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Cost of Outsourcing Software Development to India

Cost of Outsourcing Software Development to India

Steven Williams1124 05-Mar-2020

With the rocketing rise in digital technologies, it is essential to rapidly adapt to whatever new development the digital world has to offer. The demand for a software solution in sectors such as IT, healthcare, travel has risen exponentially especially with the advent of new technologies like Blockchain, AI, ML etc. In the current industry, the need for mobile and web application development and revamp is more than ever. Not just for incorporating new technologies into their business, but also for swapping out the manual processes with automated techniques. Startups and new businesses are constantly looking out for experienced software development companies to develop their product in the shortest time frame, usually with a limited budget. This of course has always been the foundation of the concept of software outsourcing, which is considered as a viable solution to many operational concerns in small and big companies.

While offshore software development has become a crucial strategy, choosing the right offshore partner remains a difficult task for businesses due to various challenges such as meeting deadlines, adjusting time zones, language and cultural barriers, etc. For nearly two decades, India has evolved and established itself as a major offshore software development hub. The main reasons behind outsourcing software development to India are lower development costs, higher software quality, no language barriers, and a giant pool of talent which solve various complexities and challenges businesses face.

Why does a company outsource?

Outsourcing software development means a reduction in cost and capital expenditure for the company. According to a report by TechCrunch, a software engineer can get paid up to $200 per hour in the US, while the average cost to hire a similar resource in India and similar countries could go as low as $7. So outsourcing the project eliminates the recruiting cost of an in-house employee. Moreover, a company can focus on its core competencies once the software part is taken care of. Some of the biggest tech hubs hire experienced developers from Asia, Eastern Europe, Africa, Central & Southern America. Offshore software development prices for Central and Southern America range from $30 to $50; in Eastern Europe, it falls between $25 and $50, while in Asia and Africa, hourly rates range from $15-$30.

What makes India a sweet spot for cost effective software development outsourcing?

Although there is no shortage of countries that will continue offering good value outsourced software development services, India is far ahead of the competing nations in terms of cost as well as quality. Despite the rise of other low-cost outsourcing options in North Africa, Eastern Europe, and Southeast Asia, the majority of tech hubs in the world still prefer India as their software development outsourcing destination.

In 2017-18, India’s high market share was 55% of the US$ 185-190 billion global services sourcing business, which stands the highest in the world.

In a survey conducted by Deloitte, they interviewed few businesses of which, 59% confirmed that they were already outsourcing their software development to India, while another 22% were considering the option of outsourcing to India.

That’s not it, with these facts to back up, we are also going to explain four key reasons why outsourcing software development services to India is ideal for any business.

Lower pricing

The primary reason behind developed countries going for Indian offshore software development companies is lower costing. Due to the economic difference, India has relatively low operational and labor costs when compared to Europe and the United States. The wages in India are much lower than their US or European counterparts, the reason why their software development cost is low. So how much does it cost to outsource software development to India? As stated above, the average cost to hire a resource in India could go as low as $7 to $25 per hour for small to medium sized organizations. Depending on the various factors such as software requirements, resources utilized and size of a company, the prices can vary. Cost is not the sole reason for outsourcing software to India, the price and quality ratio, is what makes the companies stay.

The giant pool of talent

India has an enormous talent pool in terms of technology professionals, which makes it the biggest outsourcing hub. This is one reason that has been significant in India’s dominance in custom software development. Indian IT outsourcing industries employ a total of 3 million people. Additionally, India as the biggest destination for outsourcing the highest number of diverse talent, which includes people digitally skilled in every sector. In education end, a high percentage of developers aged 20-35 years from India holds a Bachelor’s as well as a master’s degree in IT-related fields. Nearly 200,000 engineering graduates are hired by Indian IT industries every year. Because of this huge pool of talented individuals, they tend to tackle any development challenges with maximum accuracy.

English language advantage

The common medium set to communicate effectively with other nations is the English language. Technically, English is the second language in India, but the other fact is that many people that are residing in southern regions of the country, primarily communicate in English. India has almost 125 million people who could effectively communicate in English, making India the world's second-largest English-speaking country, after the United States. On the EF English Proficiency Index(EPI), India ranks third in Asia in English proficiency.

While outsourcing software development, effective communication is the top priority and the leading challenge. Command over the English language helps in better coordination between the outsourcing company, and the software development teams, to maintain a smoother workflow. Outsourcing to software development companies in India means one has the benefit of associating with an IT sector where everyone understands and speaks fluent English.

Favorable time zone

India is 10 hours and 30 minutes ahead of Washington, DC, USA.

India is 5 hours and 30 minutes ahead of the United Kingdom.

Australia is 5 hours and 30 minutes ahead of India.

The vast difference in time allows a business to carry out round the clock operations, in different countries, across the globe. This round-the-clock working hour means faster turnaround of project, and a boost in productivity, the saved time is used to gain a competitive advantage. The overlap period is sufficient to arrange meetings and calls between teams from both countries. It also means that customers can get 24x7 customer support from the company. If a company decides to carry on in-house development and outsource it at the same time, then their business can run 24x7.

Pricing structure for software services in India

The price for hiring a resource in India ranges from $7 to $25 per hour, if one is opting for hourly rates. The rates completely depend on the complexity of work and experience of resource hired.

One can also opt to employ a dedicated full-time equivalent (FTE) and the rates vary for different resources for a minimum of 160-180 hours of developer work per month.

Developer: $1200 - $2200 per month

Mid-Level Developer: $2000 - $2700 per month

Sr. Developer: $2500 - $3000 per month

Expert Developer: $2800 - $3500 per month

Full time equivalent Rates for IT Maintenance

Shared Resource: $1500 per month

Dedicated Resource: $2500 per month

Note: We have tried our best to keep all information on pricing accurate for small to medium sized enterprises, but based on the company size, one might need to make changes in the cost of their services.

Evon offers offshore software services at a very comparable if not lower rate. Evon's location is what makes it an ideal and cost-effective offshore development partner. We are headquartered in Dehradun, a Himalayan foothill town in India. Being situated in a non-IT hub, the wages are low, hence the cost of software development is comparatively lesser than major IT hubs in India. This helps us maintain a low attrition rate and attain higher productivity, letting us offer a wide range of end-to-end software services. Low attrition rate means one can invest in an Evonian’s training without worrying about him leaving the job. We do not have so-called "big city" problems like high travel-time & pollution, that makes us a healthy workforce. Moreover, with such problems out of the way, we spend 8-12 hours in the office each day.

Final say

Outsourcing is not much different from hiring an employee. There is always a substantial amount of risk in hiring an offshore company or an employee. Whatever option you go ahead with, you are wide open to potential risks. So make sure you follow a set of steps that will help you to minimize those risks and maximize the success of outsourcing software development.

Evon Technologies specializes in outsourced product development (OPD). With over fourteen years of experience in providing offshore software development service across every vertical, Evon is the ideal choice for your company to partner with. We commit to ensure all software and hardware availability as per project requirements and meet client’s expectations at each point of time. The developers at Evon have diverse skills and experience to grow beyond capabilities and build custom software applications. Our cost-effective and professional software development services makes us one of the most favourable offshore software development partner. We believe that the success of any project depends on both party’s effective communication to make their requirements very clear. That’s the reason we use voice calls, video chats, screen sharing, and regular emails to create an office-like environment and seamless communication between organizations. Reach us here for all your queries and software development requirements, we will get back to you in no time.

Steven Williams is a content writer for businesses that specializes in Digital Marketing. His mission is to to help business owners to embrace marketing

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