Outsourcing your company’s software engineering could be a valuable choice, allowing you to tap into established software development talent for a fraction of the cost of hiring someone domestically.
You can build out an entire team of talented software engineers, rather than hiring only one person, and you can harness the virtues of a culture outside your own as well.
The question is, where do you want to outsource?
Different countries have different advantages and disadvantages to offer, with different prices, different work cultures, and different education levels and skill sets within the population.
Two of the most popular countries for outsourcing software engineering have been India and the Philippines for the last several years. But which of these countries is superior for your outsourcing needs?
Is one demonstrably better than the other?
Let’s take a look at some of the most important categories for consideration when preparing to outsource your software engineering needs.
One of the biggest challenges of outsourcing your software development to another country is dealing with a potential language barrier.
You can make the argument that language proficiency doesn’t have much of an impact on the software development itself; However, you’ll still need to exchange words in order to relay scope, provide feedback, work through issues, and potentially speak with clients. Because of that, English proficiency needs to be one of your top priorities when choosing which country and which people to work with.
Though its proficiency has dropped somewhat in recent years, the Philippines remains one of the most English-proficient countries on the planet, and the second-most proficient country in Asia. The average Filipino is able to competently create work presentations, understand TV shows, and read newspapers – all in English. Of all the countries where you could outsource your software engineering, the Philippines is an attractive option.
India, too, has a high rate of English proficiency, in part because of how many opportunities there are for Indian citizens to work with English speaking employers. However, English proficiency in India is slightly lower than it is in the Philippines, and people speaking with Indian citizens or sometimes able to detect more of an accent.
That said, you shouldn’t base your entire decision on the English proficiency of a nation as a whole. There are perfectly competent, fluent English speakers in India, as well as people who don’t know any English in the Philippines. No matter which choice you make, you’re going to need to evaluate the English skills of each individual who applies to work for you.
We should also consider the population of each country and the potential labor pool. If you’re choosing only one country to work with, it makes sense that you would choose one with a larger population, all other factors being equal. That’s because a larger population means more people are entering the workforce and more people are looking for jobs. This, in turn, means you’re going to have more applicants for your position and you can afford to be more discerning when hiring people. As an added bonus, the extra competition for jobs means labor costs are going to drop slightly – but will dig deeper into labor cost in a future section.
India is home to a population of 1.2 billion, with millions of new people entering the workforce every year. It’s one of the most populated countries in the world, and therefore has one of the biggest pools of Labor.
The Philippines population is a mere 109.6 million, so you can expect only 10 percent of India’s new labor entering the field each year. However, the Philippines is not an especially small country, and you should have no shortage of people applying for jobs in software engineering if you choose this as your primary target for outsourcing.
Educational differences between the Philippines and India provide even more important background information. Obviously, your top concern is going to be software engineering and skills related to that occupation. However, you’ll also need to consider the overall education that each person receives. Software engineering isn’t just about mastering a programming language; it’s also about being able to communicate, being able to critically think, being able to problem solve, and many other general skills. Accordingly, people with a more diverse and more robust educational background tend to make for better software engineers.
India currently has an adult literacy rate of 62.75. The Philippines, by contrast, has an adult literacy rate of 93.6 percent. The average adult in India has 5.1 years of schooling, while in the Philippines, the average adult has 8.2 years of schooling. In almost every category that we can find, the Philippines has a competitive edge over India; citizens of the Philippines are better educated and more literate than their Indian counterparts.
So what about software engineering education, specifically?
This is a more complicated question, since we can’t categorize software engineering proficiency the same way we categorize something binary, like literacy. In India, one study from 2013 found that 94 percent of software engineering graduates in India did not have the skills necessary to compete in the modern workplace. The Philippines is, unfortunately, facing a similar issue, with a lack of diversified skills and a general skillset mismatch between employees and employers.
What does this mean for you? For starters, it means you should temper your expectations and scrutinize the resumes you receive. Just because somebody claims to have software engineering experience, and just because they attended school for software engineering, doesn’t mean they’re going to describe themselves accurately as a competent software engineer. Of course, this is also true in the United States, or any other developed country that you want to examine; any prospective candidate can exaggerate or inaccurately assess their own skills.
The primary focus of this article is to compare India and the Philippines. When it comes to general education, the Philippines is clearly superior. When it comes to software engineering education, both India and the Philippines have a steady supply of people with software development skills, but those skills may not be up to par with your expectations. Accordingly, you’ll need to judge each individual on their own merits and do your due diligence to make sure you’re hiring only the most competent people.
Differences in work culture can sometimes lead to disruptions in efficiency and performance, on both sides. If you don’t follow rules of etiquette or if you breach social contracts, your workers are going to become frustrated and less likely to do their best.
Similarly, if your employees don’t meet your expectations or fall in line with the work culture you want, it’s going to create more work for you, as well as more stress and frustration.
There’s no such thing as a culture that is inherently “better” then another, so our comparison cannot declare a victor here. But we do need to explore what makes India and the Philippines different in terms of work culture.
India’s work culture is noticeably different than what we have in the West. Though the caste system is starting to weaken, the general Indian population is used to working within a strict hierarchy. People are used to very strictly defined roles and very strictly defined places within the organization they work for. Lower-level employees are expected to follow instructions exactly, without questioning them or contributing any creative ideas of their own.
Accordingly, if you want to be successful when outsourcing software engineering to India, it’s important that you improve how you communicate and how you set expectations. As a boss, it’s important to be as direct and explicit as possible when setting expectations were delivering instructions. It’s also important to encourage your employees to volunteer their own creative ideas and reward them for creatively contributing, if that’s important for you. They may not do this on their own.
In Filipino culture, family always comes first period you can expect your workers to place the needs of their family above their career in importance; the flip side of this is that if you make your organization feel like family, your employees will be much more loyal and much more engaged in their work. In the Philippines, it’s very important to respect your elders, and it’s important to save face whenever possible, as embarrassment feels severe and oppressive. To compensate, you need to make sure your employees feel comfortable admitting mistakes and taking feedback and criticism from you.
It’s also worth noting that the Philippines was a United States territory for almost 50 years period it’s common to find traces of pop culture everywhere in the Philippines, so many of their cultural elements are borrowed directly from the West.
How does work culture influence individual lives? On the wellbeing index, India and the Philippines are somewhat similar. India ranks 37th, while the Philippines ranks 42nd overall.
What about cost of labor? Most companies looking to outsource their software engineering place this as the highest priority, since the entire motivation behind outsourcing is usually related to saving money.
According to Clutch, the average hourly cost of a developer in India ranges from $15 to $25. A developer in the Philippines will charge $20 to $35 per hour. Compare that to a developer in North America, who can typically charge $132 to $140 per hour for their work.
No matter what, you’re going to save significant money by outsourcing your software engineering. But when it comes to cost, India has a clear advantage – and that advantage is unlikely to go away anytime soon.
Both India and the Philippines have seen an explosion in the growth of internal infrastructure, especially when it’s related to tech jobs. India and the Philippines have both been highly sought-after targets for American businesses looking to outsource, and they’ve used this as motivation to secure better assets for their populations. In major cities throughout both countries, you can find expertly developed streets and commercial buildings. You’ll also find fiber internet available for almost everyone – which is indispensable to maintain a reliable flow of work.
Both India and the Philippines have promising futures ahead of them, with economic analysts predicting that both countries could easily outpace China’s growth in the next several years. Beyond that, it’s difficult to make specific predictions about how each country is going to develop as a potential option for software engineering outsourcing.
Over time, we can expect a few trends from both countries. Because of increasing skills, rising demand, and other factors, we can expect the cost of software development in each country to predictably rise. We can also expect infrastructure to develop even further, and thanks to all the outsourcing opportunities, we can expect workplace cultures to gradually come closer together. We can also hope that education will improve, but this is contingent on a number of external factors.
It doesn’t appear that either country has an edge over the other, unless you want to make the case that the higher education rate in the Philippines may lead to slightly quicker advancements within the country.
Outsourcing software development to India has some clear advantages over the Philippines, including:
However, it’s also reasonable to choose the Philippines over India, for at least the following reasons:
Overall, neither India nor the Philippines are objectively superior to the other country.
Each country has something to offer, making it a good fit for at least some companies seeking software engineering.
If you’re interested in outsourcing your software engineering needs and you’re still undecided on your exact approach, you’re in the right place.
DEV.co can help you evaluate your software engineering needs and find the perfect fit for your organization. Contact us for a free consultation today!
Ryan is the VP of Operations for DEV.co. He brings over a decade of experience in managing custom website and software development projects for clients small and large, managing internal and external teams on meeting and exceeding client expectations–delivering projects on-time and within budget requirements. Ryan is based in El Paso, Texas.