics) education ensures a continuous supply of skilled professionals. Currently, there are 9.75 million experts from India on Github, as Business Standard claims.
• Cost-effective rates. One of the primary attractions of outsourcing to India is the cost advantage, with an average hourly rate of $25-$50. The labor costs in India are significantly lower than in Western countries, allowing businesses to save substantially on development expenses while maintaining quality.
• Strong English proficiency. English is widely spoken and used as a second official language of business and education in India. A great level of English proficiency facilitates clear communication and reduces the likelihood of miscommunication, making collaboration smoother.

Challenges

• Time zone differences. As was mentioned, the time zone difference can be both an advantage and a challenge. In fact, when it is 8 AM in New York, it is 5:30 PM in India. While it allows for round-the-clock productivity, it can also complicate real-time communication and require flexible working hours for effective collaboration.
• Quality variation among providers. The vast number of IT service providers in India means that the quality of service can vary significantly. It is crucial to thoroughly vet potential partners to ensure they meet your quality standards and project requirements.

Ukraine

Ukraine, the largest сountry in Europe and the 44th-biggest region globally, is another well-established tech hub on the list of the best countries to outsource software development. The IT outsourcing market is projected to generate $1.09 billion in revenue in 2024. As Statista claims, the market is expected to grow at a compound annual growth rate (CAGR) of 9.68% from 2024 to 2029, reaching a market volume of $1.73 billion by 2029.

Approximately 200,000 specialists in Ukraine serve thousands of companies, and the global market for information software technologies workers is constantly growing. Software development outsourcing in Ukraine can benefit your company’s project. In 2020, 

Ukraine demonstrated a 20% information technology growth rate, and the country is forecasted to triple this result by 2025. The country’s IT industry is one of the fastest growing, as historically, Ukraine has a strong engineering, physics, and maths base. Now, Ukrainian universities have a variety of tech faculties available focusing on innovation and technology education. Ukrainian cities like Kharkiv, Kyiv, and Lviv have already become robust tech ecosystems, introducing a broad spectrum of companies for offshore software development outsourcing. 

The IT sector in Ukraine is extending by up to 30,000 specialists per year. According to Clutch, hourly rates in Ukraine are budget-friendly, ranging from $25 to $100/hour, depending on the developers’ seniority. On Upwork, developers typically charge between $20 and $40 per hour. The most widely used programming languages among Ukrainian developers are Python for web development, Java, and Ruby. 

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Key Benefits

• Highly skilled developers. Ukraine is appreciated for its highly skilled and well-educated technicians due to its historically strong educational system. Due to this fact, the country has a strong tradition in STEM education, producing professionals with deep technical expertise and proficiency in modern technologies.
• Competitive pricing. While receiving high-quality services, employing Ukrainian IT vendors can be truly cost-efficient. The prices to employ software developers in Ukraine are still significantly lower than in Western Europe and North America, making it an affordable option for high-quality software development.
• The constant development of IT education. Being a highly digitized country, Ukraine contributes to IT education and continually invests in developing its tech talent. The country hosts numerous tech conferences, hackathons, and innovation hubs that foster a culture of continuous learning and technological advancement, making it the best country to outsource software development.

Challenges

• Political Instability. Ukraine has faced political and economic challenges in recent years, which can be a concern for businesses considering outsourcing. However, the situation has been improving, and the IT sector remains resilient and growing.
• Language barrier. Although fluent English is critical for any Ukrainian developer, and every agency assembles the team considering this factor, it is less universally spoken than in this country. 

Poland

Poland is another prominent player in the European IT outsourcing market, being one of the best countries to outsource software development. Last year’s Kearney Global Services Location Index research rated Poland as the twelfth most attractive outsourcing location. Poland offers a large pool of skilled software developers while remaining budget-friendly. Another insight states that Poland is a rival to Ukraine, with 100+ firms and 255,000 software specialists benefiting from excellent education.

As per Clutch and Upwork, offshore software development rates in Poland fluctuate from $25 to $100/hour. Lower rates, between $25 and $50, are traditionally detected in smaller cities like Katowice, while the highest rates are in major tech outsourcing hubs such as Warsaw and Krakow.

Popular programming languages are Java, SQL, Python, and C++. Poland’s top tech cities are Warsaw, Krakow, Wroclaw, and Lodz. The country has developed a strong reputation for its high-quality software development services, driven by a robust educational system and a focus on technology and innovation. 

Key Benefits

• High-quality education system delivering tech experts. Poland has a well-established education system that equips students with strong knowledge in computer science and engineering. Polish universities consistently produce highly specialized developers with expertise in various solutions.
• EU Member with strong legal protections. As a member of the European Union, Poland adheres to stringent legal standards, such as strong protections for intellectual property (IP) and data privacy. This way, businesses are provided with greater security and peace of mind.
• Cultural compatibility with Western Europe and the US. Poland’s cultural and business practices are very similar to those of Western Europe and the United States. Because they share almost the same culture, Polish IT companies provide cohesive and smooth collaboration and reduce potential friction in business interactions.

Challenges

• Higher costs compared to other Eastern European countries. Polish IT services are undoubtedly more cost-effective than those in Western Europe and North America. Nevertheless, Poland’s labor costs are higher compared to those of other Eastern European countries like Ukraine. Businesses need to assess the higher costs against and benefits of quality and reliability, as such peculiarities are an essential part of Ukrainian software development services as well.

Philippines

The Philippines has become a popular destination for IT and software development outsourcing, particularly for Western countries. That’s because this country offers high cost-effectiveness, market competitiveness, and strong software development background. According to the Philippines IT Market report, software development has become one of the most established sub-sectors of the country’s information technology industry. According to Clutch, hourly rates for software development range from $25 to $49, while on Upwork, average rates vary from $15 to $35 per hour. In the Philippines, you’ll most often face development with technologies like PHP, ASP.NET, Ruby on Rails, and ASP.NET Core. Manila is a leading tech city in the country. The country’s growing IT sector is supported by a strong focus on education and a large number of English-speaking professionals.

Key Benefits

• Strong English proficiency. The Philippines has one of the highest levels of English proficiency in Asia. English is an official language and widely spoken, which facilitates clear and effective communication with clients from English-speaking countries.
• Cost-effective labor. The cost of hiring software developers in the Philippines is relatively low compared to Western countries, making it an attractive option for businesses looking to reduce their development costs.
• Cultural compatibility with Western countries. The Philippines has a cultural affinity with Western countries, particularly the United States, due to historical ties. This cultural compatibility helps ensure strong working relationships and an understanding of client expectations.

Challenges

• Smaller talent pool compared to India and Ukraine. While the Philippines has a growing IT sector, its talent pool is smaller compared to larger countries like India and Ukraine. The talent shortage can limit your choice, the availability of specialized skills, and the capacity to handle large-scale projects.
• Time zone differences. The time gap and difference between the Philippines and Western countries can pose challenges for real-time communication and collaboration. For instance, when it is 8 AM in New York, it is 8 PM in the Philippines. Similarly, when it is 8 AM in London, it is 4 PM in the Philippines. Still, it’s not an obstacle for many Filipino firms that are accustomed to working flexible hours to accommodate their clients’ time zones.

Vietnam

Vietnam’s IT industry has grown over the past decade, positioning itself as a solid player in the global best countries to outsource. The country has made significant investments in education and technology infrastructure, creating an environment conducive to IT innovation. The government has implemented various initiatives to promote the tech industry, including favorable policies and incentives for the tech startup sector and foreign investments.

According to LinkedIn, the typical cost for offshore software development in Vietnam ranges from $20 to $50/ hour, which is highly cost-efficient. In the Global Innovation Index 2021, Vietnam was ranked 44th, a significant improvement from its 76th position in 2012.

Vietnam’s primary software development centers are located in Ho Chi Minh City and Hanoi, the country’s capital. The country is highly accessible, with direct flights available from the United States to Ho Chi Minh City.

Vietnam also boasts four high-tech parks: Hoa Lac Hi-tech Park in Hanoi, Ho Chi Minh City Hi-tech Park, Da Nang Hi-tech Park, and Biotechnology Hi-tech Park. The top popular programming languages in Vietnam are Python, Java, and JavaScript.

Key Benefits

1. Rapidly growing IT sector. Vietnam’s IT sector is expanding at an impressive rate, with a steady influx of startups and multinational tech companies setting up operations in the country. This growth is driven by a strong focus on STEM education and the development of tech hubs in cities like Ho Chi Minh City and Hanoi.
2. Cost-effective rates. One of Vietnam’s most attractive features for outsourcing is its competitive pricing. The cost of software development services in Vietnam is significantly lower compared to Western countries and even some other Asian countries, making it an economically viable option for businesses.
3. Young and dynamic workforce. Vietnam boasts a young, energetic, and highly motivated workforce. The majority of its population is under the age of 35, and there is a growing number of graduates specializing in IT and related fields. This youthful demographic is quick to adapt to new technologies and trends.

Challenges

1. Language barriers. While English proficiency is enhancing, it is still a challenge in Vietnam, particularly in smaller cities. This can sometimes become an issue for cooperation between clients and developers.
2. Need for more experienced developers. Although there is a large pool of young talent, there is a noticeable gap in the availability of seasoned developers with extensive experience in handling complex projects. This restricts your choice and may potentially affect the quality and reliability of the output.

Brazil

Brazil is the largest IT market in Latin America and has developed a powerful tech sector. According to the Panorama and Trends 2018 report, Brazil ranks 9th globally in software and services, with a software market valued at nearly $19 billion. Brazilian IT outsourcing accounts for up to 50% of the best LATAM countries to outsource on the market.

As Clutch states, hourly rates for web development in Brazil range from $25 to $50, while on Upwork, the average cost varies from $25 to $60 per hour. The most adopted techstack in Brazil is Java, Python, and SQL. Key cities for IT development are Rio de Janeiro, Porto Alegre, Curitiba, Blumenau, and Londrina. 

The country has a profound network of tech companies, universities, and research institutions. Brazil’s IT industry can be described by a strong focus on innovation and digital transformation, supported by a solid number of tech events and conferences that promote knowledge exchange and collaboration.

Key Benefits

1. Great choice of IT professionals. Brazil has a substantial number of skilled IT professionals. The country annually elevates a significant number of tech graduates, adding to the already sizable workforce in the software development sector.
2. Cultural and time zone compatibility with North America. Brazil’s cultural similarities and close time zones with North America can be attractive for U.S. companies that need a decent outsourcing destination. Compatibility in these terms facilitates smoother communication and project management.
3. Growing tech ecosystem. Brazil’s tech ecosystem is experiencing ongoing rapid growth, with an increasing number of tech startups, small-to-medium enterprises (SMEs), and enthusiasts. This dynamic environment elevates innovation and provides robust support for software engineering professionals.

Challenges

1. Higher costs compared to Asian countries. Brazil offers more affordable rates than Western countries. Still, its costs go through the ceiling in comparison to those in Asian outsourcing hubs like Vietnam and India. This can be a limiting factor for companies with tight budgets.
2. Bureaucratic hurdles. Brazil is known for its complex regulatory environment and bureaucratic challenges. Navigating these can be time-consuming and may require local expertise, potentially delaying project timelines

Romania

Romania is another leading IT destination, among the top countries for outsourcing, alongside Ukraine. It has become an attractive outsourcing destination because of an active IT industry with a growth rate of 14.3%, expected to double by 2025. This impressive growth is supported by a well-coordinated education system, with 7,500 new software developers graduating this year.

Romania is home to the first high-tech software unicorn, UiPath, and hosts numerous offices of global software giants such as Microsoft, IBM, HP, Oracle, Intel, Luxoft, and Amazon. The cost rates in Romania range from $25 to $49 per hour, according to Clutch and Upwork. Popular programming languages among Romanian developers include JavaScript, NodeJS, .NET, C#, ReactJS, and PHP. The top tech cities in Romania are Cluj-Napoca, Iasi, Bucharest, and Sibiu. 

The country’s IT sector also has a robust educational system where students are welcome to dive into science and technology, comprising a high number of skilled IT professionals. Romania’s strategic location in Europe, along with its EU membership, provides extra perks for businesses seeking reliable outsourcing partners.

Key Benefits

1. High-quality education system. Romania has a robust education system that consistently delivers highly skilled IT graduates. The country’s universities are known for their strong emphasis on technical and engineering disciplines, ensuring a steady supply of certified professionals.
2. Strong IT sector with skilled professionals. This country’s IT sector is well-developed, with a solid choice of experienced developers proficient in a wide range of technologies. The country is a foundation for numerous tech companies, both local and international, that create a powerful Romanian tech community.
3. EU Member with good legal protections. Romania is a member of the European Union, so it follows stringent data protection regulations and legal standards. Foreign partners can be sure that the privacy, security, and confidentiality of their ideas are on top.  

Challenges

1. Language barriers in smaller cities. While English is widely spoken in major cities and among IT professionals, language barriers can still exist in smaller towns, which may pose challenges for communication and project management if a developer lacks this skill.
2. Higher costs compared to other Eastern European countries. Romania’s fees are competitive but relatively higher than those of some other Eastern European countries like Ukraine or Bulgaria. This should be a consideration for companies looking to minimize expenses.

Country	Average software development services hourly rate
India	$25-50
Ukraine	$30-55
Poland	$50-100
Philippines	$20-49
Vietnam	$20-50
Brazil	$15-50
Romania	$25-49

Within this list of the top countries to outsource to, you definitely can find the most relevant option for yourself. Outsourcing can be a true game-changer for your business, providing access to global talent, extended opportunities, and rising technologies. Share your experiences with outsourcing and contact PLANEKS professionals for more information or assistance with making the most efficient outsourcing decisions. Your insights and questions are valuable, as we can help you fruitfully employ the capabilities of outsourcing software development and bring tangible benefits to your business.