Onsite Development vs. Overseas Development: How do the Development Costs Resemble?

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Dissect through the advantages, risks, and costs of onsite development vs. overseas development.

Hourly rates of overseas developer range from $18-$25. Fixed rates for an overseas developer is between $30000 (For a developer having 2-3 years of experience) to $90, 000 (For a developer having 8-10 years of experience).

This cost is 1/5th the cost that organizations incur when they hire a developer in-house/onsite.  In-house (Onsite) development cost within small to medium sized companies in India is around $15-30. In addition to this, while overseas (offshore) development saves the cost of providing space, infrastructure, cost of hiring, cost of retention, employment benefits etc., there can be certain other benefits of hiring an onsite developer. Ascertain which one suits you best!

Sketching Out the Differences among Onshore, Offshore and Nearshore Outsourcing

Onshore – Outsourcing to a software development provider in your own country

Offshore – Regions those are ovearses or more than four times

Nearshore –Outsourcing to the firms two to four time zones away, possibly located in bordering countries to your own or just a short distance away.

How are the cost estimate created?

It is important to understand how owners form the pricing in the offshore development teams. As a normal practice, a buyer compares the prices based on simple calculation. They combine rates of 6-8 members of a Scrum team and calculate the cost of a 12 month full time employment. Such estimations are relied upon in case a buyer is looking for a long lasting partnership. This estimate will also include qualification levels of developers, engagement models and experience they hold.

Referring from the list of average hourly rates for offshore development services in 2018, revealed by qubit-labs, here is the enlisting of the development costs across all the continents:

  • Asia – $18 – $25 / hour
  • Latin America – $75+ / hour
  • Europe – $15-$45 / hour
  • Australia – $75 / hour

Breaking the rates down further, global software outsourcing costs in 2018 according to Diceus are as follows:

Asia: China, India, Japan

  • Cost: $18-25/hour

India is one of the top outsourcing countries in the world, amounting to around 40% jobs. They earn around $12,000/year while Japanese programmers earn around $40,000/year.

Latin America: Brazil, Argentina, Chile, Mexico, Costa Rica

  • Cost: $75+/hour

Being in proximity to USA, Brazilians earn around $30-50/hour. Argentinians charge the same rates as Brazilians do. Chile is comparatively cheaper and a very good option to avail ICT services. They charge $15-25/hour. The rates in Costa Rica range in between $25-50. These people are pros in written as well as verbal communication skills. Buyers in Mexica pay as high as $35-55.

Eastern Europe: Rates in Romania, Ukraine, Poland, Belarus

  • Cost: $20-30/hour

Global Offshore Software Development Rates 2018

The releavnt information related to cost often seems to be decisive and it is very difficult to identify the exact cost of development across the continents. The gathered facts look biased and are often turned by different providers to their advantage. Cost is the determining factor in search for offshore developers that’s why the list above illustrates only the most popular termini.

Contact us to check the cost of off-shore/near-shore development teams. A successful mobile or a web application takes much more than just a good software development. From funding, business modeling, app store optimization, product design and development, post-launch, growth and scale, app marketing/user acquisition, user/behavior research, monetization/financial modeling and market research, an app development company will understand the process throughout and all the skills that are required to ensure sustainability of the project in long term.

Advantages and Disadvantages that Companies Avail While They Hire a Developer Overseas

Benefits to Hire a Developer Overseas

The workforce is available at cheaper rates overseas. It is not advisable and feasible to pay $170/hour to the local developer if you can get the same amount and quality of work done by overseas developers at a quarter costs. The saved cost can be deployed to some another more productive cause like building a more feature rich application. Entrepreneurs often think that it does not make any sense to pay more for a project locally if they can get the same thing done overseas. But enterprises might find that overseas projects come with an extra time associated with managing and preparing them. One side effect that comes tagged with offshore development is a short-term commitment. Organizations might require developers skilled in one technology but might require someone else skilled in totally different technology for another project later. Overseas developers must not be thought of as dead souls who work against company culture or have to devote more hours than regular employees.

Disadvantages of Offshore Outsourcing

It often becomes difficult to check the quality of the content written by overseas developers. A large number of overseas developers make it a practice in general to list the company portfolio for whom they have worked as their own. Here it becomes difficult to find out and quantify whether you will be getting the same things as expected?

This risk can be mitigated by taking certain measures. Some local person can be hired as a consultant who can actually do the tiring tedious work (involving traveling, gathering information, etc.) that forms the basis for a project for you. You can alternatively ask them to do a test project for you in real time.

Candidates can be made to give technical interviews before being assigned with actual tasks. The main objective of the technical interview always remains that the candidate can actually code. As soon as they qualify in the technical aspect of the test, the candidate must be made to answer some behavioral questions to ensure that they are personally fit for the task.

Organizations can even face some kind of logistical challenges as they might have to coordinate with offshore developers apart from office hours, sometime in the middle of the night when they might not be able to perform optimally. Hiring a project manager who is in a closer time zone or who is local (nearby to developer) can help resolve this problem.

Benefits Availed By Organizations When They Hire A Developer Full Time

Developers who work full time have invested their present and future (if the fit is good). They are very less likely to ditch and have associated their personal goals with those of the organization. Monitoring them is easy and the risk associated with them can be mitigated well.

Even if a new feature or a module has to be implemented; the organization does not have to wait for the scheduled meeting time to discuss it over with the developers. This can be conveyed quickly to the developer sitting next to you and things can work out easily without time lag.

Minuses Faced By Organizations When They Hire A Developer For Full Time

Finding and recruiting a developer as a full-time employee can be time consuming and expensive. This is in drastic contrast to hiring an overseas developer who can be changed on the project basis. Additionally, it often becomes herculean to find the best fit according to required skillset and from the cultural point of view.

Things To Be Considered While Hiring Offshore Developers

  • Although cheap prices are enticing but do not fall into the trap
  • Check completed past projects
  • Make them work on real-time test project
  • Discuss a plan of work and timetable of payment
  • Post-project submission scenario must be discussed in advance

Terser

Hiring a full-time developer or an overseas developer seems to be a Beguiler. The call into question depends upon the scenario and requirements of the organization. While a small organization might hire a developer as a full-time employee, in other cases, medium to large scale organizations might require outsourcing their app development needs. A few quick questions that must be asked while deciding to hire full time or offshore developers:

  • What exactly are you looking for in a developer? Do you know how to hire a technician who is highly proficient and enthusiastic about development?
  • Are you aware of all the skills that a developer must possess?
  • How much time can be spent on researching for the developer?
  • Do you want to write technical requirements yourself or want someone else to do it for you?
  • Will it be beneficial to hire a developer or partnering up with a peer organization for app development needs?
  • How much will it cost to hire a developer? What is the difference in terms of cost if you decide to hire a full-time developer or an overseas developer?
  • What types of resources are required for developing a typical business app? –
  • Android Developers
  • iOS Developers
  • Front-End Developers and UI/UX Designers
  • Back-End Developers
  • Project Managers
  • Test Engineers
  • Business Analysts
  • Data Scientists

Even if all the members like data scientists, analysts or designers are omitted, the cost of overall onsite development still remains high as compared to overseas development. And this equation still lacks the cost of software/hardware, personnel management, seating space, and licenses etc.

The costs are competitive and are constantly growing. Apart from doing your research, it is advisable and beneficial to discuss the same scenario with other entrepreneurs to get acquainted with the prevalent best practices.

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About Author
Neeti Kotia

Neeti Kotia

Neeti Kotia is a technology journalist who seeks to analyze the advancements and developments in technology that affect our everyday lives. Her articles primarily focus upon the business, social, cultural, and entertainment side of the technology sector.

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