Outsourcing vs Offshoring Software Development: Who Will Upscale Business in 2022?
The Industrial Revolution is the culprit behind turning the tables for businesses. It has amended many ways in which a company was perceived earlier. Thanks to the evolving techniques & methodologies that have paved the way for outsourcing & offshoring software development.
A recent statistic indicates that software development is witnessing growth at a CAGR of 4%. Simultaneously, the demand for software developers will rise by 21% between 2018 to 2028. This has given rise to outsourcing or offshoring the business. Today’s article will discuss the concept, how it works, and which technique is better.
But, let’s first discuss the meaning & other related information.
What is Outsourcing Software Development?
Outsourcing software development in the general sense is a process of hiring an external software development company in the same locality. These organizations are engaged in finishing the existing development project, which the in-house developers can complete. The organizations are hired due to the excess workload or skillset required to finish a task. The entire process, from hiring the third-party vendor to submission of the project, is counted as an outsourcing technique.
What is Offshoring Software Development?
On the other hand, offshoring is hiring specialists to complete a specific task. Generally, the projects that are being offshored require high-end skills, knowledge, and domain expertise. People mostly hire foreign professionals or Indian delegates to do the task. Offshoring projects is a cost-effective solution. You find the best developers or specialists for the projects.
Key Difference Between Outsourcing & Offshoring Software Development
Here is the major difference between Offshoring & Outsourcing Software Development in 2022. Check out all the differences and then decide whether you are choosing outsourcing or offshoring the project.
| Outsourcing Software Development | Offshoring Software Development |
| Here an organization is hired for noncore business functioning. | Here a specialist or domain expert is hired to perform the noncore business task. |
| Outsourcing is done majorly in the same region. | Offshoring is done in different regions. |
| The company has less control over the outsourced project. | The company has full control over the project offshore. |
| There are myriads of benefits of outsourcing software development:
a. Reduced Cost |
Some amazing benefits of offshoring the business software development: a. Very economical b. Fewer regulations c. Tax and tariff reliefs d. Increased productivity e. Scalable business outcomes |
| Major disadvantages includes: a. Communication gap. b. Possibility of theft & fraud. |
Some cons of offshoring software development: a. Cultural & language barriers b. Time zone issues |
Outsourcing vs Offshoring Software Development: Who Will Upscale Business in 2022?
Now, here you will be stuck on which one to choose? Our experts and years of experience state that Outsourcing is much more prevalent than offshoring. It is always beneficial for the companies to delegate their non-core activities to some skilled or highly professional external companies. It makes you emphasize your workforce on the core functioning and obtain high-end productivity.
How Much You Will Be Charged for Outsourcing or Offshoring Software Development?
Here is a quick look at what you will be charged for outsourcing or offshoring the non-core projects of the company:
Outsourcing Software Development Rate
Outsourcing any project might get slightly expensive for your business. The cost of outsourcing the project depends upon three prominent factors Location, Experience, and Project length. The average price falls between $100 to $150 (benchmark rates). It is completely based on region-specific hiring.
Similarly, Eastern Europe’s software development will cost around $35 to $45 (hourly rate). Moreover, European developers charge about $50 to $60 per hour.
Offshoring Software Development Rate
It has been observed that when we speak of offshoring software development, the US & Western Europe are first in consideration. It is because you can find the most skilled and high-rated IT companies here in the region. Moreover, we are sharing region-specific offshore software development rates below:
Eastern Europe:
There are approximately 1.5 developers per 100 people. Simultaneously, IT outsourcing from the companies is about 21% to 24%. Moreover, the hourly rates here include $25 to $30.
Asian Countries:
Asian software development is a highly grown market, and many big ventures are offshored from here. The region includes China, India, Indonesia, Malaysia, Nepal, Thailand, etc.
So, here is an overview of the charges you may face when offshoring the projects in the above said Asian countries:
- China: $20 to $25
- India: $20 to $25
- Indonesia: $21 to $24
- Malaysia: $25 to $30
- Nepal: $22 to $25
- Thailand: $18 to $23
These were the charges of outsourcing or offshoring the software development. We hope the article has provided suitable answers to your offshore & outsource software development query.
Conclusion:
Offshoring or Outsourcing has its benefits & drawbacks. It is crucial to identify the company’s needs and goals. Moreover, you can decide which activity falls under core functions & which does not. Finally, it will give you a clear picture of whether you want to outsource or offshore software development.