How much does an offshore developer cost?

Computing Magazine 25th September issue has some interesting costings in an article about Egg Bank setting up an IT academy to recruit and train students: Egg keeps costs down by poaching students (ho ho).

Robin Young, CIO of Citi UK Consumer (owner of Egg) is quoted:

“The motivation for setting up this academy is purely financial … Banks are quickly disappearing from the market and the consequences of the recession are reaching a larger scale, so I think the best way to develop IT is locally, with global architecture principles.

“But to do that, I need to keep staff affordable. It is a simple calculation ­- we found a way to reduce our overall cost base and still have the same output, as we will work on developing workers’ skillsets and get more for our money.”

The hard copy article goes into some more details on the numbers

Citi’s sceme cost about $50,000 (£27,765) to set up and the bank said the daily cost per graduate is significantly lower than the rate it pays contractors, which is about $300 (£167), while offshore costs are eight to 10 percent higher.

I presume of course that the $300 is the daily rate paid to graduates. If so then here are some maths:

Graduate costs $300 a day. Offshore developer is 8-10% higher, say $325 a day. Assuming the offshoring is in Eastern Europe the rate this converts to about €228 or about €28 an hour. Which sounds fairly competitive, if a bit at the top end of rates I’ve seen there.


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