Countries and Rates for off-shore software development


Countries and Rates for off-shore software development

Joseph Vargheese PMP CISA CSM, Atlanta GA USA, joevgh@gmail.com

Dated: 2012-03-09

(Please let me know, if you need help in locating a vendor with lowest rates below in respective countries)

1.    Introduction

It is somewhat confusing for a company to do offshoring these days. With the entry of Latin American companies, it is somewhat confusing for a client to decide a vendor. Every country has certain strength and weakness. There are always some hidden factors in off-shore software development which will not be known to organization seeking services till engagement starts.

Please check here for Salary of Software Engineers Globally

2.  India (Tier-1 Cities) –Hourly Rate: 20$-40$

Strength

  1. Natural choice
  2. Long term player
  3. Strong knowledge in offshore software delivery models
  4. Strong process framework knowledge especially agile processes.
  5. Highly experienced and large supply of experienced workers
  6. Higher English language fluency (both written and oral)
  7. Higher technical skill level and wide array of skill sets
  8. Very good infrastructure

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Weakness

  1. Time zone difference  of 10-12 hours
  2. Offshore operation cost is rising
  3. Resource attrition is high as 25%

3.  India (Tier-2 Cities) – Hourly Rate: 12$-30$

Many Indian companies started operation tier-2 and tier-3 cities.  Apparent cost benefits are most often not transferred to organization seeking services.

Most of recent start-up in software industry originated from Tier-2 cities and there are variety of vendors offering niche services from these cities at lower cost.

Considering ROI on variety of services, Tier-2 cities have better ROI than Tier -1 and Tier 3 Cities.

One of challenge is lower supply of highly skilled man power.   But not every part of software development requires skilled resources.

4.  India (Tier-3 cities and below) – Hourly Rate: 12$-25$

One of challenge is lower supply of highly skilled man power. But not every part of software development requires skilled resources.

But attrition is also equally lower compared Tier-1 and Tier-2 cities.

Suitable for creating small web-site support and BPO operations.

 

5.  China (Tier -1) – Hourly Rate: 15$-40$

 Strength

  1. Low cost operation suitable for software testing
  2. Highest productivity on highly documented process driven work items
  3. Large supply of experienced workers
  4. Higher technical skill level on many areas
  5. Very good infrastructure

Weakness

  1. Time zone difference  of 10-12 hours
  2. Lack of wide array of technology skill set
  3. Lower oral English language skill set
  4. Week software  development process  framework
  5. Lack of knowledge in offshoring delivery model
  6. Resource attrition is high as 25%

6.     China (Tier -2 and below) – Hourly Rate: 10$-25$

One of the advantages on moving to tier-2 cities in China is the lower operation cost. Tier-2 cities in China are 30% cheaper than Tier-2 cities.

Large supply of small companies in tier-2 cities in China. But the disadvantage is English speaking skills. If communication can be limited to email and instant messenger, these companies can do excellent delivery of services.

7.      Brazil – Hourly Rate: 30$-50$

 Strength

  1. Same time zone as North American clients
  2. Lower cost operation suitable for infrastructure outsourcing
  3. Moderate supply of workers
  4. Moderate technology skill set
  5. Moderate oral English language skill set

Weakness

  1. Strong labor union presence in software service sector force lower productivity
  2. Scarcity of trained supply for resources and lack of wide array of technology skill set
  3. Week software  development process  framework
  4. Lack of knowledge in off-shoring delivery model
  5. English language is still a challenge
  6. Need strong training division for resources
  7. Unstable governments and inadequate IP laws

8.     Vietnam – Hourly Rate: 10$-20$

Strength

  1. Moderate English language skill set both oral and written
  2. TBC…

 Weakness

  1. Time zone difference  of 10-12 hours
  2. Lack of experienced workers
  3. Lack of wide array of technology skill set
  4. Week software  development process  framework
  5. Lack of knowledge in offshoring delivery model

 9.     Russia – Hourly Rate: 5$-20$

 Strength

  1. Lowest cost of operation
  2. TBC…

Weakness

  1. Mostly email only communication
  2. Lack of experienced workers
  3. Lack of wide array of technology skill set
  4. Week software  development process  framework
  5. Lack of knowledge in offshoring delivery model
  6. Lack of English language skill set both oral and written

 10. Argentina-Hourly Rate: 30$-55$

 Strength

  1. Same time zone as North American clients
  2. English language skill set both oral and written
  3. TBC…

Weakness

  1. Strong labor union presence in software service sector force lower productivity
  2. Lack of experienced workers
  3. Lack of wide array of technology skill set
  4. Week software  development process  framework
  5. Lack of knowledge in offshoring delivery model
  6. Scarcity of trained supply for resources.
  7. English language is still a challenge
  8. Need strong training division for resources
  9. Unstable governments and inadequate IP laws

 

11. Chile – Hourly Rate: 15$-25$

Strength

  1. Same time zone as North American clients
  2. TBC…

Weakness

  1. Highly labor union driven economy
  2. TBC…

 12. Costa Rica – Hourly Rate: 25$-50$

 Strength

  1. Same time zone as North American clients
  2. English language skill set both oral and written
  3. TBC…

Weakness

  1. TBC…

 12. Mexico – Hourly Rate: 35$-55$

Strength

  1. Same time zone as North American clients
  2. TBC…

Weakness

  1. Labor union driven economy (not so much in software)
  2. English language is still a challenge
  3. Need strong training division for resources
  4. Unstable governments and inadequate IP laws
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About Joseph Vargheese
email:joevgh@gmail.com.

2 Responses to Countries and Rates for off-shore software development

  1. Pingback: Agile Scrum and globally distributed teams | josephvargheese

  2. Bhavana says:

    Hi,
    Thanks for sharing useful information related to countries and rates of offshore software testing
    .The blog is very descriptive. Keep Posting.
    Good Going.

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