Offshore development centers: types, benefits, rates

During the last years, there has been a growing tendency for businesses to move their development efforts offshore. Companies follow this trend because it helps them get a cost-efficient model, access a global talent pool, and gain top-tier quality at a reasonable price. It is believed to be the future of the IT market.

Deloitte’s research expects global spending on outsourcing to reach $731 billion by the end of 2023. Simultaneously, the experts at Grandview Research predict that the market will reach $525 billion by 2030. These reports show a strong trend likely to be maintained for a long time.

ISG research demonstrates that 57% of all G2000 companies had at least one significant outsourcing contract. Also, 82% of European companies ranked between 501 and 1000 in the G2000 have adopted outsourcing. The situation in Britain is similar, as 70% of B2B companies outsource key operations.

Read on!

This article is your ultimate guide to understanding offshore development, the types of these centers, their benefits, and more. You’ll discover the best countries for offshoring business processes.


What is an offshore development center?

An offshore development center (ODC) is a dedicated office environment with all the equipment your engineering team could need. It often involves all the specialists you would see in a typical in-house office. There are software developers, project managers, administrative staff, and other professionals.

Types of offshore development centers

As different types of ODC models cater to different business needs, companies must choose the right options to achieve their goals. Each type offers unique advantages and can help you with certain challenges. Let’s see what they can offer your firm.

Contractor model

The contractor model involves hiring a third-party vendor to handle the development work. In this model, the vendor is responsible for providing the necessary resources and managing the project to deliver the desired outcome. The vendor may also be responsible for providing infrastructure, such as office space and equipment, and may charge a fixed or hourly rate for their services.

Pros of the model

  • Flexibility in scaling teams.
  • Cost-effectiveness is due to the absence of additional benefits or overhead costs associated with full-time employees.
  • Access to a diverse talent pool.
  • Faster time to market due to reducing the time it takes to start a project.

Cons of the model

  • Limited control and oversight over the contractors, as they may not be on-site or directly managed by the company.
  • Intellectual property concerns — the risk of intellectual property theft or leaks.
  • Cultural and language barriers.
  • Contractors may have higher turnover rates than full-time employees, as they may be more likely to move on to other projects or opportunities. 
  • Dependency on third-party agencies can cause risks, such as the agency’s reliability, the quality of the contractors they provide, and potential disputes over contracts and payments.

Companies with such a model

  • Toptal
  • Upwork
  • Freelancer
  • Crossover

Customer model

The customer model involves setting up an ODC that is owned and operated by the customer. To establish their team, customers can either hire local developers or relocate their existing staff to the ODC location. The customer retains full control over the project and has greater flexibility to adapt to changing requirements.

Pros of the model

  • Better collaboration due to working closely with the customer’s in-house team.
  • Improved quality due to a deeper understanding of the customer’s business processes, goals, and expectations.
  • Increased control over the offshore development team for better decision-making, faster issue resolution, and a more agile development process.
  • Enhanced knowledge sharing between the offshore team and the customer’s in-house team leads to better knowledge sharing.

Cons of the model

  • Management challenges for the customer’s in-house team to manage and collaborate with the offshore team.
  • Communication barriers are due to time zone differences, language, and cultural differences.
  • Dependency on the ODC can lead to difficulty in switching providers.
  • There are higher infrastructure, resources, and management costs than other ODC models. 
  • Intellectual property concerns.

Companies with such a model

Product engineering

The product engineering model is designed to manage the entire product creation process, from ideation to development and maintenance. It is often used by companies that require ongoing support for their software or hardware products. The ODC team is responsible for designing, developing, and testing the product, as well as providing ongoing support and maintenance. Additional services, such as quality assurance and product documentation, may also be included.

Pros of the model

  • The comprehensive approach covers the entire product lifecycle: product development, management, and continuous improvement.  
  • Innovation and competitiveness with an emphasis on innovation, research and development, and continuous improvement.
  • Agile and adaptive development processes allow rapid response to changing market conditions and client requirements. 
  • Enhanced collaboration between cross-functional teams, including product managers, architects, designers, developers, testers, and support specialists. 
  • Focus on quality and testing processes to ensure products meet the highest quality and performance standards.

Cons of the model

  • Higher complexity compared to other ODC models.
  • Resource-intensive due to the need for a more extensive and diverse team of professionals with a wide range of skills and expertise.
  • Longer development cycles due to the comprehensive approach to product development.
  • Higher costs than other ODC models, as it requires more resources, infrastructure, and investment in research and development.
  • Dealing with intellectual property concerns and its protection.

Companies with such a model

  • GlobalLogic
  • HCL Technologies
  • Cyient
  • Persistent Systems


The built-to-scale model is designed to be flexible and scalable, enabling companies to quickly adjust to changing project requirements. These ODCs are ideal for companies with fluctuating development needs or those looking to avoid the additional costs of establishing their own offshore team. The team typically includes both full-time and part-time staff, and the vendor is responsible for providing the necessary resources to meet the customer’s needs.

Pros of the model

  • Customized team based on the client’s unique requirements.
  • Scalability of a team according to the changing business needs.
  • Flexibility in terms of team structure, technology, and processes. 
  • Knowledge transfer and training with seamless integration with the client’s in-house team.
  • Cost-effectiveness due to the lower labor costs in the country where a built-to-scale ODC is located.

Cons of the model

  • The initial investment is required in terms of infrastructure, tools, technologies, and human resources.
  • Management overhead: managing the offshore team, including training, communication, and performance evaluation.
  • Longer setup time due to the customization and infrastructure requirements. 
  • Cultural and language barriers.
  • Risk of higher employee attrition rates, especially in competitive job markets.

Companies with such a model

  • EPAM Systems
  • GlobalLogic
  • Luxoft
  • SoftServe


The build-operate-transfer model combines the benefits of outsourcing with the control of an in-house team. In this model, a vendor sets up and operates an ODC for a set period, usually 3-5 years, before transferring ownership to the customer. This approach provides the customer with greater control over the development process while minimizing the costs and risks associated with setting up a new offshore team.

Pros of the model

  • Reduced initial investment as the service provider takes care of the infrastructure, recruitment, and other operational aspects during the build and operation phases.
  • Lower risks due to the service provider managing the operational risks and challenges during the build and operate phases.
  • Faster setup with the service provider responsible for building and operating the ODC.
  • Access to the expertise of the service provider’s experience.
  • Transfer of ownership of the ODC to the client organization after a predefined period or upon meeting specific milestones.
  • Knowledge transfer and training due to the close work of the service provider and the client organization.

Cons of the model

  • Limited control during the build and operation phases can occur as the service provider manages most operations.
  • The more extended transition period to full ownership because the client organization needs to ensure they have the knowledge, skills, and resources to manage the ODC independently.
  • Dependency on service providers can be a disadvantage if they do not meet expectations or fulfill their obligations.
  • Legal and contractual complexities related to the transfer of ownership can appear, which can be time-consuming and challenging to navigate.
  • Potential for misaligned interests when the service provider and the client organization are not fully aligned.

Companies with such a model

  • Accelerance
  • Trigent Software
  • TCS (Tata Consultancy Services)

Benefits of the offshore development model

Using offshore development center services in your business provides you with multiple advantages.

1. Profound talent pool

Limiting your search for an expert with relevant experience in your city can significantly decrease your chances of finding the right fit. It’s important to consider the bigger picture. With a global developer population estimated at 27.7 million in 2023, and over 213 million companies worldwide, the demand for software engineers is clearly high. 

Accessing the global talent pool increases your chances of finding the right people with the necessary skills, relevant backgrounds, and deep industry knowledge. The offshore development model can offer you this advantage and should be considered for your business needs.

2. Easy processes

Creating an in-house development team from the ground up requires a significant investment of time and money. Recruiting, onboarding, and training staff can be a tedious and costly process, which can take away from your core business focus.

Offshore development models can alleviate these concerns. With this approach, you can simply outline your project requirements and let the vendor handle the rest. They will provide you with a highly skilled team of dedicated software engineers who meet your specific needs. This type of partnership yields top-notch results, streamlined management, and cost-effective solutions.

3. Fast hiring

Hiring a tech employee in America takes an average of 66 days, 23 days longer than other types of hires. This process can be time-consuming and often ineffective, with some positions taking 100+ days to fill due to the high demand for top talent.

However, the ODC model offers access to a vast global talent pool, allowing you to hire seasoned developers with diverse experiences. Partnering with StartupSoft can provide you with a fully-functional development team in under four weeks due to our curated talent pool of pre-screened candidates. This saves you the trouble of having to conduct time-consuming interviews, tech screenings, and coding assessments. With an efficient recruitment process, you can quickly get your project off the ground with a high-quality team.

4. Reduced costs

Collaborating with an offshore software development team can offer you access to exceptional tech expertise at an affordable price. Our studies indicate that working with Eastern European teams can yield cost savings of up to 81.1%, leaving you with ample budget for other crucial business activities.

You could use the additional funds to expand your team or invest in state-of-the-art equipment to boost your overall productivity. Alternatively, you could channel these savings toward your marketing efforts, which can often be just as vital as the development process itself. And despite the reduced costs, you can still expect top-tier quality in your product.

5. Flexible team

Many tech-oriented companies and newborn startups have to adapt to changing project specifications, technologies, business models, and team capacities. This is extremely challenging when working in-house. However, a development center from abroad mitigates these issues.

ODCs have a wide range of experts who can work on an hourly or contract basis, allowing you to extend your team and add necessary expertise at any time. The costs are usually effective because you don’t pay for the specialists that are on the bench.

How much does offshore development cost?

According to data from the US Bureau of Labor Statistics, the average hourly pay for a software developer in 2021 was $52.41 per hour. In California, the median hourly pay is $50.71 and can increase significantly based on a developer's qualifications and experience. However, it's essential to note that these figures represent average rates across all levels of experience. While $52.41 per hour may only get you a junior or mid-level developer in the US, the same salary could potentially secure a senior-level developer in Eastern Europe. Let’s check out the costs of offshore development center services in these countries.


Ukraine has consistently ranked as the world’s top technology country and is currently placed 11th in terms of the quality of its developers. Despite challenging conditions, the country’s IT sector has demonstrated remarkable resilience, recording a 20% growth in 2020 and a 10% growth in 2022. Ukrainian IT professionals are known for their commitment and reliability, delivering high-quality work regardless of the circumstances.

With an average hourly rate of $25-59, hiring Ukrainian developers can be a cost-effective solution for companies seeking top talent. Additionally, the country’s favorable business approach and skilled workforce make it an attractive destination for outsourcing software development projects.

Glassdoor screenshot with developers salary in Ukraine.


Poland is a leading destination for business and investment, ranking third globally in 2020. With an IT market size of $8.1 billion, it represents one-third of the country’s domestic IT market. Poland’s workforce is renowned for its high level of education and technical proficiency, making it an ideal location for companies seeking skilled IT professionals.

Polish developers charge an average hourly rate of $25-40. In addition to their technical expertise, they possess excellent communication skills and a strong work ethic. Their central location in Europe also makes them an attractive option for companies looking to offshore IT projects.

Glassdoor screenshot with developers salary in Poland.


Germany is one of Europe’s leading technology hubs, with 112 AI startups in Berlin alone. With over 1 million employees in the IT industry, the market turnover in 2021 reached an impressive $178 billion, indicating a thriving technological industry in the country. German developers are also known for their technical proficiency and high level of education. 

German software engineers charge $35-60 per hour. They provide their clients with profound industry knowledge and an innovative mindset, as the country is ranked 8th in the Global Innovation Index.

Glassdoor screenshot with developers salary in Germany.


While we mentioned Ukraine, Poland, and Germany, there still are many other countries with powerful software development centers. These include many popular destinations with various rates:

  • India: $3,90 hourly in cities like Hyderabad or Kochi;
  • Vietnam: $12,20 hourly in cities like Hanoi or Ho Chi Minh;
  • China: $25 hourly in cities like Shenzhen or Beijing.

However, the situation may differ depending on the companies you contact. That’s why you should research the information in each individual case.

How to choose an offshore development company

Partnering with a trustworthy vendor is crucial for any business or startup because it determines your product’s success. We gathered six tips that will help you choose a reliable offshore development team.

Understand your business needs


First of all, you should prepare a detailed project outline. It should include your goals, performance metrics, competitors, and any other project-related information. This is a necessary step to help you systemize your expectations and explain the idea to a software development company.

Choose a location


Picking the right location is necessary because it will determine the price, communication standards, time zones, and cultural compatibility. If you look at Eastern Europe, then Ukraine or Poland would be your best choice. However, if you focus on Asian countries, India or Vietnam are the local hotspots.

Plan your budget


Your ODC’s location will most likely determine the required budget. It’s an important element as it defines which features will be implemented in your project. Also, with more funds, you can hire a team with greater technological skills. That’s why you must plan everything in detail.

Search for efficient communication


The first criterion of efficient communication is that your team is fluent in English or any other language you choose. For example, Ukrainian developers are quite proficient, as the country is ranked 35th in the global EF EPI. The team should also have clear communication channels and be available during working hours. The time zone difference mustn’t affect this aspect.

Check experience and reviews


Client testimonials and project examples are the best way to prove a vendor’s expertise. You can find these on many websites like Clutch or Goodfirms. The vendor should have relevant case studies that cover an industry or project that’s similar to your idea. However, note that not all data is shown online due to possible non-declaration agreements.

Start working!


Contact a vendor and book your first meeting. If this feels like a good match, let the team estimate your project and suggest a development plan. This will help you get a clear understanding of the next processes to bring your idea to life.

Partner with StartupSoft

StartupSoft is your reliable offshore development partner with a profound talent pool of engineers all around the globe. We collaborate with people who own their work and invest their experience for your success. You won’t buy a service. You’ll get your own team of dedicated professionals.

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What is an ODC?


An offshore development center is a team of software engineers located abroad. This could be a company’s separate branch or a third-party vendor. Also, it could be an extension of your current IT team or even your main development team.

How much do offshore teams charge?


The rates depend on many factors like location, expertise, and project requirements. Working with an offshore software development center in Ukraine costs $25-59 hourly, while Vietnamese developers request about $12 per hour. However, note that you’ll get a precise estimate only after discussing your project with the vendor.

What are the benefits of an offshore team?


Collaborating with an offshore team grants you access to a global talent pool. You can easily find any developer with relevant experience in your niche. Also, it’s a flexible and cost-effective approach. For instance, your startup won’t have to pay for engineers on the bench. You can increase or decrease the number of people on your team at any time.

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