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How to Save with Outsourcing?

The term ‘outsourcing’ has become popular not long ago. Nowadays many executives suppose that IT-outsourcing leads to increasing in a company efficiency. Originally, mainly legal and consulting firms outsourced their services. Outsourcing boom started in early 90s when work without computers became impossible. Companies began to build up IT departments and hire appropriate professionals, as a result expenses increased significantly. That was the very moment when they’ve come up with an idea to hand some IT tasks over to special companies instead; and modern outsourcing as it is now was introduced.

According to Global Services Media the leading source code developers, i.e. the outsourcing market leaders are India, Eastern Europe, Russia. But why are the United States, the ancestor of outsourcing, absent even in a Top-10 of countries for outsourcing? The answer is as easy as pie: it’s too expensive.

As well as any product, IT services have their price. The most usual factors affecting this price are employees’ wages, office space lease, company’s social policy.

Wages

The average wage in 2015 for a software developer with 3-5 years of experience is about $100,000 (before taxes), what is more than an average salary in Europe and Asia. Developers in the US have the highest amount of money (the ones with Objective-C and Node.js skills), they get near $120,000. Least of all have PHP developers: in the US it’s about $77,000. Australia and New Zealand with $68,000 are the next countries in the list.

For you to compare, in Europe the specialist with the same skills earns about $55,000. The leader here is Germany with $65,000, then goes Switzerland with $53,000, and the 3rd is Lithuania with $44,000 annual. In Belarus, for example, this number is $15,000, what is 7 times lower! In general, in Europe salary doesn’t depend on the programming language, it ranges from $53 000 to $60000 in Western Europe, and from $23 000 to $26000 in Eastern Europe.

And, of course, we should mention Asia. Although China is leading in pace of commercial development (including IT sphere) it is an outsider in terms of wages. An average software developer earns up to $18,000 annually. In India, this number is $12,000, in Japan – near $40,000.

Altogether, you pay at least 2 times more when you hire a software developer from the US.

But let's not forget the ‘secondary’ staff. An HR, a cleaner, a secretary, a cook – their wages are also included into a project cost, and the bigger a company is the more employees they have.

Office space lease

Let’s compare prices in metropolises, will the US still lead?

New York

The office building is on Broadway, near Fifth Avenue, not far away from Madison Square Park. For a very nice office space in a business center (a stone's throw of the subway) you will pay $113/ft2 monthly.

London

Borough of Southwark, the city center, near the London Bridge. All equipped office space is about $15/ft2 monthly.

Sydney

210 George street, the building is not far away from the Museum of Contemporary Art. Huge office space in a business center with a reception, a kitchen, a conference room, a parking and so on will cost you around $8/ft2 monthly.

Minsk

For an office space in the most expensive borough (Nemiga) in the city center, leasing price is $2/ft2 monthly.

Impressive difference, isn’t it?

Social policy

You can’t find a developer who will agree to work without insurance, which costs $200-$500 for a person monthly. Moreover, the insurance for the whole family is preferable. You’ll also have to include common sick leaves, business trips and vacations. In addition, here are the most typical benefits for employees:

  • free drinks and sweets
  • free meals
  • holiday presents for Christmas, Thanksgiving, etc.
  • corporate activities for every employee plus his/her spouse
  • gyms membership
  • training
  • parking
  • and tons of other things.

In general, it’s a common thing in the US to have a great number of perks for employees, and it seems that it’s like a competition where the prize is the best specialist. And these expenses are also paid by clients.

By the way, the US is a leader in the number of unsuccessful projects with 16% failed and 48% controversial. Do you really want to risk with such a prices in addition?

The only point we can be happy with is that software costs are the same in the US, Europe and Asia.

Now you can easily think it over, alter your mind and hear hospitable ‘Welcome to Belarus!’