The Best Countries For Offshore Software Development in 2023

The offshore software development model is fast-rising today, especially among growth-focused startups: following Mordor Intelligence, by 2027, the global IT outsourcing market will be worth $682.3 billion compared to $526.6 billion in 2021. Such countries as Estonia, Albania, Portugal, India, Vietnam, and Brazil are expected to become game-changers in this sphere.

But before you explore the best countries for outsourcing software development, it’s important to understand why offshoring works. ProCoders has gathered our best experience here, so let’s get started!

Nearshore and Offshore Outsourcing: What is The Difference?

Nearshoring is a form of outsourcing that involves sending work to countries that are geographically close to your company’s home country. For example, it is nearshoring if you’re located in North America and want to try software development outsourcing in Mexico.

Conversely, offshoring involves sending work to a company or professionals from another country located further from yours. The goal of offshoring is to find low-cost labor and reduce your operating costs.

Let’s have a look at how nearshoring and offshoring are similar and different compared to each other:

Similar	Different
Both offshoring and nearshoring involve companies assigning work to a contracting company in another country.	Offshore outsourcing is typically a longer-term commitment because of the distance between the two countries.
In both cases, the company doing the offshoring or nearshoring doesn’t have to train employees.	Nearshoring is when a business sends work to another country that is nearby. Offshoring is when a business outsources its work to an entirely different part of the world, often many time zones away.
The contact company handles all interviewing, hiring, and training of employees.	Cultural differences. Your nearshore colleagues may live within the same culture as you, but if, for example, you’re from the USA and hiring a specialist from Estonia, be ready to expand your cultural borders!
Both have the benefit of allowing companies to focus on their core competencies.	Language. In the case of nearshoring, there’re more chances that a person you hire would speak your native language. However, as for offshoring, you can also hire people who speak your local or project language – that’s not a problem nowadays.
The company and contact company will generally set up a contract with deadlines and deliverables.	The number of countries. In the case of nearshoring, you’re limited to a particular number of countries where you can find a specialist.
Companies who do this work tend to have an in-depth knowledge of their client’s businesses.
Both offshoring and nearshoring can save money for companies, big and small.

Why do You Need to Outsource?

When planning to outsource your project, you need to consider several things. First of all, is it worth outsourcing your project at all?

Actually, the answer is yes. You can outsource projects of any type and size. However, the decision depends on the resources you possess: financial, timing, etc.

According to Statista, the reasons why many countries outsource IT services worldwide are the following:

• Provide access to skills not available in-house: 46%
• Save money: 70%
• Free up resources to focus on core business: 35%
• Add scale to an IT organization: 40%
• Improve flexibility in the use of resources: 40%
• Improve the ability to innovate: 10%

At the same time, Deloitte Global Outsourcing Survey found the following reasons for companies to adopt micro-segmentation worldwide in 2021:

• Reduce the cost of hiring new personnel, facilities, and equipment. This includes fewer tax benefits than you would pay for an employee.
• The release of capital to allow to invest in other company activities.
• Free up resources to focus on core business.
• Increase agility with plug-and-play solutions.
• Improve service quality by bringing unavailable in-house skills to the company, which equals abilities to innovate.

In general, companies outsource mainly to gain access to resources they do not possess, which are critical to a project’s success.

After answering such a question as “What is missing in the company? Human resources, physical infrastructure, new technologies?” you will be able to choose the right work model, which wouldn’t necessarily be outsourcing.

For example, if you see that your team lacks professionals, you can use staff augmentation. Staff augmentation is a flexible staffing solution that allows your business to draw on short-term or long-term resources as needed. With this approach, you can hire personnel with the skills and experience needed for particular projects but without the ongoing financial commitment of a full-time employee.

However, now another question arises: when do you need outsourcing services? Outsourcing is needed when:

• you do not have the opportunity to manage the project;
• there is no team yet;
• you don’t have enough experience;
• you have other projects that require attention and need to focus all your resources on them without delay.

For example, if your project is a small start-up, your budget is limited, and it is not clear whether you will be able to attract investors regularly to support an entire department. In this case, outsourcing would be the best option.

Benefits of Offshore Outstaffing

As discussed in the previous section, it is not enough to know the best countries for offshore software development. It is more important first to determine how offshoring can help your project. And this is what we at ProCoders discovered:

Close skills gap

Though there is a global shortage of software developers, there are still some countries that offer high-qualified talent at competitive pricing. If you need to find specialists for a project, it may make sense to consider outsourcing the project to one of these countries.

For example, such best offshore software development countries as Estonia, India, Mexico, Brazil, China, etc., give you access to affordable professional talents with which you can close skills gaps in your project. More so, finding talent in any of these best countries to outsource software development is a great way to overcome hiring hassles and speed up your development.

Innovation and Perspective

When a company is globally-minded, offshoring worldwide can help it achieve its goals. Just imagine: you can get fresh ideas just because an IT professional grew up in another country and thus thinks differently.

Besides, offshoring will also help you:

• Test your product and see how an international community would perceive it.
• Gain more creative input and insights in developing your software products.

ProCoders have developers all over Central Europe: Estonia, Croatia, Albania… So don’t miss your chance to get a fresh look at your project!

Round-the-clock development

From the ProCoders’ experience, the differences in time zones present an excellent opportunity to accelerate the development process.

Imagine you are already in the offshoring. At the same time, you have your own in-house team. In that case, both parties can ensure round-the-clock development such that the work hours of one side would fall to the rest hours of the other and vice versa. This means the development process is not entirely paused almost every hour during workdays.

Cost Optimization

If your company operates in a country with a high cost of living and, thus, high costs for professional developers, it would probably be a better choice to hire a development team located abroad with lower costs.

For instance, Estonia, and countries in Central Europe in general, is one of the most affordable options for offshore software development, mainly because the cost of living is low. Because of that, Estonian developers would not charge as high as developers in countries like the US, Germany, France, etc.

In addition, by using outstaffing services and hiring professionals abroad through the vendor, you can avoid hidden costs such as hiring expenses, insurance, taxes prescribed by your country, etc.

The Most Important Challenges You Will Face

During our work, ProCoders have faced all imaginable problems, and we already have experience dealing with them. So let’s have a look at the challenges you may face!

Management

As a business owner or manager, you want to ensure that all employees within your company are working towards the same goals and objectives. However, this can be difficult when working with outside contractors on your IT project.

In this case, you should take care of the Discovery Phase. Discovery Phase is a project implementation plan (a roadmap) of how your project will be created. Usually, such a plan helps to estimate your project development as accurately as possible. With the Discovery Phase, it would be easier for you to manage your outsourcing team, as you will understand milestones and times when particular goals should be achieved.

Language and Communication

Usually, remote developers require different communication than you might be used to. Communication is no longer just about sending an email or making a phone call — it’s about using tools like video calling, instant messaging, and project management software to keep everyone in sync.

Here are some tips and tricks for communicating with remote developers:

• Use video calls and instant messaging whenever possible. Video calls allow you to see the person you’re talking with and manage visual cues more easily than text does.
• Choose your tools wisely. Find tools that are easy for everyone on your team to use and won’t require training time before getting started (if possible). For example, Google Hangouts allows you to start a group video call with up to 10 people at once, while Slack lets you create channels so that certain conversations include certain employees that need to be up-to-date considering particular issues.
• Use a project management tool. Most project management tools have chat features built in, allowing users to post statuses and comments about their work outside of scheduled meetings. You can also use it to set up regular check-ins with each person so that there’s always someone who can answer questions or provide feedback if needed.

However, it can be disappointing when you hire a developer remotely, and they appear unable to communicate with you properly. To prevent miscommunication, choose those proficient in the same language as you. At the same time, remember that even if a developer’s English level is not C2, they still may provide you with professional work with their B1 level.

Legal Challenges

Be prepared to face legal challenges when outsourcing your software development project. For example, there is a possibility that the legal landscape of a country you outsource to would be pretty different from yours, especially regarding registration, fees, taxes, benefits, and other compliance issues. Besides, there might be some legal obligations applicable to the client’s country as well if receiving labor from abroad.

All legal issues, regardless of whether they pertain to the offshore development company or the client company, must be resolved when working internationally. If they aren’t solved on time, it can result in heavy sanctions. However, cooperation with ProCoders removes the worry about these things while fulfilling legal requirements because we have already taken care of them!

In every contract, we prescribe everything in detail from our and the client’s sides. Besides, ProCoders have experience working with different countries, so we know how to behave in most cases!

How to Choose The Best Countries for Outsourcing: Main Criteria

This section compares top offshore software development countries from various world regions, ranked according to quantifiable metrics. The criteria used to determine the rankings include:

• Availability of skills and the size of the talent pool
• The rates for hiring developers in the countries
• The different time zones applicable for the countries

Skills and Talent Pool

Access to a global pool of talented developers is one of the advantages for companies that use software development outsourcing services in top offshore software development countries. In addition, these countries are home to many developers and different agencies, making them stand out in the rankings.

Considering quantity vs quality, Central Europe has more than one million specialists in its countries. Central European specialists are even displacing engineers from Germany or Great Britain!

Rates

There are significant financial benefits when it comes to outsourcing, that’s why companies usually outsource to a country where developers charge less.

Although the rates for coders are lower in Estonia than in other countries, this doesn’t mean that Estonian developers are of low quality, since they are usually highly qualified and experienced. The lower rates just reflect the low cost of living in Estonia.

Time Zone

If you’re outsourcing work to a company in another country, then time zone differences will come into play. However, it can also depend on which work model you would like to choose: offshoring or nearshoring.

For your team to be online during business hours, nearshoring can help. Nearshoring means that the development company will be located near your local time zone, so there are no time differences between you and them.

However, if you want your project to be developed continuously, you can consider offshoring (even to other continents). For example, you can organize a round-clock development if you have more than a 6-hour difference between you and your offshore team. When your in-house team works during their business hours, your remote development team will have some rest. And vice versa: when your in-house team has some rest (as it’s nighttime by your side), your offshore team will take care of the further development during these hours.

List of The Best Offshore Software Development Region and Countries

The table overviews the details of assessing the best countries to outsource web development.

Top offshore software development countries	Developers	Firms	Base Rates	Time Zone (GMT)
Portugal	10 000+	128	$21 500	+1
Croatia	9 000+	3 101	$18 800	+2
Estonia	30 000+	66	$16 000	+3
Albania	35 000+	120	$14 000	+2
India	>5 million	1.9 million	$6,725	+5:30
Poland	>300,000	1300	$20,060	+2
Mexico	>225,000	>600	$18,368	-5
Brazil	>500,000	>7000	$19,330	-3
Argentina	115 000+	3 800	$12,379	-3

How to Find The Best Software Development Vendor for Your Project: 5 Key Points of Hiring

Set actionable goals

Setting goals that align with your company’s overall mission is important. A good rule of thumb for setting goals is the SMART principle: Specific, Measurable, Achievable/Attainable, Relevant/Realistic, and Time-Based.

Besides, when choosing a vendor to help you achieve your goals, assess the vendor’s values and skills during the consultation phase.

One of the most prominent examples is ProCoder’s collaboration with Roth River to develop a web application for their IoT sensors. It was easy to hit the ground running because the goal was clear: create a cross-platform interface that allows Roth River to layer on a mobile app alongside its web application.

Evaluate vendors

It’s really important to understand the level of professionalism of the vendor you choose. The main points for evaluation are:

• industry experience;
• infrastructure;
• talent pools (as they can give insights into how a vendor would perform on your project).

For example, Frontegg chose ProCoders because they knew that we had access to high-quality full-stack developers and could help them overcome the registration and regulatory challenges they would otherwise have faced in Israel.

Check who your vendor is

Reputation is everything in business, and your choice of an offshore development vendor can have a huge impact on your success.

Here are some tips on how to check your vendor’s reliability:

1. Check the company’s reputation online. You can search for reviews on social media sites like Facebook and LinkedIn or at independent review sites like Clutch.co or g2.com.
2. Check the company’s portfolio. You should also look at the sample projects on the vendor’s website and see if they are similar to what you need to do in terms of size and complexity level.
3. Talk to the vendor’s past clients directly. You can call or email them and ask about their experience working with the vendor.

Interview the developers

When choosing a software development company, it is not enough to speak with the management team of the remote agency. It would be best to interview the developers and engineers and check their skills directly because one of them (or even all of them, depending on how many specialists you need) will work with YOU.

Interviewing the coders and giving them live coding tasks enable you to adjudicate their skills, experience, cultural fit, and mentality. ProCoders know how important this stage is. Because of that, we always allow potential clients to get in touch with our developers in person or virtually. This helps us to convince clients that their work is going into the hands of highly competent professionals.

Communicate with your vendor

Last but not least is to pay attention to how well your vendor communicates with you. For these, pay attention to the next factors:

1. How often do you get replies from your vendor? If your vendor is always in touch with you, you shouldn’t worry about anything (at least at the initial stage). However, if you get replies twice daily (when you always write to them and need to remind them that they need to reply to you), you risk facing the same irresponsible workers with whom it would be hard to communicate.
2. How does your vendor reply to you? It’s also very important to pay attention to the tone of voice your vendor uses to reply to you. ProCoders is sure that you would like to collaborate only with specialists who can keep communication on a professional level even in the most stressful situation).
3. Does the contract suit you? Before signing an outsourcing contract, look for the scope of work. The scope defines what needs to be done and how much time it will take for your team to complete it. It also specifies any deadlines for delivering a product or service. Also, ensure that your vendors can deliver on time and within budgeted costs. If they don’t have enough resources, they might ask for more money later on, which will result in extra costs and delays in delivery time.
4. Do you have the same values? When choosing a vendor for a project, it’s important to find one that shares your values. If you can check this by looking at the company’s previous work and comparing it with the type of work you need them to do for your business, it will help ensure that the two of you are on the same page.

Conclusion

In this article, ProCoders looked at what offshore software development is, why it is important to delegate your tasks to other professionals, and especially why it’s important to outsource your projects to the best countries for outsourcing software development.

The main advantages of the latter are:

• This way, you will find a talent you need. It’s much easier to look for a specialist worldwide than to look for a bunch of skills in local developers;
• Innovation and perspective. By outsourcing the development project to international specialists, you will gain creative insights and fresh analysis from abroad;
• Round-the-clock development. While your in-house team sleeps at night, your offshore team can work during the day.
• Cost optimization. By outsourcing your projects, you avoid hidden costs such as hiring costs, insurance, employee country taxes, etc. Besides, it’s much cheaper to outsource your projects to Eastern European countries than to look for a developer in the USA or Western Europe.

Nowadays, the best countries for offshore software development are considered to be Estonia (having 66 development firms and more than 30,000 developers), Albania (having 120 IT companies with 35,000+ developers in total), and Poland (having more than 50,000 developers in 800 companies).

If you’re looking for a place where you can outsource your project, ProCoders is the best choice for it. With developers worldwide and all possible IT skills, we’ll offer you exactly what you need. Laravel, React, Swift, Angular – which technology do you need your project to be written on?