How much does offshore development cost?

Monthly rates per person quoted to Japanese clients in Vietnam, the Philippines, India, and Thailand are roughly ¥270,000–400,000 for programmers, ¥400,000–600,000 for senior engineers, and ¥550,000–750,000 for project managers. A separate bridge engineer adds about ¥500,000–700,000 per month, so compare vendors by total cost.

Should I choose offshore or nearshore development?

Offshore suits you if you want the lowest cost or need headcount and skills that are hard to find at home. Nearshore suits you if you want to avoid language and time-zone friction. For work whose specifications change often, what matters most in either case is whether your side can stay involved every week.

Can small projects be outsourced offshore?

Yes. With a dedicated team you can start with one or two engineers and add people once the way of working is settled. Start with a PoC or a small feature during a trial period, and check quality and communication before handing over larger work.

What is Offshore Development?

Offshore development is the practice of contracting software or system development to development companies or your own subsidiaries in other countries. The two main goals are lowering costs by working with engineers in countries with lower labor costs, and securing headcount or skills that are hard to hire at home. "Offshore" literally means "away from the shore," and here it simply describes where the development team is located.

Onshore, nearshore, and offshore

The name changes with the location of the team you contract.

Model	Where the team is	Cost	Communication
Onshore	A company in your own country	High	Same language and working hours
Nearshore	A company in a neighboring country	Medium	Similar time zone, but language and working style may differ
Offshore	A company or subsidiary in a distant country	Low (depends on country and role)	Needs deliberate effort on language, time difference, and business culture

In Japan, "nearshore" usually means outsourcing to regional cities within Japan rather than to a neighboring country, so the word means something different when you work with Japanese clients.

Advantages and disadvantages

Advantages

Lower cost: For countries and roles with lower rates, many companies pay 30–50% less than for engineers with the same skills in a high-cost market such as Japan
Easier hiring: You can fill headcount and skills that are scarce at home (mobile, cloud, AI, and so on) with engineers abroad
Flexible team size: With a dedicated team, it is easy to scale up or down as the workload changes

Disadvantages

Communication cost: Beyond language, teams differ in how specifications are written and how much must be spelled out, which leads to rework
Costs that are not in the rate: A bridge engineer (the person who links your side with the development team), your own management time, and travel are billed or spent separately
Quality and data protection: Without acceptance criteria and a review process, quality varies. Because source code and customer data are handled abroad, access rights and contracts need careful design

Contract models: dedicated team vs. fixed-price project

Item	Dedicated team (lab model)	Fixed-price project
How cost is set	Monthly rate × headcount	Total price per deliverable
Specification changes	Flexible within the contract period	Each change needs a new estimate
Best for	Continuous improvement, new products with unsettled specs	Work with fixed specs and acceptance criteria
Client's workload	Stays involved in prioritization and reviews	Focuses on requirements and acceptance

The dedicated team is usually billed on a time-and-materials basis, while in a fixed-price project the vendor is responsible for delivering a finished result. Which one is cheaper depends on the work, so choose by project length and how likely the specifications are to change.

Main destinations and typical rates

Typical monthly rates per person quoted to Japanese clients are as follows.

Country	Time difference from Japan	Programmer / junior	Senior engineer	PM / tech lead
Vietnam	2 hours	¥350,000–400,000	¥450,000–550,000	¥600,000–720,000
Philippines	1 hour	¥300,000–370,000	¥400,000–500,000	¥550,000–640,000
India	3.5 hours	¥300,000–380,000	¥400,000–500,000	¥550,000–680,000
Thailand	2 hours	¥270,000–370,000	¥450,000–600,000	¥550,000–750,000

※ General market rates as of March 2026. They vary by company size, skills, and contract type. A separate bridge engineer adds roughly ¥500,000–700,000 per month.

Vietnam has many Japanese-speaking engineers, but rising rates have almost closed the gap with Thailand. The Philippines has the smallest time difference from Japan and strong English. India has a very deep IT talent pool, but very few Japanese speakers and a larger time difference. For a comparison of quality and risk by country and detailed costs in Thailand, see our offshore development comparison of Thailand, Vietnam, the Philippines, and India.

How to think about cost

Compare quotes by total cost, not by the monthly rate.

Total cost = rate × headcount × duration + bridge engineer + your management time + rework + travel and tools

Even if you pick a low-rate country, the total can end up close to what you would pay at home if you add a separate bridge engineer and keep rebuilding features because the specifications were misunderstood. When you request a quote, ask whether the bridge engineer is included, how many hours per month your side is expected to spend, and who runs acceptance testing.

How to get started

Set the goal and scope: Decide what to build and what stays in-house (requirements, acceptance, customer contact, and so on)
Choose a vendor: Check track record, engineer retention, communication in a shared language, and security, then agree on a 1–2 month trial period
Write down requirements and acceptance criteria: Describe the screens, APIs, and data, and what counts as done. Defining the conditions for acceptance testing up front reduces rework
Start small: Test the way of working on a PoC or MVP-sized scope before adding people
Make meetings and handovers routine: Use weekly reviews, code review, and automated tests to make quality visible, and use knowledge transfer to move knowledge in both directions

Common failures and how to avoid them

Choosing on rate alone: A quote below half the market rate may mean a junior-only team or subcontracting. Ask for the team structure and the profiles of the people assigned
Passing on specifications verbally: Record every decision in documents and tickets
Relying on a single bridge engineer: If that person leaves, work stops. Share specifications and review records so several people can follow the status
Not keeping design documents and tests: Switching vendors then costs almost as much as rebuilding. Make design documents and tests part of the deliverables
Leaving data protection for later: Keep access to production data to the minimum, check the laws of each country involved when personal data is handled (such as Thailand's PDPA), and state in the contract which AI tools may be used to prevent shadow AI, where the vendor uses generative AI without approval

We cover quality management step by step in quality management for offshore development teams. We offer a dedicated-team model called Laboshare, in which senior engineers in Thailand handle design and review while engineers in Laos handle implementation and testing. You can start with one person for one month.