The real cost behind a nearshore solution

June 18, 2021

Money, the main reason companies choose to outsource their software development processes in the first place, to save money and put those resources into something else.

Don’t get us wrong, we understand the need to go for a cost effective software solution to solve a current problem your company might be experiencing, but defining how much does a software solution cost is, well… Difficult.

You see, customers love to ask “How much does a software solution for ____ costs?” “How much would this project cost me?”, “How much will it cost me for you to build a software app” and the answer is: We can’t tell you.

Any trustworthy nearshore company won’t be able to answer this question right away, and if you find an IT outsourcing provider that actually gives you a straight answer, run, because you might fall into the false scam of cheap nearshore solutions.

So, how can you know the real price of software development?

The reason why the question “How much does a software solution costs?” is so uncomfortable, is because, as much as we want to tell you and answer right away, we can’t.

There are way too many factors that go into considering the price of a nearshore solution, that telling you even an estimated price right away would be a terrible lie from our part.

And this doesn’t only happen with nearshore companies, it happens when working with offshore companies as well, and even with in-house teams: Estimating a cost right away isn’t easy to do.

But, since we understand you want to have an accurate idea of the real cost behind a nearshore solution, we are going to tell you the factors you need to consider, and everything that goes behind these types of processes.

Main factors that affect the cost of a nearshore solution

Before you continue reading, we want to point out two very important things:

First, we have already talked about how much does a software development process really cost, and you can check that blog here, before continuing with this reading.

Second, the prices and costs we are about to tell you are an estimated. This is, by no means, the price all nearshore companies handle, but rather a standard price point for you to guide yourself.

That being said, there are three main factors to consider that can influence the final cost of a nearshore solution:

  1. The average price range of software engineers

  2. The scope of the project

  3. The type of contract.

Let’s take a deeper look into these three factors to understand what goes behind a software development project in a much better way.

1: The average price range of software engineers

Since we ourselves are a nearshore company, and we are talking about nearshore solutions, we will be focusing on the average price range for Latin America software outsourcing, something we have actually talked about in our previous blog.

To talk about this more in depth, the price range of software developers in latin america changes depending on the country you’re outsourcing to, which can result in cheaper or more expensive software solutions.

Based on a study made by Accelerance, in which they compared the price range of full time employed software engineers in Latin America, these are the results :

  1. Junior software developer $35-44

  2. Senior software developer $45-55

  3. Tech lead $50-61

  4. Architect $60-72

  5. QA $30-50

  6. Project Manager $55-66

Furthermore, according to an study made by Stack Overflow, amongst the countries with the highest price range in Latin America, are the following ones (From the highest paid to the lowest one):

  1. Chile

  2. Argentina

  3. Brazil

  4. Colombia

  5. Dominican Republic

  6. Mexico

  7. Peru

  8. Venezuela

Obviously, the country you pick and the average price rate of each region will affect the overall cost of your project. But as we have said multiple times, money shouldn’t be the number one concern when software outsourcing.

2: The Scope of the project

The main reason why, as a nearshore company, we can’t tell you right off the bat how much will your solution cost, is because we don’t know the full scope of the project.

Depending on the unique requirements and specifications of your software development project, the type of solution of you need (web, mobile, responsive...) and the level of complexity, your software solution could cost anywhere from $10,000 to $250,00.

Again, that is just the average rate, but it can vary depending on what your specific project needs and the requirements you make. For example, a simple commercial website won’t ever cost the same than developing a responsive web platform with API’s.

3: The type of contract

Last, but definitely not least, the type of contract you sign with the nearshore developer can influentiate the ultimate cost. You see, it is up to you to evaluate if it’s better to hire them hourly, hire them for the entirely of the project, or work indefinitely with them.

This is a topic that should be talked in depth, and we actually have a full blog where we mention the different types of contracts to hire a nearshore company, and which one is best for you depending on the type of project you’re thinking of developing, we recommend you to check it out, here.

Keep in mind, these are just some of the main factors that can influence the cost behind a nearshore solution. For a proper pricing, let us discuss your future project, and don’t doubt in contacting us.