What outsourced software development actually costs
Outsourced software development costs whatever the unit you buy it in costs: an engineer by the month, a team by the hour, a project by the quote, or a week of work at a fixed price. Those four units carry different risks, and the risk is where most of the real cost hides, so a rate card on its own tells you less than it seems to.
We sell one of the four, and our prices are on the site, so this is not a neutral survey. It is the comparison we would want in front of us if we were the ones buying: what each model charges for, what none of them puts on the invoice, and how an outsourced week compares with an engineer you hire.
The four software development outsourcing models
Most proposals are one of these, whatever they are called. The differences that matter are who manages the work from day to day, and who pays when it takes longer than planned.
Staff augmentation rents you engineers who join your team. It looks cheapest per hour and costs the most of your own time, because the vendor supplies people and you supply everything else: the backlog, the reviews, the decisions, and the accountability for the result.
A time and materials project hands the management to the vendor but keeps the risk with you. If the estimate was wrong, the invoice grows. We wrote about that trade at length in fixed price vs time and materials.
A fixed-price project moves the risk to the vendor, who prices it in. The quote carries a discovery phase, a project manager and a contingency for what nobody knows yet, and you pay for all three whether or not the risk turns up.
Fixed-price sprints fix the price on a short horizon: one week of agreed scope at a published price, planned again every week. It is what we sell, for the reasons in the rest of this piece.
The costs no rate card shows
The cost of outsourcing software development is the vendor's rate plus everything the arrangement costs you in time. None of that appears on their invoice. It lands on yours.
Someone on your side has to run it. A backlog to keep, questions to answer, pull requests to review, priorities to call. Under staff augmentation that can approach a full-time job; under a well-run project it is a few hours a week. Price it at the salary of whoever ends up doing it, because someone always does.
New engineers start slowly, on your money. Any engineer, outsourced or hired, spends the first weeks learning your codebase. Under hourly billing you pay for that learning by the hour. Ask what the first two weeks will produce, and whether they are refundable if the answer turns out to be not much.
Handoffs stretch the calendar. Time zones, a project manager relaying questions, and work that waits overnight for an answer all add days. A week of calendar time is not a week of work if half of it is spent waiting.
Leaving has a price. If the code lives in the vendor's repository, if documentation is an end-of-project deliverable, or if only one of their engineers understands a module, ending the engagement costs a handover. The cheapest exit is code in your repository from the first commit.
The rate is what the vendor charges. The cost is what you spend, and that includes your own team's time.
An outsourced week against a hired one
The fair comparison is not a vendor's hourly rate against a salary. It is what a productive week of work costs you either way.
An in-house engineer on $130,000 costs about $229,050 in the first year once employer costs, recruiting, equipment and the months of ramp are counted, and delivers about 34 weeks of full output. That is roughly $6,737 per productive week. The engineer cost calculator does the same sum with your own salary and assumptions.
That gap is large, and most of it is where the engineers live: ours are in Islamabad, and we say so. It is not a reason to stop hiring. Someone permanent holds context, is still there next quarter, and answers when something breaks at night. It is a reason to decide which work needs someone permanent, and which needs capacity you can switch off when it is done.
How to compare software outsourcing companies
Put three quotes from software outsourcing companies side by side and the headline numbers will not line up, because each one prices a different unit. Six questions make them comparable.
What exactly am I buying? Hours, people, a project or a week. Write the unit next to each price before comparing anything else.
If this takes twice as long, whose invoice changes? It is the one question that sorts the models, and most proposals answer it in the small print.
Who manages the work from day to day? If the answer is you, add that person's time to the price.
Where does the code live, and from which day? Your repository from the first commit is the answer that costs nothing to leave.
What do the first two weeks cost, and can I get them back? A vendor that trusts its own onboarding will refund a start that did not work. We refund the first fourteen days.
Can I see the price before the call? A published price makes the call about scope rather than negotiation. Most firms will not show one, and it is worth noticing which ones do.
When outsourcing is the wrong call
When the work is the core of the product and will need someone thinking about it every week for years, hire. An outsourced team can build it, but the knowledge has to end up inside your company, and paying a vendor to hold it permanently is the most expensive way to own it.
When nobody can yet describe what done looks like, do not outsource the exploration on a fixed price. Buy a short block of time to answer the open question, then decide. And when you need someone accountable inside your organisation for a long roadmap, with a seat in your planning meetings, that is a hire or a retainer, not a sprint.
Outsourcing earns its keep on bounded work with an end you can describe: the migration, the integration, the feature that has to exist by a date, the backlog your own team will not reach this quarter.
What we charge
A one-week sprint costs $600 in Commerce Lab, $900 in Dev Lab Web, $1,200 in Dev Lab Mobile and $1,600 in AI Lab, and a two-week sprint costs less per week. Every price is on the pricing page, the scoping call is free, and the first fourteen days are refundable.
That is the whole rate card. It buys a week of work against a scope we agreed before the week started, in your repository, with a demo at the end. If that is the shape of the work you have, the call is thirty minutes and the price does not move after it.
