1/21/2022

Pros and Cons of Outsourcing Software Development to India

When it comes to software development, your business has plenty of options.

You can hire a full-time employee.

You can find a freelance developer and work exclusively with that individual.

You can try onshore development.

Then there’s nearshore development.

While the options are seemingly limitless, there’s one approach that many companies are consistently drawn to over and over again.

We’re talking about overseas outsourcing.

But before you go this route, it’s important that you know what you’re getting yourself into - the good, the bad, and the ugly. And in this article, we’re going to explore the pros and cons of the most popular software development outsourcing destination in the world.

The Top Countries for Outsourcing Software Development

Source: CodeinWP

When vetting possible options for outsourced software development, it’s helpful to create a checklist of wants and needs. And if you’re like most businesses, there are a few specific things you absolutely need in order for the relationship to go well.

First off, you need the right development skills. If our outsourced partner can’t meet the scope and demands of your project, nothing else matters. You’ll fail to get the product you need, which prevents your business from accomplishing its goals.

Secondly, you need low costs (comparatively speaking). The entire point of outsourcing is to save money, so you want to be sure that the savings justify the investment.

Thirdly, there has to be good communication. This requires an advanced grasp of the English language, as well as a high degree of responsiveness. If either of these pieces is missing, it makes the project much more difficult.

In light of these three factors, there are a few countries that stand above the rest as the top destinations for outsourcing software development. Take a look:

Ukraine. Few Americans realize that Ukraine has such a thriving tech industry. Not only has the Ukranian government spent a lot of time and money supporting coders and developers, but it’s home to the largest number of C++ programmers in the world. And with four in five members of the IT community speaking English, the communication barriers are lower than in most foreign countries. (For perspective, an annual salary for a full-time Ukranian developer runs between $11,936 and $46,787.)

Poland. While English isn’t as rampant in Poland as it is in other countries on this list, the majority of software developers know enough to make outsourcing an option. And in addition to having top-notch programmers, the time zone is another benefit. For American businesses on the East Coast, there’s enough overlap in work hours to conduct live meetings in the morning.

The Philippines. Did you know that 92 percent of Filipinos speak English? This makes it one of the largest English speaking populations in the entire world. On top of that, they have a high emphasis on STEM education in the school system, which has led to a boom in IT professionals and skilled developers. Couple that with the fact that the average annual salary for a software developer is $10,563 and you can see just how cost-effective it might be to work with a Filipino software developer.

China. As home to many of the fastest growing IT companies in the world, China has plenty of talent. However, you do have to work around lax enforcement of intellectual property, which makes many American companies uneasy. Plus, the pay is a bit higher than other countries on this list.

India. Finally, you have India. It’s the second largest English speaking country in the world, they have a robust STEM program, and the pay is incredibly favorable. (The average annual salary for a software developer is less than that of a minimum wage job in the United States.)

As you can tell from the title of this article, it’s this last country that we want to focus on today.

India is arguably the most popular country for outsourced software development - at least for American companies - thus it makes sense that we spend more time analyzing whether or not it’s a good fit.

As with any business decision, there are plenty of pros and cons. But by understanding them on the front end, you can make wise decisions that ultimately benefit your business over the long term.

Read on to discover the pros and cons of working with software developers in India - as well as some suggestions on how to proceed for your business.

The Pros of Outsourcing Software Development to India

We’ll begin with the positives - the good, if you will. (And there’s plenty of it.)

Here are some of the pros of outsourcing your next software development project to India:

1. Deep Talent Pool

The population of India is 1.3 billion and climbing - soon to surpass China as the largest country in the world. And if you’re tracking at home, that’s roughly four-times the population of the United States.

While raw population numbers don’t necessarily equate to deep IT talent pools, this is one instance where they do.

With a heavy emphasis on STEM education and massive investments in coding schools, more than 500,000 skilled developers enter the Indian workforce every single year.

Some go to work for India-based IT companies, while many work for organizations that act as outsourced partners for American companies.

This deep talent pool is part of the reason why India remains such a cost-effective option (more on that in the next point).

The overabundance of developers mean they have to maintain reasonable prices in order to compete for jobs. This is good news for American companies.

2. Extremely Cost-Effective

Okay, let’s talk dollars and cents.

And one of the best ways to do this is by comparing the average software developer salary by country. (You obviously aren’t paying a full salary for an outsourced project, but it gives you an easy comparison.)

United States: $76,800

Germany: $54,700

UK: $46,600

Poland: $25,000

Bulgaria: $17,200

Colombia: $14,000

India: $6,700

If you’re tracking at home, the average pay for a software developer in India is just 9 percent of what it costs to hire an American developer.

The hourly rate for a developer in India starts around $11 or $12 per hour. (You’ll pay more for more experienced and skilled developers, but this gets you in the door.)

If a software development project would cost you $10,000 in the United States, you’re looking at more like $1,000 - $1,500 when outsourcing to India.

That’s a significant difference - particularly for smaller companies with limited budgets. (And it’s one of the reasons why India is such a popular outsourcing option.)

3. Plenty of English Speakers

As previously mentioned, India is the second-largest English speaking country in the world - second only to the United States (and ahead of the UK and Philippines). And there’s a disproportionate number of English speakers in skilled tech positions - such as software development.

In most Indian schools, English is taught from kindergarten all the way through university. This gives graduates a fairly comprehensive and intuitive understanding of the English language.

Most software developers are fluent in spoken and written English - something that comes in handy with email communication.

4. Established Processes

Many countries are just now entering the fray (when it comes to outsourced software development). But India has been at it for decades. This level of experience dealing with the US has produced strong and healthy relationships with American companies.

When you work with an outsourced software developer in India - particularly if it’s an agency - you get simple and repeatable processes.

You don’t have to spend much time setting expectations.

They understand what you need and have scalable resources to help you achieve your goals.

The Cons of Outsourcing Software Development to India

Now that we’ve given you the bright side of working with Indian developers in an outsourced capacity, let’s flip over the coin and examine the other side.

Here are some of the drawbacks:

1. Language Barrier

The language barrier is one of the biggest points of friction.

Woah...wait...hold up.

Didn’t we just say that the large number of English speaking Indian software developers is one of the primary reasons why you should outsource to India?

Well, yes...but it’s not always perfect.

While there are millions of English speaking IT developers in the country, this doesn’t mean they’re all perfectly fluent.

Writing skills typically outpace speaking skills. So if you want to have phone calls or Zoom meetings, you might have some unforeseen challenges.

Even with command of the English language, the tone, pronunciation, and intonation is usually quite different than the way Americans speak.

If you aren’t prepared for this, it can lead to some confusion and/or misunderstanding.

2. Time Zone

Time is perhaps the biggest drawback.

Indian is 9 hours and 30 minutes ahead of the East Coast and 12 hours and 30 minutes ahead of the West Coast.

This creates significant challenges when you need to work directly with your developer.

While many outsourced developers will accommodate American working hours, it’s still not ideal.

If nothing else, the difference in time zones leads to major delays in communication.

You send an email in the afternoon, but it’s the middle of the night in India. And by the time your developer gets the message and responds, you’re already asleep.

This can lead to six, eight, or even 12 hour gaps in communication. (Which is anything but ideal when you’re trying to fast track a project.)

3. Quality Assurance

The number of companies that offer outsourcing in India is dizzying. There literally thousands - and most promise some sort of software development service.

The problem is that it isn't always easy to vet these companies or evaluate their skillsets. Most talk a good talk, but only certain companies follow through with quality work.

This creates an issue with trust and quality assurance.

Be very careful when outsourcing to India. There are plenty of talented developers, but you have to do your due diligence.

Any company that seems too eager to get your business is probably eager for a reason. The best software developers have plenty of work and won’t feel the need to be over the top with their “wooing.”

4. Piracy and IP Issues

While not exactly rampant, it’s certainly not uncommon - and the issue goes both ways.

IP and copyright laws are much laxer in India. There’s also not much accountability or consequences for developers who break the laws.

When working with an Indian software developer, it’s possible that you’re getting code that’s copied from another project. It’s also possible that your project could be resold to other future clients.

Again, this isn’t true with every developer - many are honest. But it is something that you have to be aware of. Another element to factor into the equation.

The Best Alternative: Onshore Software Development

If you’re going to outsource your next software development project, India is an excellent choice.

When compared to other locations, like Ukraine, Poland, China, and The Philippines, it offers the best mix of technical skills, low costs, and good communication.

But it’s not perfect.

And if you’re looking to get the job done right the first time, you might be better off going with outsourcing to an onshore software developer.

Also known as “local outsourcing,” onshore software development involves hiring a developer in the United States. The benefits include:

Cultural consistency. Cultural fit is very important when it comes to forgoing a cohesive team and producing high quality end products. We’re not using the phrase “cultural fit” to mean everybody needs to look and sound the same. Instead, we’re saying every country has its own business culture. And hiring an onshore software developer ensures you get someone who understands the American business culture right off the bat - no training required.

Consistent time zone. With an onshore developer, changes in time zones aren’t an issue. Whether you’re a West Coast company working with an East Coast developer, or vice versa, everyone is pretty much on the same schedule (give or take a couple of hours).

Accessibility. Need to call your developer? Want to have him come into your office? Need to schedule a Zoom meeting first thing in the morning so that the project stays on track? Onshore developers are always accessible.

There’s no perfect option, but if quality and consistency are the primary concerns, then onshore software development is your best possible path forward.

Partner With Dev.co

Outsourcing software development to India is always an option - and a serviceable one at that.

But if you’re looking for the best in quality, reliability, and accessibility, onshore development is a much better option.

At Dev.co, we have an experienced and talented team of developers who will work with your business to develop cutting edge software development projects without all the friction and back-and-forth.

Want more information? Please contact us today and we’ll be happy to share more about our services and process!

Ryan Nead

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. Connect with Ryan on Linkedin.