Offshore Software Development with Actual Cost Benefits

Offshore developers offer cheap prices that are instantly attractive, but those average hourly rates often mask the true costs of offshore software development. If you just look at the typical rates charged by outsourced developers in India and other tech-savvy yet lower-wage countries, you’re ignoring all of the potential problems that could arise and inflate your offshore development costs.
Knowing how to hire offshore software developers—and knowing how to manage them once they’ve been hired—takes no small amount of experience, cultural knowledge, and management skill. If you want to see real cost benefits from your software outsourcing, you have to dig beyond the price itself.

A Straight Price Comparison is Just the Beginning of Offshore Understanding

Since we know you’re curious, and since it will give us a good baseline to work with, we’ll go ahead and take a look at typical software developer rates here in the US versus the average hourly rate for a software developer in India.

For Ruby-on-Rails developers in the US, answers to this Quora post seem to suggest that $100/hr is a fair market rate—perhaps slightly on the high end, but not by much (and it’s a nice number to work with, so we’re going to run with it). Different programming languages, experience levels, additional benefits, and whether a developer is salaried or hourly (and an employee vs. a contractor) can all affect development costs, of course, but $100/hr is a decent estimate for a US-based software developer.

In India, meanwhile, there’s some consensus that the average listed rate for a Ruby developer is around the $20/hr range. But don’t get excited! According to everyone who answered the Quora question, what looks like an 80% discount almost always bought substandard work. Project delays, communication issues leading to wasted work and added hours, poor quality output, and more. Offshore software developers charging $20/hr may be common, but it doesn’t mean they’re up to par.

For a top-notch developer in India, you’re probably looking at doubling that rate to $40/hr or so, and you still need to figure in the additional costs for management, communication, and some leeway for wasted time. Working with a developer from another country, with a different schedule and a different culture, simply isn’t the same as managing an in-house developer or even a US-based remote contractor. The sense of accountability and ownership is frequently lacking on both sides of the outsourced developer relationship, and that means cost overruns that quickly eliminate any cost benefits to outsourcing.

Getting the Best of Both Worlds: Offshore Development with Accountable Management

A US-based project manager with experience handling an offshore team—ideally, with experience handling the specific offshore team working on your project—is the best way to pursue outsourced software development. Hiring an offshore developer is easy, but it won’t get you the results you want with the savings you’re looking for.
Hire the team, and work with a lead who speaks your language (literally and figuratively). You’ll be much more pleased with the budget and the outcome than a project completed with a low hourly wage alone.

At Zibtek, we offer custom software solutions for businesses of all sizes. Our digital strategy, design, and custom software development solutions have helped a wide range of clients to meet their goals—ask for a free consultation to find out whether we can do the same for your business.