Cost of Outsourcing App Development: Onshore vs. Offshore

Onshore outsourcing refers to the practice of looking for IT services outside a company but within the same country. The advantage of this practice is a shared culture and language which ensure better understanding between you and the service provider. It also provides better conditions for communication due to the same time zone. And when it comes to the investment connected to the app development, it is important to translate your ideas to the developers and ensure that they understand your requirements and needs.

Offshore outsourcing implies collaboration with an agency from another country and sometimes a continent. As for IT-related work, outsourcing usually conducted in the countries with lower labour costs and tax saving and with a stable political situation. Today this practice is quite common thanks to high-speed Internet connections and the processes of globalisation. But a search of a lower cost of the app development isn’t the only reason for outsourcing. Some entrepreneurs take their projects abroad to compete with businesses in other countries.

The cost of outsourcing app development varies from different factors starting with the app functionality, design requirements, the size of the app design team, and up to the place where the developers are located. Mobile design may account for from 10% up to 30% of an allocated project budget. Design skills are critical to the overall success of the application, and if you are going to entrust the design to the established markets in Europe, get ready to be charged about £100-200 per hour. Comparing different development studios rates across the world, you can see the tendency that European countries are more expensive than Asian. But at the same time, the size of the company doesn’t always equate its rates. Smaller firms don’t have the overheads of larger IT agencies and they usually present a more agile and innovative development model, that is why they feel that can charge more. When global vendor with thousands of employees charges £40 per hour for the development of the application, smaller firms’ prices may reach £70. Location of the developer’s office also matters. Developers who work in cities where the cost of living is high, for instance in London, will ask three times more for the development.

The cost of the development in highly-respected software companies in the UK can be too high for startup projects. With the average cost of £30,000- £40,000 to build the first version of the product, an MVP, some reputable companies may charge up to £100,000 for the minimum viable product creation. Depending on the integrated functionality, the number of platforms you want to embrace, and the design requirements, the price varies from £20,000 to as much as £400,000. But paying this money, you get full access to the app creation process and quality guarantees.

The amount of money to be spent on the app development depends on the type of software is needed to be created. But such factor as human capital also influences the cost a lot. If you are hiring Indian developers, the charge per hour may be as low as £20, due to the lower labour cost. With such rates, a simple app may cost from £5,000 to £8,000, while the cost for a complex solution may rise to a £40,000. Of course, making regular updates and handling user problems will increase the development cost. But it is only something you can see on the surface. The pitfalls of the offshore outsourcing include cultural gap and language barrier which causes misunderstanding of the basic concept of the application requirements. In the end, outsourcing oversea you risk to get a poor quality or completely not working program which requires code audit, debugging, and even redevelopment. Keep in mind that you get what you pay for, and estimate the risks you run approaching offshore IT service provider.