Outsourcing software development from the UK: a buyer's guide.
What an overseas engineering team costs compared with a UK hire, the three things that go wrong most often, and the questions about IR35, UK GDPR and working hours that you should ask any provider before you sign. We run our own delivery centre in Vietnam, so this is written from the provider's side of the table, and we would rather you asked us these questions too.
Last reviewed October 2026 · 9 minute read
The short version
A senior engineer hired in the UK costs the business somewhere between £80,000 and £130,000 a year once employer National Insurance, pension and overheads are added to the salary, with London at the top of that range and the regions towards the bottom. A senior engineer through a managed provider in Vietnam costs between £4,000 and £6,000 a month all in. That is roughly half the London figure and 30 to 45 per cent below a hire in Manchester, Bristol or Leeds. Eastern Europe sits between the two, and its rates have been rising.
The saving is not in dispute. What decides whether you keep it is whether the engineers you start with are still on your team a year later, whether their working day overlaps with yours enough to get work done, and whether the contract gives you a way out that keeps the knowledge, or the people, if you want them.
We have run a delivery centre in Ho Chi Minh City since 2010, so we have seen outsourcing from the side most buyer's guides never describe. This is what we would want a UK buyer to understand before signing anything, with us or anyone else.
126,861
advertised UK technology vacancies in the second quarter of 2026, up 4.3 per cent on the year, with AI roles up 41.8 per cent. Harvey Nash's 2026 report puts software engineering as the country's largest tech skills shortage, and more than three quarters of employers now say they struggle to recruit engineering and technology skills, compared with about half in 2021.
Onshore, nearshore or offshore
UK companies have three options, and it is worth being precise about them because providers tend to blur the terms.
Onshore
A UK consultancy or UK contractors. This costs the most and in return you get proximity, simple governance and no questions about where data sits. It suits work that is tied up with stakeholders, regulated data or sensitive systems. Senior contractor day rates currently run from about £450 to £700, with London medians around £640.
Nearshore
Poland, Romania, Ukraine and the Baltics. One or two hours ahead of the UK, EU data protection rules, and a working day that fully overlaps with yours. The price of that convenience has gone up 12 to 22 per cent since 2024, and Polish senior rates now sit around £45 to £70 an hour, which is not far below a regional UK hire once you load the UK salary.
Offshore
India, Vietnam and the Philippines, and for some UK buyers Latin America. The deepest talent pools and the lowest rates, with a time difference of four to eight hours in one direction or the other. Whether it works depends on the management around the engineers and on how the provider handles that time difference, which we cover below.
Most arrangements that run for more than a year end up as a mix: accountability and the senior client-facing roles in the UK, with build capacity overseas. You get offshore pricing with onshore governance.
What it costs
These are ranges rather than quotes, and the right comparison depends on how long you expect the arrangement to run. For project work, compare day rates. For a seat you will hold for years, the real alternative is a permanent UK hire, so compare the annual loaded cost.
Senior engineer, permanent hire, London
£85,000 to £110,000 salary; £100,000 to £130,000 loaded. Job-ad medians sit near £95,000; large tech employers pay more.
Senior engineer, permanent hire, Manchester, Bristol, Leeds
£63,000 to £87,000 salary depending on the source; £80,000 to £105,000 loaded.
Senior contractor, UK
£450 to £700 a day; around £120,000 to £160,000 a year if fully utilised, before any IR35 considerations.
Senior engineer, nearshore (Poland, Romania)
£45 to £70 an hour; roughly £7,000 to £11,000 a month.
Senior engineer, offshore through a managed provider (Vietnam, India)
£30 to £45 an hour; £4,000 to £6,000 a month all in, including the provider's management, recruitment and replacement.
Dedicated offshore team of five to seven with a delivery lead
A monthly cost comparable to two or three senior UK engineers.
Two things are worth noting about the table. The offshore figure already includes management. The UK figure does not include the cost of hiring, which for a senior engineer through an agency is usually 15 to 25 per cent of first-year salary, or the three to five months a senior search typically takes. The gap also narrows with seniority: a junior offshore seat is about a fifth of a junior UK hire, while a senior seat is about half.
If a quote comes in well below these bands, the money has usually been taken out of management, testing or retention, and you tend to find that out in the second year rather than the first.
On AI and the senior premium
Stack Overflow's 2026 survey found 83 per cent of developers using AI tooling, and a third of daily users spending four or more hours a day with it. The job of a senior engineer is moving from writing code to directing, reviewing and owning it. That skill costs the same to develop in Ho Chi Minh City as it does in the UK, and the premium for having it in a particular city is harder to justify each year. Larger enterprises have already acted on this. Most companies under a hundred people are only beginning to look at it.
Where it goes wrong
Most of the bad outsourcing experiences we hear about from UK companies come down to one of three problems, and the country the engineers are in is rarely the cause.
01
Engineers who do not stay
You want a provider who has the right people available when you need them. That is reasonable, and a good provider does. The problem comes afterwards, when the engineers you started with are quietly moved to another client, or leave, and you get a replacement who has to learn your codebase from scratch. Six months in, you discover that nobody on the team was there at the beginning. Every rotation costs you a few weeks of productivity and some of the context that made the team useful in the first place.
What to ask What the provider's attrition rate is, what their policy is on moving engineers between clients, and what happens to your team if a bigger client comes along.
02
Mid-level engineers sold as seniors
The people on the sales call are the provider's best. The team that arrives is two mid-level engineers and a graduate, all billed as senior, with the person you met "overseeing" from a distance. Titles are inflated across offshore markets because clients pay by title, and it is hard to tell from a CV alone.
What to ask Whether your own engineers can run a technical interview with each person before they start. A provider who will not allow that is telling you something.
03
"UK hours" that mean a two-hour overlap
How much of your day the team shares depends on where they are and on whether the provider has done anything about it. Eastern Europe is one or two hours ahead, so a standard local day overlaps almost entirely with yours. Latin America is four to six hours behind, so the overlap is your afternoon and their morning. India, Vietnam and the Philippines are four and a half to eight hours ahead, so on a standard local day you get two or three hours of overlap at the start of your morning and every question raised after that is answered the next day. That is fine for well-specified build work and a real problem for anything that needs a conversation.
What to ask Which hours each person will keep, stated in UK time and written into the statement of work. For a team in Asia, a provider that covers UK hours properly puts the team lead, at minimum, on a shift that runs into their evening to match your working day, and is upfront that not every engineer will work those hours. For Latin America the question is the reverse: who starts early enough to cover your morning. Either way, a provider that cannot name the hours per person before you sign is unlikely to deliver them afterwards.
The UK-specific questions
Three areas where UK rules change the picture. This is general guidance rather than legal advice, so check the detail with your accountant and your data protection adviser.
IR35 and employment status
The off-payroll working rules exist to catch UK contractors who work through their own limited companies but are employees in all but name. A managed offshore team does not fall into that category. The engineers are employees of the provider in their own country, and you are buying a service rather than engaging an individual. The size thresholds also moved on 6 April 2026: a client company now counts as small, and is exempt from the rules, if it meets two of three tests (turnover under £15 million, balance sheet under £7.5 million, fewer than 50 employees), which takes a lot of scale-ups out of scope for UK contractors anyway. Where UK firms do run into trouble is engaging individual offshore freelancers directly over several years, which can raise employment-status and permanent-establishment questions in the engineer's own country.
UK GDPR and data leaving the country
Most offshore destinations, including Vietnam, India, the Philippines, Colombia and Mexico, are not covered by UK adequacy regulations (Argentina and Uruguay are among the few that are). If your offshore engineers can see personal data, the transfer needs an International Data Transfer Agreement or the UK Addendum to the EU standard clauses, a transfer risk assessment, and the usual Article 28 processor terms. Poland and Romania are in the EU and are covered. For most engineering work the simpler answer is to keep production data in UK or EU hosting and give the offshore team masked or synthetic data to build against, which removes most of the transfer problem rather than documenting around it. Ask the provider which of those two approaches they use and how they can show it.
Working hours
Get the overlap written into the contract, in UK time, per role. Without that, "UK hours" is a sales line.
Six questions to ask before you sign
A provider who runs their own delivery will answer all six without any trouble. One who is reselling hours will steer you back to the rate card.
1. Can we interview the engineers ourselves before we commit?
If the answer is no, assume the people on the call are not the people you will get.
2. What is your attrition rate, and what happens when someone leaves or is moved?
You want to hear about replacement time, handover, and who pays for the gap.
3. Which hours, in UK time, will each person keep?
Per role, in the statement of work.
4. Where does the code live, who owns the IP, and what security controls do the engineers work under?
Repositories you control, IP assigned to you in the contract, and a clear answer on devices and access.
5. How do you handle personal data under UK GDPR?
Either a transfer agreement with a risk assessment, or a masked-data environment. Both are acceptable. Not having an answer is not.
6. What happens at the end? Can the knowledge, or the team, move to us?
A non-solicitation clause is normal. A non-solicitation clause with no agreed exit path at all means the provider intends to keep you.
Taking the team in-house later
For longer programmes we can set the team up so that it can transfer to the client later, on terms agreed at the start. We call this Assemble, Operate, Transition. It is an option rather than the default, and most clients keep the standard arrangement where we run the team for as long as the work lasts. The clients who ask about it mostly want to know the option exists if they grow faster than planned. There is a longer write-up of how it works.
If you are weighing up an outsourcing decision, the most useful first conversation is about your programme: what you are building, over what period, and what has to stay in the UK. Tell us what you are working on and you will get a straight answer on which arrangement fits, from the people who run the delivery.
Frequently asked questions
Is offshore development cheaper for a UK company once management is included?
Usually, yes, though by less than the hourly rates suggest. A managed senior seat in Vietnam or India costs about half of a loaded London hire and 30 to 45 per cent less than a regional one. The gap narrows as seniority rises and widens again once you add UK recruitment costs.
Does IR35 apply to an offshore development team?
Not to a managed team employed by the provider overseas, because you are buying a service. The rules are aimed at UK contractors working through personal service companies. Engaging offshore individuals directly raises different questions in their country, so take advice before doing that at any scale.
Can an offshore team see our customers' personal data?
Only with a UK GDPR transfer mechanism in place, since Vietnam and India are not covered by adequacy regulations. Most engineering work does not need production data, and masked or synthetic data in UK-hosted environments is the cleaner route.
Which country is best for a UK company?
Nearshore if a full working-day overlap matters more than price. Offshore if price matters more and the provider will cover UK hours for the roles that need it. The provider's operation matters more than the country.
How long does it take to stand up a team?
A few days to a couple of weeks if the provider has the right people available, four to eight weeks if they need to recruit for a particular skill. Ask which it will be for your stack before you plan around a start date.
Sources: ITJobsWatch, Indeed and Glassdoor UK salary data for senior software engineers, London, Manchester and Bristol, 2026; APSCo, CV-Library and Lightcast UK tech vacancy report, Q2 2026; Harvey Nash Tech Talent and Salary Report 2026; Royal Academy of Engineering submission to the Migration Advisory Committee, February 2026; Stack Overflow Developer Survey 2026; published 2026 nearshore and offshore rate surveys (vendor data, indicative only); HMRC off-payroll working thresholds effective 6 April 2026; ICO guidance on international data transfers. Rates converted at approximate October 2026 exchange rates. Current as at October 2026.
Tell us what you're building.
If you need more senior engineers than the UK market will give you this quarter, tell us what the work is. Someone who runs the delivery will reply within one business day.