As we continue to transform digitally, most firms recognize the need for custom software solutions. If you develop an in-house application or create bespoke applications for customers, custom solutions abound. To keep competitive companies need automation and digitization to maximize productivity.
How we organize all this digitization and work needs thoughtful planning and consideration. Should we choose to hire in-house developers? Should we choose a freelancer? Or would it be best to hire a well-known consultancy? Will our project work best with a local company or outsourcing? Onshore or offshore? We have many choices when it comes to software development. If we choose to outsource offshore, which are the best regions to find top talent? What hourly rates do developers earn in different places?
How much does a software developer earn per hour?
Several factors play into the amount a software developer earns. Let’s take a closer look at which factors influence developer salaries. The major factors affecting the salary rates for developers and engineers fall into seven major categories:
Outsourcing company size
What determines what engineers earn as an hourly rate?
Region influences salary more than any other factor. Taxes rates, cost of living, and government benefit programs affect the rates software developers charge. Software developers in the USA and Canada earn more than software developers in other countries.
To state the obvious, software engineers with more experience tend to earn more than those with less experience. Seasoned and well-educated developers will earn much more than junior programmers. Usually, more experienced engineers will provide value for complex projects.
Depending on the complexity of the project, you may need more investment in software and hardware. These tools will need engineers who know how to use them. Larger, more complex projects require more specialists than smaller projects. If you are creating a new web application, you will need both front-end and back-end experts to make it come together.
Any project with a short timeline will cost more. You will have to hire a larger team working longer hours in order to meet deadlines. Rush jobs also have greater room for error and bugs. It’s best to plan large software development projects with time to spare.
As mentioned above, complex projects tend to require a larger technology stack. Projects with more function and features will need larger and more experienced teams to execute.
Outsourcing company size
If you hire a well-known consultancy, you will get very predictable results. Those results, though, usually come with a much higher price tag. Mid-sized and smaller firms will offer better rates as well as a more personal and flexible approach.
We don’t need engineers with just technical prowess. We need our outsourcing or in-house developers to communicate with ease and diplomacy. The best developers know how to express themselves and explain complex solutions to stakeholders.
Let’s take a closer look at each region and examine how much engineers earn in each.
Many of the leading tech firms call North America, and the United States in particular, home. Many of our most popular and trusted technologies come from Silicon Valley. All this premium talent comes at a premium price. But we need to consider more of North America than just Silicon Valley. Wages vary greatly by region. Engineers earn much less in Florida than they do in California, reflecting the differences in the cost of living. That said, finding the right talent in less-tech-savvy locations can prove difficult at times. An average junior developer in the USA earns anywhere from $50-70 per hour, based on location. San Francisco- and New York-based developers would earn toward the high end. Engineers based in Alabama or Florida would earn toward the lower end.
Canada holds its own in the tech world. Toronto, Ottawa and Montreal all have thriving tech sectors. Engineers in Canada earn a bit less than their counterparts in the USA. Junior developers in Canada earn anywhere from $30-40 per hour.
South America has many advantages as a place to source engineers. Working in similar time zones makes planning meetings very easy. South Americans also speak a variety of languages, including Spanish and Portuguese. Software engineers in South America do not earn as much as their North American counterparts. Junior developers in South America typically take home between $4-10 per hour. Economic and political stability create the need for concern in some countries.
Argentina has faced issues with economic stability recently. Argentina also has a history of political instability. Thankfully Argentina has had two decades of relative political stability. According to Statista, Argentina has steady growth in the tech sector, with 150,000 Argentine Pesos in revenue in 2020. In Argentina, a junior developer earns about $3 per hour. Senior developers earn $8-9 per hour.
Brazil has not had the best response to many recent crises, from COVID response to global warming. Wages remain low, with junior developers earnings starting around $5 per hour.
Western Europe easily competes with North America when it comes to talent and tech know-how. Software engineers earn relatively high wages. Salaries vary quite a lot across different countries. The average junior developer earns between $20-40 per hour. It’s important to take a closer look at countries within Western Europe to see the differences in salaries and skills.
Germany ranks high for many as a place to do business. German developers rank as the eighth happiest in the world. German developers earn wages based not only on their location and skill sets, but especially on their experience. German firms place high value on knowledge. In Berlin, for instance, seasoned developers earn 70,000 EUR per year on average. German entry-level developers earn $25-35 per hour.
Central and Eastern Europe
IT business continues to boom in central and eastern Europe. Lower cost of living, technical prowess and language skills draw many firms to outsource here. Salaries vary greatly between different countries. Junior developers earn between $17-30 per hour in general. Each country in central and eastern Europe has strengths in the IT and tech sectors.
The Czech Republic
The Czech Republic hosts many IT hubs for international firms. Amazon, Google, Oracle, Microsoft, MetLife, Novartis, and RedHat all have large operations in the Czech Republic. The population of the Czech Republic has a high level of education and expertise. Czech workers provide an excellent value for their expertise. Wages in the Czech republic’s IT sector are lower than in neighboring Germany or Austria. According to softermii, Junior developers in the Czech Republic make about $19-27 per hour. The Czech Republic is a small country at the center of Europe. The population has always needed to know more than one language because of this. Language proficiency and multicultural openness have great value to Czech people.
Poland has experienced steady growth in the IT sector, even during the pandemic. According to Statista, Poland’s year-on-year growth in the IT sector remains strong. Many foreign firms have invested in the Polish IT market. Poland’s IT talent pool contains many experts. According to PFR Group, more than 70,000 Poles study computer science every year. Poland ranks high in English language proficiency as well.
Russia’s IT sector has many strengths. However, higher cost of living in the larger cities increases the wages earned by engineers. Russia’s IT talent pool has depth and breadth. 70% of IT outsourcing happens in key larger cities. Russia ranks low for English-language proficiency. This might make communication and soft skills a bit of a challenge when working with Russian developers.
Ukraine has a solid reputation as a great place to outsource and offshore IT operations. Many large international firms base IT operations in Ukraine. Ukraine also has a large startup culture. Ukrainian startup Grammarly came out of that growth. The tech and soft skills of Ukrainian software engineers remain very good. Ukrainian developers have higher rates of English-language proficiency than their Russian counterparts. Ukrainian junior developers earn between $14-21 per hour.
Asia still provides great value for firms looking for software engineers. Developers in the region typically earn between $18-24 per hour. Income disparities between different nations and regions make Asia a difficult area to generalize. Language and technical skills also vary greatly between countries. Large differences exist. Japan has a very different socio-economic structure than Afghanistan.
India has long been a dominant player in the global IT outsourcing market. India’s IT industry now has a value of $70 billion and employs almost 3 million workers. Technical and language skill abound amongst the engineers of India. Time zone differences may pose a challenge for firms based in the USA, especially the west coast. Hourly rates for junior developers in India start at about $4 per hour, depending on the region. Language skills vary by region as well.
The Philippines has seen very strong growth in the technology sector in the last few years. Junior developers hourly rates start at about $3 in Manila. The Philippines counts English as one of its official languages. English proficiency among developers poses no problems. The IT industry in the Philippines posted strong growth in 2020, with revenues of US$26.7 billion.
Australia and New Zealand
Both Australia and New Zealand have diverse, if smaller, IT sectors. Both are well-known for their varied cultural and natural resources. But both countries offer quite impressive IT and technology resources.
Both countries have technology centers where most experts live and work.
Australia’s technology industry concentrates in Sydney, Melbourne and Perth. Junior Developers in Australia earn $35-50 per hour. In Australia experience really pays off, senior developers earn around $55 per hour. Because of the influence of the mining industries around Perth, wages for developers trend higher.
New Zealand has quite a lot of technology workers, but they tend to earn less than their Australian counterparts. Junior developers in New Zealand typically earn about $27 per hour. More season engineers earn about $40 per hour. The cost of living in New Zealand influences these numbers.
Should you choose a freelancer or software development team?
Choosing a freelancer means you contract directly with an independent worker. Likely your freelancer will also work for several other clients as well as for you.
Benefits of hiring a freelancer
Lower hourly rate
Typically freelancers have lower overhead than a software development firm.
Deep knowledge of specific technology stacks
Freelancers usually find a niche and deep-dive into the skills needed for proficiency.
Freelancers often have greater incentive to work more hours than salaried workers in larger firms.
Software development team
Choosing a software development firm gives you a full-stack full-service experience. If you choose a well-known consultancy you will often pay more. Boutique firms in software development often provide great value and technology know-how.
Benefits of hiring a software development firm
Software development teams can handle larger, more complex projects
Even boutique firms will have developers, testers, scrum masters and UI designers in their office. (Virtual or brick and mortar).
Diversity of know-how
When you choose a software development firm to work with, they will have many area experts.
Hip to the latest outsourcing trends
Software development teams must remain competitive. They keep close eyes on the latest trends and technologies.
Prefer outsourcing a development team instead of hiring a freelancer? Learn more in our detailed guide on how to estimate the development cost. In case you want to develop a mobile app and you are curious how much will it cost, read our “App development cost in 2022” article.
The smartest move when searching for a software development team is to find the right mix of talents. You should look for a mix of soft skills, technology knowledge and experience in your field. It often makes sense to choose a mid-sized or smaller firm that will value your business.