Outsourcing software development projects are becoming increasingly more popular each year. As per Statistics MRC, the global IT outsourcing market will grow by up to $481 billion in 2022. The same source reports that the largest share of revenue comes from Eastern Europe and the Middle East. According to a Statistics Brain survey, conducted among CTO and CEOs in the United States, 43% of US companies use outsourcing software development services.
There are a few significant reasons why so many companies worldwide find offshore outsourcing services beneficial to them. First of all, IT outsourcing allows you to access highly skilled global talents unavailable within the company. The second most important reason is the lower development cost. On average, software outsourcing helps companies save up to 30% of costs. Additionally, it enables you to conduct better risk management due to the opportunity to partition software development operations.
Today, many forward-thinking businesses outsource software development in Vietnam, India, China, Philippines, Ukraine, and other nearshore destinations. At this step, the following question arises: what is the best country to outsource software development? Below, you can see the top software outsourcing countries, compared by their rates, market size, and other factors.
Did you know that tech giants like IBM, Microsoft, and Intel all have outsourced their software development in Vietnam? You might wonder why they have chosen this country for this. The price of services is probably one of the most significant factors. The product development cost in Vietnam is 90% less than in the USA. Compared to other outsourcing software development countries, Vietnam is still an attractive option in terms of cost reduction.
Often, we associate the low cost with low-quality services. Although it is quite a reasonable judgment, the situation is different when it’s going about Vietnam. There are a lot of highly skilled and experienced software engineers that offer their services for affordable prices.
Ho Chi Minh has been named the new tech innovation hub and a center of outsourcing software development because of not only the prices but also due to the high quality of software solutions provided by local companies.
Offshore outsourcing software development has become the new driving force for the Vietnamese economy. That’s probably why the government of Vietnam actively supports technological growth and promotes its economy for foreign investments. During the last decade, Vietnam has been continually investing in education. Nearly 25000 eligible engineers graduate from colleges every year.
Local law and public policies create a friendly environment for business and foreign investment. Moreover, companies in Vietnam pay particular attention to intellectual property protection, so you can be sure that your software product is not exposed to the risks related to infringement of intellectual property rights.
China is the second most popular destination when businesses start thinking of moving their projects offshore. It is home to many of the fastest-growing software development companies and produces around 4.7 million technology graduates every year. In theoretical analysis of countries that are the most eligible to participate in a “programming Olympics” conducted by HackerRank, China has ranked first.
In recent years, China has significantly increased the quality of services and created a more favorable political and business environment. All this makes the country highly competitive in the IT outsourcing market.
The quality of local IT development is proven by plentiful games and software products, such as 360 Camera, Baidu, and Alibaba, which have become global hits and lead in different countries today. China is also famous for highly skilled hackers (both white and black hat) who can provide excellent assistance or, on the contrary, cybersecurity problems for companies and governments worldwide.
Although the cost of software development services provided by Chinese engineers is much cheaper than in other countries, we have noticed some increase in prices during the last few years.
According to recent studies, 80% of European and US firms say that India is the number one outsourcing country. The National Association of Software & Service Companies (NASSCOM) has also reported that 50% of all Fortune 500 companies prefer to outsource software development to Indian IT companies.
There are also a few exciting facts proving that India is probably the best spot for outsourcing software development. You should know that even global investors such as Alibaba Group, Foxconn, Softbank, and Sequoia are now investing in the Indian startup ecosystem. Furthermore, IBM is already partnering with more than 100 big data and IoT startups located in India.
There are a lot of talented, well-educated, and innovation-driven software engineers. It can also be confirmed by the fact that around 7 million people graduate from Indian colleges every year, and 55% want to work in startups, according to StartupIndia.
The Philippines is one of the leading software outsourcing countries in Asia. Many companies all over the globe choose this country to outsource their software development because it offers a vast pool of talents and a full specter of software development services for very reasonable prices. Last year, this outsourcing empire was estimated at $23 billion.
One of the biggest advantages of outsourcing in the Philippines is that this country offers collaboration with engineers with a high level of English proficiency. Communication is vital for any project’s success, particularly when it comes to design and software development. Excellent English-speaking skills of professionals located in the Philippines have become one of the most significant reasons for many enterprises all over the globe to prefer this country to outsource their software development. In fact, over 92% of the local population speaks English.
The Philippines also has a specialized STEM high school system and has started incorporating severe educational reforms during the last few years. These factors confirm that the Philippines is now investing much resources and effort into bringing up intelligent and open-minded professionals.
According to PSIA (Philippine Software Industry Association), the Philippines has about 190,000 developers, and the number is expected to grow up to 210,000 by 2022. The value of the software industry in the Philippines is already nearly $3.2B, and it is predicted to increase to $5B by 2020.
In past years, Ukraine has become one of the most popular software outsourcing destinations too. The Ukrainian IT industry is growing at the fastest pace than ever before. Nowadays, there are over 192,000 IT specialists working in 1,600+ IT outsourcing companies in Ukraine.
One of the most significant advantages of Ukraine is its large pool of IT talents. There are a lot of highly skilled professionals that offer software development services for comparatively low prices. Ukraine has a solid educational background and produces 16,000+ ICT graduates every year. Furthermore, nearly 23,000 professionals graduate with STEM-based degrees. Ukraine has been listed as the top one in CEE by the number of graduates who join the workforce market.
In Ukraine, around 80% of software engineers have good conversational English, and local companies encourage them to learn English by providing free language courses for their employees.
All these factors have made Ukraine one of the most popular software outsourcing destinations. Global Sourcing Association (GSA) has even named Ukraine as the Offshoring Destination of the Year, while Gartner has listed it among the Top 30 offshoring and outsourcing destinations in the world.
There are many concerns around outsourcing, but the truth is that many global brands and organizations outsource software development because it makes a lot of sense for them. Software outsourcing helps companies save nearly 30% of the development cost and get high-quality services. It also allows you to find talented people who can help you deliver a new project in a short time and focus more on your business.
Below, we have introduced five great IT outsourcing destinations that can offer clients high-quality software development services, collaboration with skilled IT professionals, favorable business climate, and affordable prices. We hope that this shortlist will limit your search to the best countries to outsource software development and help you find the most appropriate one among them.