Software development outsourcing is a strategic step for businesses seeking to save costs without compromising on high-quality engineering. Pricing, though, is highly variable based on project complexity, team size, tech stack, and engagement model. In 2025, worldwide trends such as inflation, remote work adoption, and persistent talent shortages continue to impact the cost of outsourcing.

As Herman Stohniiev, CTO of IdeaSoft, describes:

Highlights:

• Outsourcing costs vary widely geographically, and Eastern Europe offers a combination of value for money and skills.
• Fixed price, Time & Material, and Dedicated Team approaches have strengths and weaknesses.
• Hidden costs like inefficient processes and timezone differences could impact your expenses. An experienced outsourcing provider reduces such threats.
• Fintech, AI, blockchain, and SaaS businesses reap the most from outsourcing.

In this guide, we’ll break down IT outsourcing cost, compare pricing models, and explore strategies to reduce expenses without sacrificing quality.

Table of contents:

1. What Determines Outsourcing Costs?
2. Cost of Outsourcing Software Development in 2025: Complete Breakdown
3. The Most Popular Approaches to Estimate Software Development Costs
4. Industries That Benefit Most from Outsourcing Software Development
5. Self-Checklist: Should You Outsource?
6. Why Outsource to IdeaSoft?

What Determines Outsourcing Costs?

When outsourcing software development, businesses are inclined to focus on hourly rates or project estimates. However, the total cost of outsourcing IT services is more than just developer salaries. There are numerous factors that dictate the final budget—some obvious, others less so. Being aware of the costs helps businesses optimize their outsourcing strategy and avoid budget pitfalls.

Direct Costs: The Core of Outsourcing Costs

At the heart of outsourcing expenses are direct expenses—anything that goes directly into the creation of the software. Development, testing, and deployment are all included.

The most significant portion is developer salaries. Whether you’re hiring a dedicated team, working on a time-and-materials (T&M) basis, or opting for a fixed-price contract, software engineers’ rates will be the main cost driver. Offshore development rates vary depending on:

• Skill level
• Technology stack
• Region

For instance, hiring a senior blockchain developer in Eastern Europe may cost $60 per hour, whereas the same expertise in the U.S. could exceed $150 per hour.

Besides coding, testing and QA are the most important things in delivering a stable and secure product. A poorly tested application will lead to costly bug-fixing down the road, so shortcuts here have a way of biting back. Deployment costs, including infrastructure, cloud services, and DevOps, also add up. This is especially acute for complex SaaS or FinTech applications demanding high availability and security needs. 

Indirect Costs: The Forgotten Costs of Outsourcing

Although development is the focal point of outsourcing expenses, indirect costs can have a considerable influence on the budget. One of them is project management. Despite having an exceptionally competent web development team, coordination is crucial. Without well-organized project management, inefficiency, delays, and scope creep can occur. All of them equate to increased expenses.

Communication is another indirect yet important cost. If, for example, a development team is located in Eastern Europe while the client is based in San Francisco, even a simple clarification request may take several hours to be addressed. Such inefficiencies add up over the course of time, increasing the project’s price.

Compliance and legal expenses also rear their heads, particularly for fintech, blockchain, and AI startups that must adhere to strict regulations. IP protection, data protection law, and contract negotiation all contribute to the tally. Failing to consider these areas leads to legal problems that are far more expensive to remedy further down the line.

Hidden Costs: The Unforeseen Expenses That Blindside Companies

Additionally, there are some outsourcing costs that are not immediately obvious when a venture is started. Time zone differences, even though they can be controlled, can create productivity lags. When an outsourced worker is not in sync with the client’s work schedule, daily progress and approvals can get delayed, thereby leading to longer development cycles.

Re-work is another hidden cost that is underestimated by a majority of companies. We imply:

• Inadequate requirements
• Communication breakdowns
• Quality issues

These problems lead to features being rebuilt. This not only wastes time but also adds costs. This is especially acute in fixed-price projects where additional work means renegotiating budgets. Poor processes, whether in task delegation, project monitoring, or code review, also drain resources.

Cost of Outsourcing Software Development in 2025: Complete Breakdown

Software outsourcing remains an affordable action in 2025, even though the price can vary significantly based on region, ability, and project requirements. Businesses must be aware of these differences in order to have the optimum method of distributing funds without sacrificing quality.

How much does it cost to outsource software development? Hourly rates for developers differ by location, skill level, and demand for specific technologies.

By the way, we have an article about choosing between outstaffing or outsourcing. Here are the key factors determining outsourcing expenses:

• Project complexity. The project complexity has a direct impact on the development cost. The simple mobile app may require a small team, but a FinTech platform based on blockchain needs specialized engineers, increasing total costs.
• Technology stack. Technologies such as AI, machine learning, and blockchain development cost more as they are niche. Then, there are more common stacks such as JavaScript (React, Node.js), which cost less as there is a larger talent pool.
• Team composition. The size of the experts involved—developers, designers, QA engineers, DevOps, and project managers—directly influences costs. An MVP team costs less than an enterprise-level development team.
• Project duration & engagement model. Massive projects benefit from cost savings because specialized teams rationalize processes in the long term. Fixed-price contracts prevent budget blowouts, while time-and-material (T&M) plans provide flexibility at the expense of meticulous tracking to ensure costs remain under control.

How to Reduce Outsourcing Costs Without Compromising Quality

Businesses only reduce hourly rates, but cost optimization is not about pricing. Here is how businesses can reduce costs without compromising high development standards:

• Choose the right engagement model. Dedicated teams are for repeat work and long-term value, while fixed-price suits well-defined scopes.
• Optimize team mix. Hiring middle-level developers for general work and reserving senior engineers for critical parts save dollars.
• Ensure sufficient project documentation. Well-defined requirements prevent scope creep, rework, and cost overruns.
• Use nearshoring to improve cooperation. Latin America is ideal for North American firms since time zones are few, reducing lag time in communications.
• Use Agile development practices. Incremental development provides early problem detection, minimizing the cost of rework.

The Most Popular Approaches to Estimate Software Development Costs

Choosing a proper price model is crucial in controlling software development costs. The three most sought-after approaches are Fixed Price, Time & Material, and Dedicated Team. Every model has pros and cons, so each is most appropriate for particular business needs. Offshore software development rates can greatly influence your choice.

A Fixed Price model is appropriate for MVPs or short-term projects with limited budgets, while T&M allows companies to adapt scope dynamically. A Dedicated Team is most suited for scaled development without long-term employment contracts.

Ballpark Estimates

This is an estimate based on industry standards and past experience. It provides a rough order of magnitude (e.g., $50,000–$100,000) but no breakdown. It’s useful during the initial decision-making process when deciding to outsource.

Breakdown in Detail

This involves precise estimation of development costs based on:

• Scope of work (features, integrations, infrastructure).
• Team structure (developers, designers, QA, project managers).
• Development hours estimated per task.

This technique gives a clearer view of the budget but is time-consuming and needs meticulous planning.

AI-Powered Estimation Tools

AI tools use past project experience to estimate cost more accurately. AI tools consider technology stack, team capability, and historical project complexity while estimating costs. These tools allow companies to narrow their budgeting but work well along with expert judgment.

Industries That Benefit Most from Outsourcing Software Development

While potentially any industry can use outsourcing, there are industries that benefit immensely. Why? This is due to their complex technical requirements, regulatory challenges, and needs for rapid scalability.

HealthTech: Faster MVPs & Access to HIPAA-Compliant Developers

Healthcare software must adhere to strict data protection guidelines such as HIPAA (U.S.) and GDPR (Europe). Outsourcing provides:

• Access to veteran engineers who have experience with medical data encryption, EHR integrations, and telemedicine platforms. 
• Faster MVP development so that startups can validate their ideas before scaling. 
• Cost-effective scaling without in-house teams’ long hiring processes. 

By outsourcing to an Eastern European vendor, you gain access to certified engineers and launch quicker. Here, the cost of outsourcing software development is much more pleasant.

E-commerce & SaaS: Cost-Effective, Scalable Product Development

Online companies and SaaS products require continuous feature releases and seamless UX. Outsourcing enables:

• Rapid scaling by adding developers as required.
• Cost-effective maintenance of high-traffic applications.
• Access to UI/UX specialists for conversion-focused design.

Suppose a SaaS company attempts to build its analytics dashboard in-house, which takes a lot of time. Through outsourced front-end development, they can go live much faster and save up to $80,000 in internal development.

Blockchain & AI: Access to Niche Tech Expertise

Blockchain and AI development demand highly specialized capabilities. They are also costly and difficult to find in most locations. Outsourcing provides:

• Seasoned developers familiar with smart contracts, DeFi, and AI/ML algorithms.
• Faster project realization without prolonged in-house training.
• Cost savings through the use of offshore talent for high-complexity solutions.

BridgeTower tried to hire an in-house team to build a global blockchain-based marketplace but couldn’t find experts. With outsourcing to IdeaSoft, they found the right expertise and launched faster than expected.

Self-Checklist: Should You Outsource?

Here is a short checklist to understand your outsourcing needs. Here are the questions to answer:

• Do you need an affordable development team? It costs a lot of money, especially in acquiring top-class engineers. Outsourcing provides you with access to experienced developers at an affordable price.
• Need to scale quickly? Hiring and training internal developers can take months. If you need to scale your team fast in order to meet deadlines or scale your product, outsourcing is your best choice.
• Don’t have in-house expertise in a specific tech stack? If your project requires specialized knowledge (AI, blockchain, cybersecurity, cloud engineering, etc.) outsourcing helps a lot.
• Is your development workload changing? For organizations with fluctuating development needs, employing a full-time in-house staff might be detrimental. Outsourcing allows you to scale up or down as needed.
• Do you like to keep core business functions at the core of your focus? If software development management distracts your company’s focus from core activities (e.g., sales, marketing, or product strategy), outsourcing allows you to outsource technical tasks to experts while remaining growth-focused.
• Do you need a faster time-to-market? Outsourcing teams generally take with them the best practices within the industry.
• Is your budget small? If expense is a problem, outsourcing will allow you to optimize spending.

Answers to these questions will genuinely help you identify the need for outsourcing.

Why Outsource to IdeaSoft?

Choose the right outsourcing partner, and your software development project might be doomed or blessed with success. IdeaSoft stands out with deep expertise in blockchain, FinTech, AI, and SaaS. Ukraine outsourcing rates will significantly surprise you.

Compared to typical outsourcing vendors, IdeaSoft provides high-skilled teams with extensive blockchain and FinTech knowledge. Our outsourcing models (fixed price, dedicated teams, or hybrid) are tailored to provide companies with the flexibility they need to grow successfully without additional costs. We also offer outstaffing services.

Security and regulatory compliance are central to our development practice. Earning praise for excellence, IdeaSoft has successfully completed projects for startups and companies.

Although there are many articles on the benefits of outsourcing software development, many companies remain hesitant—questioning whether it is right for them. At IdeaSoft, we have previously discussed this topic in “7 Reasons Why Outsourcing Software Development is a Smart Move“, but today we will address the topic differently. Rather than mentioning all the same arguments, this article addresses the 10 biggest benefits of IT outsourcing in 2025 and how it can guarantee business development.

Outsourcing is growing due to:

• Rising development expenses that make in-house hiring expensive.
• Growing need for faster time-to-market, especially in competitive industries like FinTech and SaaS.
• Greater demand for specialized expertise in AI, blockchain, and cybersecurity.

Here, we’ll break down the top advantages of outsourcing, from cost reduction to security and compliance, to help you decide if it’s the most effective strategy for your business.

Key takeaways:

• Minimize operational costs without compromising quality.
• Engage the finest developers in AI, blockchain, and FinTech.
• Scale your workforce up or down with fluctuating business demands.
• Maximize security and compliance with better outsourcing partners.
• Be ahead of the competition by accelerating innovation.

Table of contents:

1. 2025 Software Development Boom: What Businesses Need to Know
2. Top 10 Benefits of IT Outsourcing
3. How to Choose Between Nearshoring vs Offshoring Outsourcing
4. Harnessing IdeaSoft’s Experience for Your Success
5. Summing Up

2025 Software Development Boom: What Businesses Need to Know

The software development ecosystem is snowballing. In 2024, the global business software and services market size was estimated at $584.03 billion and is projected to grow at a CAGR of 12.1% from 2025 to 2030. At the same time, the IT outsourcing market size is estimated at $651.54 billion in 2025. It is expected to reach $850.73 billion by 2030.

As you can see, businesses need to act quickly to stay ahead. So, why is it accelerating, and how can companies prepare? There are 3 main drivers of these changes:

• AI & automation in development. Artificial intelligence tools such as GitHub Copilot and ChatGPT-4 Turbo are transforming coding. Developers code software as much as 55% quicker. Tesla is one of the companies that is incorporating AI for autonomous software testing. It decreases the risk of human error and speeds up deployment cycles. Outsourcing software development for businesses allows businesses to streamline processes and save money on internal teams.
• Increasing demand for blockchain & Web3 solutions. The adoption of Web3 applications has gone to all-time levels, with entities like Nike starting blockchain-enabled reward programs and JPMorgan utilizing smart contracts for secure financial transactions. With corporations venturing into DeFi, tokenized assets, and NFT platforms, they require skilled developers to build secure, high-volume applications.
• Cybersecurity risks requiring professional intervention. As cyberattacks increased by 38% in 2024, companies like Uber and Marriott have encountered multi-million-dollar data breaches due to inadequate security protocols. As AI-driven cyber threats evolve further, companies need skilled professionals to implement zero-trust architecture, end-to-end encryption, and real-time threat detection. 

Outsourcing and outstaffing services cover all businesses’ scaling needs.We recommend you dive deeper into the Difference Between Outsourcing vs. Outstaffing to better understand what suits your challenges.

Top 10 Benefits of IT Outsourcing

So, without fluff, let’s get to the point regarding offshore software development benefits!

Cost Savings

Hiring and maintaining an internal development team is expensive. Significant investment in salaries, benefits, infrastructure, and training adds costs. Outsourcing allows firms to save these expenses by accessing experienced professionals at a reduced price. 

For example, a London-based fintech startup might spend over $90,000 annually for each developer. At the same time, outsourcing the same role to Eastern Europe (Ukraine) or Asia helps save 50% or more of the expense. This cost-effectiveness enables companies to make more effective use of budgets. You can invest in business development and innovation rather than in exaggerated operating expenses.

Access to Global Talent

IT outsourcing software development gives access to the world’s top-level web development & consulting. This includes the following professionals but is not limited to:

• Blockchain
• AI
• FinTech
• Cloud computing

Instead of being limited by local talent, businesses can collaborate with top-level engineers from leading tech hubs like Ukraine, India, or Poland. For example, a blockchain project in the U.S. may struggle to find Solidity or GoLang developers locally. Still, outsourcing instantly provides experienced experts without waiting for a lengthy hiring process.

Faster Time-to-Market

Speed is of the essence today. Outsourced teams are effective. They operate on:

• Tried-and-tested workflows
• Agile methodologies
• Scalable processes

A SaaS company launching a new AI-powered analytics platform, for instance, can reduce the development timeframe from 12 months to 6 by outsourcing key portions of it to an already seasoned team. This enables companies:

• Get products to market faster
• Gain market traction
• Get ahead of the competition

This is how the balance between the benefits and risk of outsourcing software development works.

Scalability & Flexibility

Project requirements are different. Companies need to adapt quickly. Outsourcing allows for scaling up or down in line with project requirements. Whether building a new fintech product or working on an existing SaaS product, companies can scale resources without the hassle of hiring or redundancies.

A prime example is a startup preparing for an ICO (Initial Coin Offering). Additional blockchain developers may be needed on a temporary basis. Outsourcing allows them to scale up rapidly without locking into long-term commitments.

Access to Newest Technologies

Outsourcing partners possess expertise in the newest technologies like:

• Blockchain
• Artificial intelligence
• Cloud computing

Companies can access the latest developments without investing in research and development or expensive in-house upskilling programs. For example, an insurance company wanting to implement AI-driven fraud detection can outsource the process to an AI development firm with experience instead of going through the hassle of recruiting in-house machine learning experts.

Better Security & Compliance

As laws increase, like GDPR and HIPAA, compliance is mandatory. Especially for blockchain and FinTech startups. Outsourcing companies specialize in cybersecurity best practices, data security and regulatory compliance, business continuity, and risk mitigation. For instance, an outsourcing healthcare startup can make its app HIPAA-compliant without hiring an in-house legal and security team. This reduces cost and risk.

Focus on Core Business Functions

By outsourcing tech development, firms free up internal resources to focus on:

• Strategy
• Marketing
• Customer experience

This enriches overall productivity and allows leadership to drive innovation without being bogged down by operational details. For example, a growing e-commerce brand can outsource mobile app development while its in-house team focuses on customer acquisition and brand development.

24/7 Support & Maintenance

For FinTech, SaaS, and blockchain applications, 24/7 monitoring and maintenance are crucial. Service providers in outsourcing offer 24/7 maintenance. System uptime will be ensured and performance-optimized, while rapid issue resolution will prevent business downtime.

For instance, an outsourced support team can be dedicated to a global cryptocurrency exchange, monitoring security threats and system performance 24/7. As a result, costly downtime will be prevented.

Reduced Operational Risks

Internal management of IT infrastructure and software development is risky. We mean everything from technical downtime to employee turnover. Outsourcing mitigates these risks. How? You will transfer responsibility to experienced partners who manage infrastructure, security, and development processes optimally.

For example, a startup that outsources its mobile app backend development escapes the risk of knowledge loss through employee departure. An outsourcing partner like IdeaSoft guarantees project continuity.

Competitive Advantage

Outsourcing enables firms to:

• Innovate faster
• Access specialized talent
• Reduce costs

This helps to bring better products to market. Firms that use outsourcing:

• Stay abreast of industry trends
• Meet customer demands in a timely manner
• Autcompete rivals

Take, for example, a blockchain-based lending platform that outsources smart contract auditing. This ensures security, speeds up launch, and builds user trust. Or it can outsource UX design to get the best usability for the project from the best practices. 

How to Choose Between Nearshoring vs Offshoring Outsourcing

When outsourcing custom software development, firms typically choose between nearshoring and offshoring based on cost, collaboration needs, and talent availability.

Below is a comparison of the two approaches to help you make a choice between insourcing vs outsourcing software development.

Nearshoring: Proximity & Collaboration

Nearshoring is outsourcing to a proximate or neighboring country. It offers:

• Closer time zones. Enables real-time communication and adaptable workflows.
• Cultural alignment. Reduces misunderstandings and improves collaboration.
• Faster collaboration. Supports rapid decision-making and problem-solving.

Need real-time communication? Nearshoring is the better fit.

Offshoring: Cost & Access to Talent

Offshoring is outsourcing to distant countries, often in different time zones. Some of the key benefits are:

• Cost savings. Lower labor costs in distant regions save expenses.
• Access to a large pool of talent. Skilled developers in countries like Ukraine or the Philippines.
• 24/7 development cycles. Around-the-clock development throughout the day because of variations in time zones.

Looking for affordable, specialized talent? Offshoring is the best choice. We recommend you read our article Best Countries for Software Development Outsourcing.

Harnessing IdeaSoft’s Experience for Your Success

Choose the optimal technology partner to grow your business and stay competitive. IdeaSoft provides deep experience in blockchain, FinTech, AI, and SaaS development, ensuring innovative and future-proof solutions tailored to your needs.

Top reasons to choose IdeaSoft for IT outsourcing:

• Industry expertise. Having extensive experience in blockchain, FinTech, AI, and SaaS, we offer state-of-the-art solutions that drive business growth.
• Proven track record. We have developed secure, scalable, and high-performance platforms for startups and enterprises around the world.
• Security & compliance. We concentrate on data security, regulatory compliance, and industry best practices to deploy your solutions at the highest standards.
• Innovation at the core. We use the most recent technologies and agile methods to allow businesses to lead the way.

Summing Up

IT outsourcing offers a strategic advantage to businesses looking to reduce costs, economically scale, and access world-class talent. From reducing hiring expenses and accelerating time-to-market to accessing new technologies and staying compliant, the advantages of outsourcing software development are self-evident.

With partnership with experienced outsourcing provider IdeaSoft, firms stay agile, innovate faster, and keep core objectives in focus without having the burden of hosting in-house development teams. Being a FinTech startup, blockchain business, or SaaS company, outsourcing offers the potential for new businesses with minimized risk involved in operations.

The hiring niche in software outsourcing and outstaffing evolves, introducing multiple models and progressive solutions to the market. If you’ve landed on that page, you are surely aware of the two most popular – IT outsourcing and outstaffing services, which already helped thousands of companies to fill the gaps with the right expertise and tech stack.

Though both models offer distinct benefits for startups and prospective ventures, understanding their differences will help you maximize the developers hiring process and get the highest profits for your business. However, businesses should also be prepared to navigate IT outstaffing challenges, such as managing remote teams, ensuring smooth communication, and maintaining project alignment.

In this article, we’ll review the specifics of software outsourcing and outstaffing and explore the pros and cons of each to help you come up with the right solution for your project or business needs.

Let’s dive in!

Table of Contents:

1. Key Differences Between Outsourcing and Outstaffing Models
2. Pros and Cons of the Outsourcing Model
3. Pros and Cons of the Outstaffing Model
4. IT Outstaffing Services vs Team Outsource
5. How to Find Developers for the Software Development Outsource or Outstaff? 
6. Summary

Key Differences Between Outsourcing and Outstaffing Models

Despite both models helping to enhance software development with the right hiring expertise, the difference between each starts right from their meaning. So, let’s first analyze the outstaffing vs outsourcing definition in the context of hiring software developers. 

What Is Outsourcing?

In IT and software web development, outsourcing is a common business practice of hiring an expertise party outside a company to perform services or build products that are fully tailored to the business goals and needs. 

Being first recognized as a business strategy in the early 1990s, it became a powerful solution to optimize workflow and development costs without sacrificing the quality of the end products. Today, the outsourcing model has been known as a proven way to focus on the company’s core competencies and business goals while entrusting complex and expertise-specific processes to external development vendors.

What Is Outstaffing?

Outstaffing model, also known as staff augmentation, has a slightly different approach to developers’ hiring. Unlike outsourcing, where the entire project is delegated to an external company, it implies involving remote developers with particular expertise to work together with an in-house team. 

According to the IT outstaffing services, businesses can retain control and oversight of the development process while augmenting their team with additional resources, skills, or tech stack needed. 

Whether you’ve decided to outstaff or outsource software development, understanding the major benefits and potential drawbacks is of the essence. So, let’s review the pros and cons of team outstaff vs outsource to identify which will work best for your business objectives. 

Pros and Cons of the Outsourcing Model for Business

To better understand whether outsourcing an IT company for your project is worth it, we’ve covered this solution’s essential benefits and possible drawbacks.

Pros and Cons of the Outstaffing Model for Business

In case you need to boost your in-house team with niche-specific expertise (such as, for instance, fintech software developers or blockchain specialists), there’s no need to invest in the outsourcing solution. Instead, you can hire the right talent from a fintech software development company!

Below we’ve outlined the key points to consider before you ​​hire software developers through the outstaffing solution. 

IT Outstaffing vs Outsource: What to Choose for Your Project?

With years of experience providing team outstaff and outsourcing services, IdeaSoft considers these models being extremely effective and profitable for the software development niche. Software development outsourcing companies offer the ultimate solutions and technologies to address specific business objectives and their needs. At the same time, these solutions can help businesses to improve cost-efficiency, speed up the development time and maximize the output of their projects.

Based on our extensive experience, the outsourcing model will be the right option for enterprises, ventures, and startups which need the following: 

• Expert assistance in a particular technology or niche-specific project. If you are considering launching a project in highly specific industries, such as blockchain, or fintech, hiring qualified experts is of the essence. Such professionals will provide you with the latest solutions and ultimate decisions that will make your product effective, valuable, and highly competitive within the target market segment;
• Launching the startup or business project from scratch. A professional outsourcing and outstaffing company, such as IdeaSoft, can offer a custom development solution based on the idea or concept provided. Additionally, such vendors offer full-cycle development services to handle every stage at the top level, which means access to all the specialists you need;
• Shifting the focus from technical aspects to marketing efforts and product release. With team outsourcing, businesses can invest major efforts into the promotion and marketing aspects, staying sure the product development will be handled at the top level;
• The turnkey development services for their custom solutions. Opting for high-end outsourcing services makes it possible to launch a powerful product with only a project idea or concept. At IdeaSoft, we provide first-class consulting and support across all the stages of software development to help you build a powerful product that is fully tailored to your business goals and needs; 
• A cost-efficient alternative to local development services. There’s common evidence that the average hourly rates for software developers in the CEE region are lower compared to Western Europe and North America countries. In addition, according to the latest gathered data, this trend will continue in 2023 and the upcoming 2024.

On the contrary, a team outstaff solution will be a better fit for the businesses which: 

• Have already set up their business within a particular niche and looking for scaleup opportunities for further development and growth; 
• Need a temporary talent gap solution to perform particular expertise-specific processes in-house (for instance, fintech software development services or blockchain development solutions);
• Want to dive into the custom solution development fully and need on-demand assistance for their complex solution to maximize the final output. Based on our experience, this works exceptionally great for large and complex projects; 
• Consider upgrading the existing product to enter the new markets, but experience a lack of tech expertise within that niche. This is a common practice among fintech projects that extensively embed blockchain solutions. 

How to Find Developers for software outsourcing and outstaffing? 

As technologies move forward by leaps and bounds, every organization wants to involve the top talents in their development projects. No matter if you’re planning to hire blockchain developers or need an experienced smart contract developer for hire, here are some proven tips that can help you to find the best developers for your business:

1. Define your requirements: Identify the skills, experience, and expertise you need for the custom development project.
2. Research the potential outsourcing/outstaffing vendors: Explore reputable outstaffing companies to find a pool of skilled developers.
3. Check companies’ portfolios and reviews: Review the portfolios and feedback of potential vendors to assess their previous experience and expertise within the niche-related projects.
4. Request for a consultation on your idea: Before you start the cooperation, discuss the project specifications, business goals, and needs. Additionally, evaluate the developers’ technical abilities, cultural fit, and workflow nuances (location, time zone, communication approaches) to ensure effective collaboration and excellent output.  
5. Consider ongoing support and maintenance: Discuss and clarify the availability of post-development support and maintenance services.
6. Review legal and contractual aspects: Ensure you have a clear and comprehensive contract that covers aspects like intellectual property rights, confidentiality, and project milestones. 

For the further research, read our article about all you need to know while outsourcing to Ukraine to dive deep into all the details. Now that you’ve uncovered the basics of team outstaffing and outsourcing, and can finally make an informative decision on what services to choose for your business or project. 

Summary

As the technologies are moving forward by leaps and bounds, every organization wants to involve the top talents in their development projects, and that’s where outsourcing and outstaffing services can become a great fit. 

At IdeaSoft, we offer top-notch expertise across various niches, from the trendy like eCommerce and B2B solutions to, more specifically – fintech, blockchain, and crypto, the latest of which you can always find in our portfolio. So, whether you’re looking for a professional outstaffing company or want to entrust the full project delivery to the software developers for hire – we’ll get you covered!

Already have a project to discuss? Contact us today to get an expert comment on your custom development solution and immediately enhance your business!

Companies around the world continue to experience digital transformation with more and more businesses outsourcing their IT projects. Ukraine is becoming an increasingly popular outsourcing destination for those looking for software development partners. According to PwC, the Ukrainian IT market has grown 2.5 times recently. Many world-famous projects such as Grammarly, Depositphotos, Jooble, Nimses, Terrasoft were created by Ukrainian developers.  In this article, we will look at the main reasons why outsourcing to Ukraine is in such demand.

Table of contents:

1. Ukrainian software development market
2. 5 reasons for outsourcing to Ukraine
3. Which cities in Ukraine are the best for outsourcing
4. IdeaSoft outsourcing software development services

Ukrainian software development market

Let’s take a look at the facts about the Ukrainian IT market that will help you understand why many companies have started outsourcing to Ukraine.

The outsourcing industry in Ukraine has been growing at a stable rate since the early 2000s. Despite the coronavirus global pandemic, so far in 2021 Ukraine’s IT industry has grown 20%, and it’s predicted to reach the $8.4 billion U.S. dollars of industry volume by 2025

In 2021, The British Global Sourcing Association named Ukraine the best country for outsourcing in its annual nomination. Other IT sector reports indicate Ukraine as one of the top 25 most attractive countries for software development worldwide and one of the top 20 outsourcing hubs in the EMEA. According to statistics, more than 100 of Fortune 500 companies have selected Ukrainian IT services for their business.

The Ukrainian IT market is an ever-growing business environment. In 2021 the number of software developers in Ukraine has grown to over 200,000, and by 2025 this figure is projected to approach 250,000.

5 reasons for outsourcing to Ukraine

If you’re looking for the best outsourcing destination, you should know why IT outsourcing to Ukraine has become more popular in recent years. Let us consider the 5 reasons why so many global IT companies choose Ukraine to outsource their projects to.

Favorable economic environment

The country’s GDP growth is around 3.5% per year, and since 2015 Ukraine has gone 20 positions up in the World Bank’s Ease of Doing Business rating. The IT industry accounts for an estimated 10% of Ukraine’s GDP, and therefore in recent years the government has implemented reforms that have created more attractive conditions for outsourcing to Ukraine. In particular, Ukrainian legislation allows IT companies to work with self-employed specialists who only pay 5% of their income and a monthly unified social tax, which is 22 percent of the minimum wage.

Time zone and culture

Compared to some alternative outsourcing destinations Ukraine is located in the center of Eastern Europe. Working with Ukrainian professionals will be comfortable as they adhere to many of the same values ​​that are reflected in Western work culture and mentality, including dedication and discipline.

Ukraine’s time zone GMT+3 is convenient for nearshoring, given that it is only 1-2 hours ahead of most European countries, and for the USA the difference is usually between 7 to 10 hours. You can use this time difference for non-stop product development. In addition, Ukrainian companies often work on flexible schedules, so it will be easy to establish a stable workflow and communication process.

The country has a favorable geographical location for IT development outsourcing and business trips. A flight from most European capitals to Ukraine takes about 2-3 hours, and travel is mostly visa-free. Citizens of 64 jurisdictions, including all European citizens and the citizens of the USA and Canada can enter Ukraine visa-free and stay for up to 90 days in a 180-day period.

A large pool of skilled developers

More than 20,000 tech students graduate from Ukrainian universities annually. Many of them are taking internship programs at IT companies in order to receive a job offer afterwards. Around 75% of Ukrainian developers have a higher education degree, 6.3% have two degrees, and 1.5% hold an Sc.D, according to statistics. Also, in the IT Skills 2021 report, Ukraine ranks 6th among countries whose developers have received the highest scores in coding tests. In addition to traditional education, there are a large number of IT courses. There are about 120+ courses in programming, QA testing, and UI/UX design in Kyiv alone.

Ukrainian developers work with a wide range of technologies that meet the needs of the market. According to DOU, 2020 was the first year JavaScript had outrun Java and became the number-one programming language in the Ukrainian development community. Over 18% of software engineers used it as their primary language in 2020, and more than 41% named it as an additional programming language. When it comes to frameworks and libraries in use, React.js, Node.js, and Angular.js are the top three in the popularity chart.

Industry growth

The quantity of IT outsourcing services export in Ukraine has grown steadily over the last few years: 29.3% in 2018, 31.4% in 2019, and 20.4% during the worldwide pandemic in 2020. The main areas in which the Ukrainian IT market is developing are Telecom, FinTech, MedTech, Artificial Intelligence, Blockchain, security, SaaS, enterprise software development, mobile apps, and games.

Often, software development companies in Ukraine that work for Western clients grow into fully-fledged R&D centers whose creators know why outsourcing to Ukraine is a great option. Ukraine hosts more than 100 R&D centers for global tech giants: Apple, Microsoft, IBM, Samsung Electronics, Skype, Ericsson, Oracle, Boeing, Siemens, Magento, and more. 

The number of software companies in Ukraine has increased from 1,050 in 2011 to 1,650 in 2020, and 18 Ukrainian IT companies are featured in the world’s top 100 best outsourcing companies. There is a large pool of Ukrainian software outsourcing firms of any size that provide specialized services for any business domain, from small teams to companies with 7500+ employees.

Also, there is Ukraine’s strong startup community with over 4,200 startups in the country. The total venture capital investment reached $258 million in 2017 and $510 million in 2019, according to Deloitte, and has been growing steadily.

Cost efficiency

Reasonable developer rates are also one of the main reasons why outsourcing to Ukraine is booming. Companies can reduce their software development costs by 2-3 times by outsourcing their projects to Ukraine, getting the same product quality. We prepared data on the average hourly rate for software developers in different countries. According to YouTeam, the landscape of software development rates looks like this: 

Which cities in Ukraine are the best for outsourcing

The IT industry is actively developing throughout Ukraine due to a large number of universities and an ever-growing amount of new software development companies. To better understand which cities in Ukraine are the best for outsourcing, consider the 5 biggest Ukrainian IT hubs.

Kyiv

As the capital of Ukraine, Kyiv is a central administrative, cultural, and scientific hub of Ukraine. Many global enterprises such as Samsung, Huawei, Ericsson, NetCracker, and others have R&D centers in the capital. About 40% of all Ukrainian developers work in Kyiv. There are more than 78,000 IT professionals. This percentage is motivated by the high quality of local technical universities and the huge number of IT job openings. The most prominent sector here is IT outsourcing, presented by a huge number of software development companies.

Kharkiv

Kharkiv is the second-largest city in Ukraine with 1.5M citizens. It is one of the most industrialized places in the whole country and is home to many prestigious technical universities, graduating more than 2,000 technicians annually. For most market-leading software development companies, having an office in Kharkiv is a common practice. 

The city is home to over 31,000 tech specialists and around 480 IT service providers. Many Kharkiv software development outsourcing companies cooperate with clients in the U.S. to a large extent, and the U.S. market accounts for nearly 65% ​​of all IT exports. Kharkiv developers are skilled in popular programming languages ​​and frameworks. Therefore, it is not surprising that Kharkiv is the birthplace of GitLab, the first Ukrainian unicorn.

Lviv

Lviv is the biggest city in Western Ukraine, as it houses more than 800,000 people. Lviv specialists have more of a Western mindset and are used to communicating with foreign customers. According to data gathered by DOU, the city takes third place in Ukraine by the number of programmers – over 26,000 developers are employed in the IT industry. Over 450 IT companies have offices in Lviv and 90% work in the IT outsourcing sector. More than half of all the outsourcing enterprises distribute their services to the US and Canada, 35% to European countries and the UK.

Dnipro

Dnipro is the fourth most populous city located in the Eastern part of Ukraine. It has over one million citizens. There are about 370 IT companies in Dnipro employing over 17,000 IT professionals. In addition to the specialists who are currently working, the number of developers is expected to double by 2025 due to graduates of local universities.

Odesa

Odesa is located on the seaside of the Black Sea, and it is one of the fastest-growing Ukrainian startup hubs. As DOU reports, Odesa is home to around 150 IT companies engaged in various industries with an IT talent pool of over 10,000 IT professionals.

IdeaSoft outsourcing software development services

Now that you know why outsourcing to Ukraine is in demand, let us tell you how we can help your business grow.

IdeaSoft is a Kharkiv-based software development company providing a wide range of services from business analysis, UX/UI design to programming, testing, and support. As an IT outstaffing company, IdeaSoft can provide dedicated development teams to augment your existing staff. In 2021, IdeaSoft became part of the Sigma Software Group, one of the biggest IT companies in Ukraine. With a skilled in-house development team and deep expertise in blockchain, our goals are to deliver outstanding products, modernize systems, and implement emerging technologies to ensure better business outcomes. The company’s clients include more than 250 international startups and enterprises from the USA, Germany, UK, Canada, Israel, Australia, Argentina, and others.

We provide the following services:

• UX/UI&Branding design;
• Mobile development;
• Blockchain&DLT development;
• QA Testing
• Technical Support.

IdeaSoft is featured in the ratings of Top Blockchain Development Companies, Top Mobile App Developers, Top B2B Companies in Ukraine, Top Global Development Companies, and Top Custom Software Development Companies. 

If you are looking for an outsourcing software development partner, feel free to explore our services and offers. We will be glad to become a part of a new promising project and will do our best to help you achieve your business goals. Check out our portfolio or contact us directly to discuss your project.

Software development outsourcing is thriving. The increased demand for digitalization and innovative products allowed the information technology outsourcing market to reach $66.5 bn in 2019, and experts predict further growth. This is not surprising, because outsourcing software development is much more profitable both in terms of expertise and in terms of price.

However, in such a rapidly growing and changing environment, choosing a business partner that meets all your requirements can be confusing. Especially when you don’t know where to start. Let’s fix it. In this article, we will look at the top software outsourcing destinations to find out which countries are the best to develop software products.

Table of contents: 

1. Software development outsourcing market overview
2. Main criteria for choosing an outsourcing software development company
3. Top software outsourcing destinations
   3.1 Europe
   3.2 Asia
   3.3 Latin America
4. What is the best country for IT outsourcing today?

Software outsourcing market overview

Let’s start with the market overview to better understand all benefits and pitfalls of outsourcing. The outsourcing market has been developing for many years, and the Covid-19 pandemic has only intensified this. According to AppDynamics’ report, 95% of respondents said their organizations have changed their technology priorities during the pandemic following the Covid-19 outbreak. The increased demand for digitalization has forced companies to re-prioritize their tasks and find a fast and efficient solution for technology adoption. 

But why do companies outsource? According to the Deloitte Global Outsourcing Survey 2020, the main reason for outsourcing software development is cost reduction. Assembling an in-house team includes the costs of recruiting, providing jobs and a social package, nurturing expertise, which will cost you significantly more. By outsourcing custom web development services, you pay for the hours of work of a certain specialist only when his services are needed. Moreover, when outsourcing, you are not limited by location and can choose the most reasonable rates, which differ depending on the region. Delegating labor-intensive tasks to service providers allows you to reduce the internal workload of the company and focus on core business goals, optimize resources, and gain more flexibility.

Recommend reading our recent article Why outsourcing software development

Of course, the reasons for outsourcing depend a lot on the type of company. For example, according to Clutch, 24% of small businesses use outsourcing to improve their business performance. At the same time, large companies are more likely to have a budget for outsourcing, so they are more likely to resort to such services. The good news is that you can find outsourcing service providers on the market for different budgets and needs.

Main criteria for choosing an outsourcing software development company

But how to choose a software development provider? This question worries everyone who is looking for a business partner for the first time or has had a negative experience of interaction with outsourcing companies in the past. Some people put attractive developer rates in the focus of their choice and get poor-quality software. Others choose companies that cannot fully cover their needs. To help you, we have compiled a list of the main factors when choosing a software development partner. Keep in mind that they may rank differently for each project, depending on your goals and the resources available.

Technical education level

Everyone needs quality software products, and only skilled specialists can create such software. When resorting to outsourcing, you have the opportunity to choose a company for cooperation from anywhere in the world, but you should take into account regional differences and the level of the tech education level of specialists in the country are going to work with. Be sure to study both the general level of education in the region and the expertise of a particular company.

Time zone

Even though you are delegating the creation of software, you will need to interact with a remote team, and a minor issue like the time difference could one day become a major problem. Therefore, we advise you to consider the time zone when choosing an outsourcing service provider, so that at least part of your work time and your partner’s work time coincide. This way you will be able to quickly resolve the questions posed and effectively interact with each other.

Product development expertise

There are many software development companies and each may have a different specialization. So you need to know what technologies developers are working with, whether they are familiar with popular programming languages ​​that may be used in your project. If you are planning to adopt blockchain, artificial intelligence, or other advanced technology, make sure a company has a similar experience. For example, if you want to create a mobile application for the AppStore, you need a company with in-house Swift developers who have experience building apps that meet all Apple requirements.

Resource availability

Availability of company resources is also an important criterion for choosing an outsourcing partner. Make sure that the company you intend to work with has all the necessary specialists to cover your tasks and you don’t have to wait until some developer is free or the company hires DevOps. Plus, partnering with a full-service software development company can save you time and money. For example, IdeaSoft has a staff of specialists who will help you with all tasks related to software development, from business analysis and design to programming, testing, and support.

Price/quality ratio

While the main benefit of outsourcing is cost reduction, you shouldn’t focus on price alone. Many people think that any software development company can provide you with the same services, the only difference is in rates and brand, but this is far from the case. Companies differ in expertise, experience and they provide different qualities of services. Your task is to find the best price/quality ratio. In this context, you shouldn’t be guided just by general information about the company’s work but also of whether it meets the requirements of your particular project. Determine some kind of acceptance criteria that affect the quality of your product and choose an outsourcing partner based on them.

Top software outsourcing destinations

According to statistics, the most popular outsourcing destinations are Europe, Asia, and Latin America. Let’s take a closer look at the IT environment of each region to determine the best countries for outsourcing software development

Europe

Despite the fact that Europe is one of the main consumers of IT outsourcing services, it is also a popular outsourcing destination. The thing is that developers’ rates are very different in the West and in the East. Therefore, many entrepreneurs from Germany and the UK, for example, outsource software development to colleagues from the Eastern region. According to the State of European Tech 2019 report, the European software engineering pool counted 6.1m developers.

According to statistics, the most popular outsourcing countries in Europe are Poland, Ukraine, Romania, Czech Republic, Hungary, Bulgaria, Belarus, and Croatia.

Ukraine

Ukraine is a well-known country for outsourcing software development all over the world. Projects such as Grammarly and DepositPhotos were created by Ukrainian engineers. Plus, such international giants as Oracle and Google have opened their R&D centers in Ukraine. According to the IT sector report of 2019, Ukraine has become the largest exporter of IT services in Europe.

The information technology market in the country is constantly growing and this is not surprising. Around 39 Ukrainian tech universities generate about 30,000 tech specialists annually. And the market has good government support. In total, there are close to 200,000 IT specialists in Ukraine, according to Escadra. In Ukraine, you can find a specialist of any technology stack and seniority level. Besides, compared to the USA and Western Europe, there are reasonable hourly development rates. Convenient time zone, open culture, high level of professionalism, all this makes Ukraine one of the top software outsourcing destinations.

Poland

Poland has a mature software development market. International companies are happy to open their R&D centers here, as did Google, IBM, and Motorola. The total number of IT specialists in Poland is 295,300, and annually, about 70 thousand students study Computer Science. Although the software development market in Poland doesn’t have such impressive growth rates as Ukraine, it continues to develop and is expected to reach $2,834.2 million during 2021, according to Statista.

Despite the fact that development rates in Poland are not the lowest, they are still relatively low when compared to Germany, UK, or the USA. In addition, the country has a convenient geographical location almost in the very center of Europe. A favorable political environment, strong economy, and highly qualified technical resources contribute to Poland’s success in the outsourced software development market.

Hungary

The pool of IT specialists in Hungary is not as large as in Ukraine or Poland, with only 80,000 specialists. However, the region is very popular for R&D centers due to its favorable business environment. So, according to statistics, most of the income from the technology industry is generated by enterprises controlled from abroad.

IT outsourcing in Hungary is popular due to several reasons. Firstly, Hungary is a member of the European Union, which means that its services are fully in line with European standards. This makes it easy for other European companies to hire and interact with Hungarian professionals. Second, Hungary provides really high-quality software development services and has a stable market. However, in a certain sense, the country’s IT market has reached its maximum, and if you are looking for a long-term partnership and an active community, Ukraine has more potential.

Asia

The Asian market has over 10 million software developers. The region is primarily known for its relatively low development rates and it does not always mean bad quality. Software and tech consulting services are one of the fastest-growing markets in Asia. This is not surprising given the innovative business environment. Asia is home to many tech startups. According to McKinsey, in April 2019, Asia had roughly more than one-third (119) of the world’s 331 unicorns (startups worth over $1 billion). The main players in the outsourcing market are India, the Philippines, and China.

China has one of the fastest-growing software markets in the world. According to IBIS World, the market size, measured by revenue, of the software development industry has reached $1.2tr in 2021. The sector is well supported at the state level. In addition, the country’s education is mainly focused on science and mathematics, which makes it possible to replenish the pool of IT specialists by several million annually.

According to PISA (Philippine Software Industry Association), the Philippines currently employs over 190,000 tech specialists, and this number is expected to reach 210,000 by 2022. One of the main benefits of working with the Philippines for Western countries is that English is the official language for Filipinos. In addition, due to the country’s history, Filipinos have a lot in common with Western culture. Therefore, communication will be easy for you, and you can consider the Philippines as one of the top software outsourcing destinations.

India is one of the world’s largest exporters of outsourced software development services. According to ResearchAndMarkets report, the IT outsourcing market in India was valued at INR 5,649.47 billion in 2019 and is estimated to reach INR 8,830.14 billion by 2025. Key industries that Indian IT outsourcing companies work with include banking, financial services, insurance, telecommunications, manufacturing, and healthcare. A definite advantage of outsourcing in India is the low development rates, but many companies face cultural and linguistic barriers.

Latin America

Latin America is a popular outsourcing destination mainly for North American companies due to low time and distance differences, high English level, and relatively low development rates. Argentina, Brazil, and Mexico are the most popular countries for outsourcing software development in Latin America. Let’s take a closer look at each of these top outsourcing destinations. 

Argentina’s software development pool numbers around 139,000 professionals. The country’s education system is focused on informatics, which means that even more qualified developers will appear in the country in the near future. Software and mobile development, data transfer to the cloud, and DevOps development are the main specializations of Argentine engineers. However, you should keep in mind that the country is developing and still remains a quite unstable economic environment that can cause certain difficulties. For example, the unreliability of state laws regarding the entry of foreign businesses.

Brazil‘s IT market has grown significantly over the past few years. Today, Brazil has the largest number of developers among all Latin American countries. Many US companies prefer to hire Brazilian professionals because they are highly skilled and well-educated. Brazil has approximately 1,714 IT-related technical and graduate courses, which produce 100,000 graduates per year.

Mexico is also one of the most popular countries for software outsourcing. In response to market demand, the government is modernizing the country’s education system to replenish the talent pool with well-educated technicians. There are currently about 223,398 software developers working in this region. SkillValue ranked Mexico second among the countries with the best engineers in the world in terms of price/quality ratio.

What is the best country for IT outsourcing today?

Well, now that you’ve learned more about top software outsourcing destinations, let’s try to find out which country is the best for outsourcing. According to the latest Skill Value report, based on +550 technical assessments, the top 5 countries with the best developers of the world regarding price and quality include Slovakia, Mexico, Poland, Hungary, and Ukraine. 

It makes sense. However, when you are choosing a software development partner for yourself, you should look at the factors that are crucial specifically for your project. For example, for US companies, Mexico can be an excellent option due to its close geographic location, especially if you want to actively participate in the development process or are looking for specialists to expand your in-house team. At the same time, you will find lower rates in Eastern Europe. Not surprisingly, in this context, many choose Ukraine as the best country for outsourcing software development.

So why do companies outsource software development to Ukraine:

• A huge pool of technical specialists. Ukraine already has about 200,000 professional developers. Plus, over 20,000 tech students graduate in Ukraine each year, according to The IT Ukraine Association. Ukrainian engineers master a large technology stack, including advanced technologies such as AI, machine learning, and blockchain. Plus, you won’t experience trouble with communication. According to DOU, 70% of surveyed engineers speak English at the intermediate and upper-intermediate levels.

• Favorable business environment. In Ukraine, the information technology market is supported at the state level. Therefore, you will not have any problems with the legal side of interaction with a partner company. IT companies have favorable tax conditions that allow them to provide services at reasonable prices within the regulatory framework and market trends.

• International recognition. The talents of Ukrainian developers are known far beyond the borders of the country. Ukraine is in the top 50 Most Innovative Countries by The Global Innovation Index. Also in 2021, 12 Ukrainian companies, including IdeaSoft, entered the Clutch Top 100 Fastest-Growing & Sustained-Growth Companies for 2021. Such internationally famous startups as Grammarly, GitLab, Jooble, DepositPhotos, and others originated in Ukraine. 

• Reasonable rates and great quality. Ukrainian developers create high-quality software products due to a good technological background. Moreover, development rates are lower than in Western Europe or even neighboring Poland and Hungary. Often it is the excellent value for money that becomes the decisive factor in favor of outsourcing to Ukraine.

• Convenient time zone and location. The time difference between Ukraine and the United States is 7 hours, between Ukraine and the UK – 2 hours, which opens up new prospects for working on projects. Also, if you want to visit Ukraine, it will not be difficult. The country has excellent traffic interchanges.

If you like the benefits of outsourcing software development to Ukraine, we will be happy to help you get started on your project and prove that cooperation with a Ukrainian company is a good decision. 

IdeaSoft, being part of Sigma Software Group, a Swedish software development company, will be able to cover all tasks related to the development of your software product. We provide a full range of services from business analysis, UX/UI design to programming, testing, support, and outstaffing services. The company’s portfolio includes more than 250 successfully implemented projects in such industries as fintech, telecom, healthcare, B2B, government, logistics, and others.

Feel free to check our services, industries we work with and contact us directly to discuss your next project!