08/09/2021 | Last updated: 17/05/2023
6 Top Outsourcing Countries in 2021
Choosing the right outsourcing company is a complex process that has a significant impact on your project’s chances of success. To achieve your business goals, you need to keep some crucial aspects of outsourcing in mind – choose the right outsourcing model, select the contract that best ensures your interests, and prepare to start the work.
But before all this, there’s an even more fundamental decision that you have to make that will influence your subsequent projects for months (and perhaps years or decades) – selecting the right country to outsource to. This is exactly the topic we want to cover in detail in this article.
The world of tech is changing year by year at a very rapid rate, and to keep up with that, software developers need to constantly learn and improve their skills. And in economies where they fail to do so, conditions for outsourcing rapidly deteriorate. This is why the top outsourcing destinations change from year to year, and businesses have to keep up with these changes.
Furthermore, let’s make one thing explicitly clear, there’s no one “best” country for software outsourcing. Rather, the IT sector in various countries adapts to local conditions and specializes in certain types of software development.
So, in this article, instead of choosing “the one” country that is the best in our opinion, we’ll focus on various countries that shine in particular types of software development. We hope that once it is time for you to finally decide which country you outsource to, you’ll be ready to make the right, evidence-based decision instead of painting with broad brushes.
Lastly, before we start listing the country, it is important to make it clear that we are writing about the top outsourcing destinations from the perspective of United States- and Western Europe-based companies since these are the regions that tend to outsource the most. We’ve also chosen 2 American, 2 Asian, and 2 European outsourcing destinations to make sure that regardless of your timezone and requirements, at least one of these countries would fulfill them.
When you think of outsourcing software development, this is probably the first country that comes to your mind. That’s not a coincidence since most statistics confirm that India is the top outsourcing destination. Being extremely cheap in comparison to more developed parts of the world, full of software developers (India is the country with the second biggest population in the world), it’s a great place to find relatively inexpensive labor.
This makes it a great choice if you’re looking for outsourcing simple tasks and the price of the service plays the most important role in your decision. That is why it’s a common and well-proven strategy to choose India if you want your external partner to take care of customer support for your service or simple but long-lasting maintenance of your existing projects.
However, if the job you’re about to delegate is complex and requires highly skilled developers and close cooperation with seamless communication, looking beyond India might be a smart decision. India is often connected with cultural misunderstandings, lack of legal protections, and communication issues.
Although the Philippines is far smaller than India both in population and territorial size, these two are often compared when the focus is Asian outsourcing locations. This is due to the fact that the price ranges, the quality of the agencies, and the talent you have access to in both countries are relatively similar.
What’s a definite advantage of this outsourcing destination, in comparison with other Asian countries, is that the Philippines was a US colony for more than 40 years. During this period, Filipinos embraced Western culture and the English language. This makes collaboration with outsourcing companies from the Philippines easier and more seamless. You’ll be dealing with businesses that operate with similar mindsets and structures, which minimizes miscommunication and increases the chances of success.
However, as is the case with India, the low labor costs that the Philippines offers come with drawbacks. Apart from a challenging time-zone difference (15 hours between the Philippines and Silicon Valley and 7 when the Asian country is compared to London), the Philippines regularly experiences problems due to its unique geographical location and environmental conditions.
Having an average of 20 storms in a year, Filipinos need to deal with power interruptions and inundations. Although this isn’t often an issue, it might present challenges for your company. That’s why if you choose the Philippines, you should always consider how the company handles irregular weather patterns, and if it is ready to operate consistently and remotely, so the continuity of your projects isn’t hampered.
A popular outsourcing location for United States-based companies is Mexico. When compared with the rest of the outsourcing countries on our list, Mexico is the closest geographically to the United States, and companies can easily use nearshoring outsourcing models to deal with development agencies in this country.
For European-based companies, the time zone differences are quite substantial, and you don’t get the benefit of geographic proximity, but if you’re comparing it to the Asian-based locations on our list, Mexico isn’t in a less suitable time zone nor is it further away. So if you want to start offshoring to lower costs, Mexico might be a good alternative to India or the Philippines.
Mexican companies have a long history of cooperating with US-based enterprises, and these companies are prepared to serve US-based companies and handle delegated tasks effectively and efficiently. Additionally, Mexico has a sizable population with a decent education system. There are reportedly 120000 new tech-related graduates yearly providing a wide talent pool to choose from.
And although English is not the main language used in the country, the population’s proficiency level is more than enough for effective communication, and many software development agencies in the country fully rely on English in their day-to-day operations. Language barriers are definitely an inconvenience, but the benefits more than make up for it.
Lastly, there are some crucial things to keep in mind before you decide to work with a Mexican company.
You should be aware of cultural differences that might affect your project. Mexican culture is really “laid back” so you should always keep track of the progress of your project and make sure that your project is meeting the deadlines.
What’s more, Mexicans are similar to Indian employees in terms of deference – If you cooperate with a company based in these countries, you should always make sure to keep your instructions and expectations completely clear, and if you want some input from the outsourcing teams, you have to ask for it rather than wait for them to come up with something.
Having these rules in the back of your mind would allow you to move forward smoothly and create more value when outsourcing to a Mexican-based company.
Time-zone difference between Silicon Valley/London and listed outsourcing destinations:
Staying with countries within close proximity to the US, we can’t omit Argentina in the list of the top countries for outsourcing in 2021. The overlap in time zones for North American and European companies ensures the possibility of communication within regular working hours, which helps make the outsourcing experience smoother and more reliable.
Argentina is one of the most educated countries with the highest English language proficiency level in Latin America (the only country with a higher score in our list is Poland) making Argentina one of the best countries for outsourcing software development well suited for cooperation with companies abroad.
Thanks to the high-quality education system in the country, it is easy to find development agencies with the skilled experts you need. This makes software outsourcing to this destination a relatively safe bet.
For start-ups and large tech companies, an important factor that you might take into consideration is the 4-hour flight from Silicon Valley making Argentina accessible. The country is already one of the best outsourcing locations for regular onsite meetings and project evaluations in Latin America.
Combining a big talent pool of well-trained and experienced developers with prices that are substantially lower than those in the UK and the US, Ukraine provides a good price to quality ratio.
Choosing the European location also has the added benefit of having a similar time zone especially for companies based in Western Europe; but, even American companies likely have overlapping working hours with Ukrainian-based companies, which isn’t the case for Indian and Filipino companies.
Are you wondering what’s the catch with Ukraine? Good, because no outsourcing country is without its imperfections. Ukraine is not part of the European Union and does not have the same regulatory framework and IP protection standards EU members have. Not to mention, business and trade barriers are not as low as with the EU, which might mean you’ll need to deal with extra paperwork and bureaucracy if you want to rely on Ukraine as one of the main outsourcing countries for your projects.
Top-notch software developers (3rd place worldwide in HackerRank and SkillValue reports), innovative market (Poland is one of the first countries in Europe to implement fintech innovations), almost 80k IT-related graduates every year, and high English proficiency are only a few of the benefits Poland brings to the table.
Although the labor cost is within the higher end of the countries we’ve included on this list (outsourcing software development companies have a similar price range to ones in Argentina), the costs are still substantially lower when compared with Germany, the United Kingdom, and the US.
The relatively lower costs coupled with the relatively high skill set and experience of Polish agencies make Poland one of the best countries for outsourcing complex and challenging development projects.
And we can’t possibly neglect to mention the role the EU plays in all this. There are many safety regulations and IP protection laws imposed uniformly across the EU that would keep your project and data safe and your rights protected if you decide to outsource to Poland. These laws and regulations have consistently made the EU a top investment destination for three decades, and they equally apply to Poland and outsourcing.
What is also essential is that constant trade and cultural exchange with Western Europe and the US has instilled a Western mindset and culture in the entire private sector in Poland. This makes the structure and operations of Polish development agencies almost identical to countries that tend to outsource (like the US and the UK), making cooperation with Polish specialists simply flawless.
We think Poland doesn’t get enough justice as one of the top countries to outsource software development projects to, which is why we wrote a whole article about the reasons that make Poland among the best outsourcing countries. That’s where you should be heading if you want to learn more.
Read more: Nearshore outsourcing to Poland
Invest time in making data-driven decision
When thinking about countries to outsource to, you should realize there’s no one-size-fits-all solution that can satisfy your every requirement. There are always trade-offs when making such an influential decision.
Before you start considering particular destinations for outsourcing, establish your needs and decide which factors play the most essential role in the success of your outsourcing efforts. By knowing these, you will be able to select the outsourcing destination that is the best fit and would provide the service you need exactly. Making the wrong choice will result in your projects experiencing unnecessary complications like miscommunication, cost overruns, zero time zone overlaps, and more depending on the country you choose.
Lastly, it is important to stress that the world of outsourcing and software development is very dynamic. Will these countries maintain their position for years to come? No one can be certain, but as things stand now, surely at least one of these outsourcing destinations will be able to provide you with the outsourcing services you need within the quality and price range you’re looking for.
If what you’re looking for is high quality, a proactive approach, a long-lasting partnership, and great value for money – we are positive that our company will be able to provide you with what you need (click here to contact us). If your focus is on other factors, then we suggest looking in countries that would suit your needs better.