Technological advancements in recent years have made the world better connected than ever before and changed the dynamics of some industries forever. One such industry is software engineering and IT that has seen a huge rise in the number of companies outstaffing to cut costs while maintaining quality.
How Are Software Development Rates Decided?
Under the normal rules of supply and demand, rates of pay in software engineering are determined using several factors:
· Technology stack: More complex stacks require more-skilled developer skills who are able to charge higher rates
· Experience & reputation: Individuals or businesses with the best reputations are able to charge more. Clients and businesses are prepared to pay more for a guarantee of quality.
· Team size: Larger teams require more people. As human resources are the biggest cost for any business, the larger the team, the more expensive it is to put together you pay for every specialist engaged in your project. The bigger scope of works and roles — the higher cost.
Disparity in Rates in 2021
Different rates of pay in different countries around the world is not new. In the past, these differences may have been down to the quality of the work provided. Now, the skills gap has been closed, but the economic gap remains.
Western economies have arguably performed too well and to support them, high levels of taxation are required. This has created a situation in which some of the wealthiest companies and highest-performing startups in the world exist in a paradox. They are happy to enjoy the benefits that come with being part of a developed economy and the disposable income that provides. But to thrive in that environment, they must constantly seek ways of reducing costs.
The cost of living in the USA and Western Europe, along with similar models in Israel and Australia, has forced software development costs to rise with the average developer in America now earning between $60-$120 per hour. Contrast that with $20-$40 per hour for equally talented software developers in Ukraine, other parts of Eastern Europe and Latin America, and the math is simple.
Is Outstaffing Just About Cutting Costs?
Absolutely not. While reducing costs is key to companies in the US, Western Europe and other emerging tech powerhouses, quality is even more important. The tech world continues to move at breakneck speed. Competition is fierce and getting noticed is tough. Only companies who offer good quality software can hope to make it. And even the most established businesses must maintain those same high standards to stay at the top of their game. This is not an industry where second best is tolerated.
Around the world, smart governments have seen the potential for outstaffing by some of the wealthier countries and have invested in enhancing their IT reputation on the world stage. More so than many other industries, software solutions can be created and implemented remotely thanks to interconnectivity.
Outstaffing also frees you from the time and cost implications of recruitment. Outstaffing differs from outsourcing in that distributed engineers are dedicated to your project only and they are essentially part of your engineering team. With that you retain full control of project management. Essentially, you can have top global talent at a fraction of what you would normally expect to pay for recruitment, training and employment costs.
Why the Rise in Demand for Outstaffing?
The tech industry is fertile ground for startups. Each year, around 1.35 million startups are established worldwide. This makes for tense competition and provides little time to nurture and grow a business. Subsequently, entrepreneurs must decide between hiring local, newly qualified or low-skilled individuals at US or UK rates, or paying roughly the same amount for highly qualified remote teams from other parts of the world.
Apart from the obvious benefits of better quality staff for the same financial outlay, startups must establish themselves quickly to avoid falling behind the game by being stuck with an outdated product when they eventually get it to market.
Outstaffing to Ukraine
Ukraine was a pioneer in outsourcing back in the 1990s. The country is ideally situated in the heart of Europe and has benefitted from a concerted state effort to become a major player on the global tech scene.
IT accounts for 16% of all Ukraine’s exports, making it a success story for the government. It’s an industry that is growing 26% per year and one that is sure to enjoy continued success
Around 85% of Ukrainian tech professionals have at least an intermediate level of English so communication is not an issue.
Benefits of Outstaffing
· Cost can be reduced by up to a third
· Access to the best engineering talent
· No overhead costs
· Communication is slick with the global move to distributed teams
· Remote teams dedicated to your company (from engineering to design)
So, Who Are the Winners?
Everyone's a winner when it comes to outstaffing:
· Startups access the best talent at an affordable price
· Outstaffing companies gain more business
· Emerging economies are strengthened
About the company
Agile Fuel is an established and respected outstaffing agency based in Ukraine. We supply dedicated teams of engineers who work out of offices in Ukraine but form an integral part of your team. The agency is stack-agnostic and is completely focused on identifying the right people for each clients’ needs. By taking care of recruiting and HR, Agile Fuel ensures clients are able to focus their time and effort on their core business.
Find out how outstaffing can help you scale your business quickly and efficiently. Get in touch today.