Let’s face it! To race against the competitive market, we’d instead outsource non-core activities to optimize the overall operational cost rather than onboard a brand new department with somewhat the same or less performance results. We have tapped into the outsourcing topic quite a few times; if you have not come across them yet, check them out here. The outsourcing world has allowed tech businesses to get access to specialized skills, reduce costs, and focus on their core competencies.

The question is, where should we go in this upcoming 2025? There are endless options for outsourcing partners, and each has its own niche and unique advantage. In today’s blog, we’ll explore all these destinations to evaluate their strengths versus the cost dynamic. Instead of going into the individual names of the tech outsourcing vendors specifically, which make quite a long list, we’ll go through the regions that help you narrow down your choices and identify what you are looking for in an outsourcing partner.

Asia-Pacific

It’s no surprise that the Asia-Pacific region is well-known in the tech organizations world for its affordability, scalability, and expertise. Popular countries include India, the Philippines, Vietnam, Malaysia, and China.

For a decade, India has had their name set in the IT & Software Development sector, standing out in Artificial Intelligence, IoT, blockchain, app development, and cloud computing. Google set up their second cloud region in Delhi NCR in 2021; Bengaluru has been named the “Silicon Valley of India,” with up to 80% of global IT companies currently operating. Plus, the average cost of a Software Developer in India is five times cheaper than that of an Australian employee of the same rank. This reflects a massive reduction in overhead costs. The Indian government has showered the IT outsourcing sector with incentives and tax benefits, welcoming foreign companies, developed world-class and state-of-the-art facilities, technology infrastructure, and high-speed connectivity to further digitally empower India to become the world’s capital of IT outsourcing.

Although India offers customer service centers for Europe and North America, the Philippines has received recognition for providing much better customer support and BPO (business process outsourcing) services. Due to its high English proficiency rate of 92.5% and widely Western-integrated culture, the Philippines edged India as the preferable choice in customer call centers, customer services, and BPO. 

Vietnam and Malaysia have worked their way up to compete in software development, while China established its strong competency in manufacturing large-scale software production.

Software development generally costs between $15 and $45 per hour, and Customer Support costs between $5 and $15 per hour.

The upcoming trends

In recent years, India has geared toward the exponential growth of KPO (knowledge process outsourcing) instead of competing against BPO. India currently holds 70% of the KPO market size worldwide, and it does not seem to slow down. The rising star – Vietnam has surpassed other Asia-Pacific countries to be the most favorite destination for startups due to its competitive costs and political stability. Meanwhile, the Philippines has actively adopted automation and AI-driven tools to optimize customer support services further and refine their skill sets to retain their expertise in this sector.

Eastern Europe

The popular countries in this region are Ukraine, Poland, Romania, Hungary, and Bulgaria, which specialize in software development, game development, and fintech. Which Ukraine and Poland are globally recognized for their coding expertise. Despite the ongoing war in Ukraine, IT outsourcing vendors remain strong, experiencing at least 20-30% growth per year. A few contracts were cut during this period, but they are starting to come back. Undeniably, Poland and Ukraine had consistently held their rank among other nations for producing high-quality enterprise software products and world-class game studios.

Eastern Europe has its fair share in prioritizing data protection; IT companies in this region follow strict international standards such as GDPR (General Data Protection Regulation). It’s the main reason why privileged tech companies open their R&D centers in Central and Eastern Europe. On top of that, the geographical location of Eastern Europe has a smaller time gap than the rest of the world, making it easier to provide services within working hours. The English competency eliminates any communication barrier and almost minimal cultural differences.

Great things come with an adequate price tag. In Eastern Europe, quality always prevails over quantity. The cost range for software development and business back office functions is between $25 and $65 per hour, and customer services generally range between $15 and $40 per hour.

The upcoming trends

Cyber security has stepped up its game, and the focus shift to data security and GDPR compliance services has risen in the past couple of years, promising to bring more work into the region. The governments of Romania and Hungary have started to support the development of high-standard technology parks and innovation hubs to compete against the rest of the countries in Eastern Europe. Though it might take Romania and Hungary a while to catch up, the effort is there. The surge in nearshore outsourcing has come to be noticed.

Latin America

Mexico, Brazil, Argentina, Colombia, and Costa Rica are the leaders in IT outsourcing in this region. Because they are geographically closer to the US and mostly bilingual in English and Spanish, they have an advantage in providing nearshore outsourcing solutions for US-based businesses.

Brazil and Argentina are leaders in innovation and software development, while Costa Rica is striving to develop agricultural and green technology sectors. Latin America’s cost range is very competitive. Services cost between $20 and $50 per hour, and customer services cost $8 to $20 per hour.

The upcoming trends

Picking up the outsourcing potential, Latin American countries have offered successful remote development teams, particularly to US tech startup businesses. With geography benefits, Latin America is thriving to solidify its position as the worldwide nearshore outsourcing hub for the IT outsourcing sector.

Africa

The growing tech hubs, well-established IT infrastructure, and English, French, and Arabic-speaking IT employees have made Africa stand out as an emerging player in the tech outsourcing industry. South Africa, Kenya, Nigeria, Egypt, and Morocco are nations that have received the most attention when it comes to IT outsourcing. Kenya and Nigeria had their spotlights on mobile innovations (eWallet, mobile money)  and fintech solutions (digital finance system).

The cost range for IT services in Africa is between $15 and $35 per hour, and for BPO services, it is between $5 and $15 per hour.

The upcoming trends

Tech giants like Google, Amazon, Meta, and Microsoft have begun operations in Africa. Google’s project value for AI and machine learning is 1 billion dollars, which is transforming Africa every day. In addition, Africa attracts tech projects related to renewable energy and sustainable solutions. The region is building its reputation by expanding its global IT outsourcing sector horizon.

Middle East

Countries like the UAE, Jordan, and Israel are leading the IT outsourcing sectors in this region. The region has gained momentum as a specialized outsourcing destination, offering services in high-end tech development, R&D, AI expertise, and cybersecurity.

If the UAE has its forward thinking with smart city development, integrated IoT, and cloud computing, Israel – the world’s startup nation – is leading its way in research and development outsourcing. The country’s ecosystem of tech startups has strengthened its innovative, cutting-edge technological services. As quality-focused, the Middle East’s cost range is much higher. For Software development, the rate starts from $30 to $70 per hour, and customer support is at $15 to $25 per hour.

The upcoming trends

Middle Eastern countries have collaborated with both European and Asian firms in tech outsourcing projects to optimize performance further, and it has been a success so far. Planning to further implement this model in future projects has emphasized the forward-thinking characteristic in Middle Eastern countries. Also, it will invest in digital transformation services such as cloud solutions services, IoT services, and the acceleration of smart cities’ expansion and urban planning projects with AI assistance. With its unique blend of expertise, innovation, and location, the Middle East is a prominent choice for businesses looking for specialized outsourcing solutions.

North America

Last but not least, the most expensive IT outsourcing services globally known is North America – the home for nearshore and quality specialized outsourcing, including countries like the US, Canada, and Mexico.

The US and Canada are strong for quality-driven services or specialized functions requiring highly skilled expertise, extreme compliance, legal alignment, and seamless integration. Mexico is another great option for US companies due to its proximity, location, language, and cultural compatibility. This region is not traditionally cost-effective for other parts of the world to outsource to. The outsourcing labor force in North America predominantly caters to US and Canada-based companies due to its higher-end cost range for IT services, which starts at $50 to $150 per hour. In contrast, customer support costs $15 to $40 per hour.

The upcoming trends

Rural outsourcing, also known as domestic outsourcing, in the US, aims to approach local talent in smaller cities. Mexico has developed its resources to provide efficient, specialized nearshore outsourcing solutions to compete with US domestic outsourcing. As the market matures, the focus on compliance and security for healthcare and finance software has outshined others.

To Sum up

Here is the short version of the hourly rate sorted by region for you to look at:

Partnering with an outsourcing vendor is not just about having the lowest-cost option; rather, based on your business needs, the outsourcing partner can help minimize your limited resource and knowledge gap. Other factors might also be considered, such as time zones, languages, and cultural capabilities. Consider the long-term benefits over the short-term advantages to allow your business to strategically advance to the next level and earn sustainable growth initiatives to further advance and expand in the global marketplace.

If you are looking for a global standard IT outsourcing partner in Japan with strict quality processes and procedures and more than just a competitive, affordable price tag for the year 2025, contact our support team at Shift Asia for a private consultation.