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Offshore vs Onshore Software Development Cost

The same project priced with a US agency and an offshore team, hour for hour, with the extra coordination that offshore work takes.

Updated · By Niraj Kumar · 4 sources

Project

The baseline: a React front end with a Node or serverless back end.

Unique layouts, not every page: a product page template counts once.

CRM, ERP, shipping, tax, analytics… 32 hours each.

Features

Sign-up and loginSign-up and login

Email and social login, password reset; SSO or MFA is complex.

User profiles and settingsUser profiles and settings

Profile pages, preferences and account deletion.

Roles and permissionsRoles and permissions

Who can see and do what; complex means custom policies.

Teams and multi-tenancyTeams and multi-tenancy

Organisations, invitations and data isolated per customer.

Admin panel / CMSAdmin panel / CMS

Manage users, content and settings without a developer.

Product catalogue and checkoutProduct catalogue and checkout

Listings, variants, cart, checkout and orders.

Payments and subscriptionsPayments and subscriptions

Stripe or similar: plans, invoices, webhooks and refunds.

Search and filteringSearch and filtering

Full-text search and facets; complex means a search engine.

Email and push notificationsEmail and push notifications

Transactional email, push and in-app alerts.

File and media uploadsFile and media uploads

Uploads to object storage, previews and image resizing.

Real-time chatReal-time chat

Messaging over WebSockets, read receipts and history.

Maps and locationMaps and location

Maps, geocoding, distance search or live tracking.

Reports and dashboardsReports and dashboards

Charts, exports and scheduled reports for users.

AI / LLM featuresAI / LLM features

Chat assistants, summaries or retrieval over your data.

Multiple languagesMultiple languages

Translated interface, locale formats and RTL support.

Offline mode and syncOffline mode and sync

Works without a connection and syncs changes later.

Design and quality

UI/UX designUI/UX design
QA and testingQA and testing

Team

Mid-market US agencies; big consultancies bill $200 to $300 an hour.

Delivery modelDelivery model
Agency tierAgency tier
Seniority mixSeniority mix

More developers shorten the calendar, not the hours.

Sprint lengthSprint length
%
0%50%

A reserve for scope that changes once work starts. 15 to 20% is usual; more for a vague brief.

Cheaper for this scopeIndiaSaves $201,000, 72% of the budget
United States
$278,000
$218,000 to $362,000 · 2,152 hours · 14 weeks · $129/h blended
India
$77,000
$60,500 to $100,000 · 2,383 hours · 14 weeks · $32/h blended
Coordination overhead
0% vs 12%
Extra project management for time zones and handoffs, included above
Where the budget goes, United StatesHover or focus a row for its hours and share of the budget.
  1. 1Front-end development$68,500
  2. 2Back end, platform and integrations$58,000
  3. 3Contingency reserve$36,500
  4. 4UI/UX design$35,000
  5. 5Project management$26,000
  6. 6QA and testing$22,500
  7. 7Hardening and launch$12,500
  8. 8DevOps and CI/CD$11,000
  9. 9Discovery (sprint 0)$8,300
Sprint plan, 14 weeks192 hours of development per sprint; design, QA, DevOps and PM run alongside.
SprintFocusHoursCostRunning total
Sprint 0Discovery, backlog, architecture and first designs198$25,000$25,000
Sprint 1Project setup, Sign-up and login and 2 more330$43,500$68,500
Sprint 2Roles and permissions, Teams and multi-tenancy, Admin panel / CMS303$39,000$107,000
Sprint 3Admin panel / CMS, Payments and subscriptions, Search and filtering303$39,000$147,000
Sprint 4Search and filtering, Email and push notifications and 2 more303$39,000$186,000
Sprint 5Reports and dashboards, Integrations303$39,000$225,000
Sprint 6Hardening, acceptance testing and launch132$17,000$242,000
Team by role, before contingency
RoleHoursRateCost
Project manager / BA231$130/h$30,000
UI/UX designer302$120/h$36,000
Senior developer488$160/h$78,000
Mid-level developer601$125/h$75,000
QA engineer250$90/h$22,500
Total1,872$129/h$242,000
The same scope in every region, offshore to onshoreMid-market agency rates at the tier you picked, with each region's coordination overhead added for a US client.
  1. 1Philippines & Vietnamoffshore$73,500
  2. 2Indiaoffshore$77,000
  3. 3Eastern Europeoffshore$106,000
  4. 4Latin Americanearshore$119,000
  5. 5Canadaonshore$220,000
  6. 6Western Europeoffshore$226,000
  7. 7Australiaoffshore$249,000
  8. 8United Kingdomoffshore$250,000
  9. 9United Statesonshore$278,000

How do United States and India compare?

For the same SaaS project, a US agency comes to about $278,000 and a team in India about $77,000, a saving of 72% in India. That includes the extra 12% of hours for coordinating across time zones.

build = Σ features (hours × complexity × stack) + screens × 10 h + integrations × 32 h + 40 h setup total = discovery + design + build + 10% hardening + QA % + DevOps + PM (12% + time-zone overhead) cost = Σ role hours × regional rate × agency tier; likely = cost × (1 + contingency) sprints = 1 + ⌈build ÷ (developers × 40 h × weeks × 0.8)⌉ + hardening

This page uses the same method as the Software Development Cost Estimator, which explains each term and assumption in full.

Worked example

A B2B SaaS product on Next.js: 25 screens, team accounts, roles, Stripe subscriptions, an admin panel, notifications and a reporting dashboard, three integrations, custom UI/UX and standard QA. Priced at mid-market rates in United States and India, 15% contingency included.

  1. 1United States: 2,152 hours at a blended $129 an hour = $278,000
  2. 2India: 2,383 hours at a blended $32 an hour = $77,000
  3. 3Coordination overhead: 0% of hours in United States, 12% in India

A team in India costs $201,000 less, 72% below a US agency, for the same hours.

Frequently asked questions

Does offshore development really save 70%?

On rates, often more. On the whole project, less: time-zone gaps and handoffs add project management and communication hours (12% here for India), rework from misunderstood requirements adds more, and you need someone on your side to own the product. A realistic saving on a well-run project is 55 to 75%, which the ranking below shows region by region.

What are the hidden costs of offshore development?

Your own time in early or late calls, a senior person on your side to review work, rework when requirements are unclear, and turnover if the agency rotates people off your project. Ask for named team members, a daily overlap window and sprint demos in the contract. An onshore project manager with an offshore team (the Blended delivery option) buys back much of the risk.

Sources

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