If you live in the US or Europe and look for a better contractor to develop custom software quickly and inexpensively, then initially you turn to local resources. Sometimes these expenses can be too high for you, because local costs for programmers' services in the US and Europe deeply differ from other countries. That’s why many customers spend too much time while searching for price-quality relationship.
If you still doubt about the real numbers of your expenses, then have a look at this small graph, where we’ve included the information about average yearly total cost for a 5 years experienced software developer.
As an example, let’s take a role of a customer, who is located in the United States and requires developing a project (12 months of duration). Let’s say this project requires 10 engineers with different skills levels (it might be .NET or PHP or other technology platforms). As any customer you want to get it FAST, with a decent QUALITY and not to spend too much money on this (let’s call it – INEXPENSIVE).
However, as we all know, such a combination of factors is quite a rare case, which can be illustrated by the following image:
Let’s calculate what it takes to develop such a project in the USA
The average salary for the team of 10 engineers including:
According to PayScale information (updated on 12 Jan 2016) it will cost you about 835,226 USD. The final cost won’t be just 835,226 USD as you will also bear the additional expenses. Let’s delve into this point:
- You’ll pay 3% for their 401k retirement savings;
- About $5,000 will be spend on the health insurance for each of your employees;
- You’ll pay 2,6% unemployment insurance per quarter on the first $8,500 of their salary ($884 / year).
- You’ll pay for the rent, office utility, PCs, servers, HR staff to hire programmers, HR services to retain them and also accountant to pay them salaries. Let’s say it can be additional 20% expenses of the salary.
Total average expenses for the team will be about 1.085.000 USD. For some of you this might be too much and there is no way on how to cut down expenses while working with the US full-time employees.
Now let’s return to the calculation of the expenses for senior developers. This time we’ll pay attention to Western Europe, Germany
To see the real cost of the same software development team in Germany, let’s analyze the list of experts included below:
We’ve used PayScale information (updated on 20 Sep 2015) and after a brief calculation you'll see that it will cost about 557,159 USD.
Just like in the US region, you’ll have to pay for the rent, office utility, PCs, Servers, HR staff to hire programmers, HR services to retain them and also keep accounting department to pay salaries. Sometimes it can be additional 20% expenses of salary. So in total it will cost you about 670,000 USD per annum.
As a consequence, you can see that a software development team in the US will cost you 1,085,000 USD and 670,000 USD in Germany.
Depending on skills and timeframe to compile team it will cost you about 450,000-520,000 USD in Poland. It’s 50-60% cheaper than in the USA and 30-40% cheaper than in Germany.
Apart from the savings, you need to take into account that the quality often doesn’t suffer in a way of outsourcing operations as every reliable company values its name and reputation. Moreover, every company is interested in long-term relations with its clients. As a result of our work with different clients all over the world, we’ve come to certain conclusions:
To ensure fast project development, a good outsourcing vendor can gather a dedicated team according to the needs in a short period of time.
Outsource Software Development companies can provide high-quality services. Thanks to the fact that well-educated engineers in Eastern Europe are more than capable of executing your project development, using standard technology stacks and provides qualitative results.
Outsourcing is a very cost-effective solution for the customers who are looking for services, where you don’t need to think about taxes and additional payments. This also excludes the need to hire expensive individuals for the in-house work.
Therefore, in a view of effective project implementation and compliance, inexpensive, fast, quality software development is true and often can be achieved using outsource software development companies with a good reputation.
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