What do offshore development rates actually measure?
An offshore development rate measures the price of one unit of someone’s time, most often one engineer for one month, not the price of working software. That distinction explains most of the surprises Japanese buyers meet: two vendors with similar rates can deliver the same feature at very different total costs.
In Japan the convention is the man-month, or 人月 (ningetsu), and the rate is the 人月単価: the fee for one person working a standard month. Offshore vendors selling into Japan usually adopt the same unit so their quotes fit Japanese procurement habits. Some price by the hour, especially freelancers on global marketplaces such as Upwork, and some quote a fixed amount for a defined deliverable.
The rate is an input. The output you care about is the number of useful, accepted features per yen spent, and that depends on productivity, how many people sit around each developer, how often work is redone, and how much of your own staff time the arrangement consumes. A lower rate that needs twice the management can be the more expensive choice.
So this guide treats offshore development rates as one line in a larger equation, and shows you how to fill in the other lines before signing anything.
How are offshore development rates quoted to Japanese companies?
Usually as a monthly fee per person, graded by role and seniority, multiplied by the number of people and months in the plan. The estimate sheet looks like a Japanese SIer’s: rows of roles, columns of months, and a total.
A few details on that sheet change the real price more than the headline rate does:
- Standard hours: how many hours a “month” includes, and whether there is a settlement range (精算幅) above or below which the fee is adjusted
- Role mix: how many senior, mid-level and junior engineers, and whether a bridge SE, project manager or QA lead is billed on top
- Allocation: whether each person is full-time on your project or shared across clients at a fraction
- Ramp-up: whether onboarding months are billed at full rate
- Currency and reviews: yen or dollars, and whether rates are reviewed annually or when exchange rates move
- Holidays: whose public holidays reduce working days, Japan’s or the vendor country’s
When you receive offshore development rates in this format, rewrite the estimate as “total yen for this scope” before comparing. That single step removes most of the apples-and-oranges problem between vendors.
Why this page does not publish a yen rate card for other vendors
Because any figure we printed for other companies would be out of date or wrong for your case, and publishing competitors’ prices is not our place. Offshore development rates move with exchange rates, wage growth, vendor size and demand, and the same country spans freelancers and listed IT firms.
Articles that list a single band per country average very different things together: a junior engineer at a small shop and a senior architect at a large vendor, a fixed-scope project and a time-based lab team, a quote with a bridge SE and one without. The averages look precise and tell you little about the quote on your desk.
What works better is collecting real quotes for your own scope. Ask three vendors for a proposal against the same written requirements, request the role mix and the assumptions behind each, and normalise them using the checklist later on this page. You will learn more from that than from any published band.
Our own prices are public and specific, because they are ours: custom software from US$900, apps from US$600, AI automation from US$600, and the full list on the pricing page. Treat them as one of your three quotes.
Offshore development rates by country: India, Vietnam, the Philippines and Bangladesh
The bands for these four countries overlap heavily; who the vendor is, and what is included, moves the price more than the flag does. Still, each country has forces that tend to push quotes up or down for Japanese buyers.
India
The widest range of any destination, from freelancers to very large IT services firms, with deep benches in cloud, data and AI. English-first delivery is the norm, and Japanese-speaking engineers are fewer, so a Japanese-language layer usually costs extra or is absent.
Vietnam
A long record of serving Japanese clients, with many vendors organised around Japanese processes and Japanese-speaking bridge engineers. That Japan-readiness is valuable and is priced in, particularly for bridge SE and Japanese documentation roles.
The Philippines
Strong spoken English and a large outsourcing workforce, often used for support, QA and web development. Japanese-language delivery is less common than in Vietnam, so it suits English-capable buyers.
Bangladesh
A growing software export sector with some vendors focused on Japan. The pool of senior engineers and Japanese speakers is smaller, so check depth and continuity carefully when a quote looks attractive.
Our view, as a small team in India, is honest rather than patriotic: pick the country whose delivery style matches how your team works, then pick the vendor with the best record on work like yours. For a direct comparison of the two most common choices, see India vs Vietnam offshore development.
Offshore development rates by role: where the money actually goes
Senior engineers, architects and bridge SEs sit at the top of most rate sheets; junior developers and manual testers at the bottom. But the role mix matters more than any single rate, because a team heavy on juniors needs more senior review and more rework.
Look at the roles on an offshore estimate and ask what each one produces:
- Project manager: plans, reports and coordination; valuable, but on small projects often duplicated by your own manager
- Bridge SE: translates requirements and reports between Japanese and the offshore team, and carries a premium for language skill
- Senior engineer or tech lead: designs, reviews and unblocks others; the role that most affects quality per yen
- Mid-level and junior engineers: most of the coding hours; productivity varies widely with supervision
- QA engineer: test design and execution; cheaper per month, expensive if bugs escape to your acceptance testing
- Designer, data or AI specialist: often part-time, billed at specialist grades
On a small team, the ratio of people who build to people who coordinate is the number to watch. In our case all three people build: one of us on full-stack development, another of us on AI, cloud and data, and the third of us on project management plus data science and automation.
Man-month, fixed price or hourly: which model gives lower offshore development rates in practice?
Fixed price gives you budget certainty when the scope is clear; man-month gives flexibility when the scope will change; hourly suits short, loosely defined tasks. None is cheaper by nature; each moves risk to a different party, and the vendor prices that risk in.
In Japanese contract terms, time-based work is usually a quasi-mandate contract (準委任契約), where the vendor owes careful performance of the work, and fixed-scope work is a contract for work (請負契約), where the vendor owes a finished deliverable and bears responsibility for defects in it. The Civil Code revision that took effect on 1 April 2020 also recognised a result-based form of quasi-mandate, where payment is tied to a deliverable rather than hours.
The practical effect on offshore development rates: on a quasi-mandate man-month deal, every misunderstanding and delay is paid by you, month by month. On a contract for work, the vendor absorbs overruns inside the agreed scope, so their price includes a buffer, and every change you request becomes a priced change order.
Decision rule: if you can write down what “done” means for each feature, fixed scope usually costs less in total. If your product owner will discover requirements as you go, time-based work avoids endless change orders, as long as you manage it closely. Your own lawyer should confirm which contract form fits; this is general background, not legal advice.
Hidden costs that offshore development rates leave out
The biggest costs of offshore development rarely appear as a line on the estimate: your staff’s time, rework, translation, and the months before the team is productive. Add them up and a low monthly rate can finish as the higher total.
Bridge SE and translation
Either billed as a role or absorbed by your bilingual staff. Someone is paying for Japanese-to-English translation of specifications and reports, even when no line says so.
Rework
Features built to a misunderstood specification, then rebuilt. No rate card shows it, and it grows with every layer between the person who knows the requirement and the person writing code.
Your management time
Reviews, meetings, acceptance testing and answering questions. Count your engineers’ and managers’ hours spent on the vendor at their real cost to your company.
Ramp-up and turnover
The first weeks of any new engineer are slow. If the vendor rotates people between clients, you pay for ramp-up repeatedly.
Acceptance and defect fixing
Bugs found in your testing cost your staff time even when the fix is free. A vendor with weaker testing shifts cost onto you.
Transfers and currency
Bank charges, exchange spreads, and movement between the quote date and payment dates.
A simple way to see these: after the first month of any offshore engagement, ask your team how many hours they spent on it, and what fraction of delivered work was accepted without changes. Those two numbers tell you your effective rate far better than the invoice.
How to turn a man-month quote into a real cost per feature
Divide the total you will really spend, including hidden costs, by the number of features accepted. That effective cost per feature is the only number that lets you compare offshore development rates across vendors and models fairly.
You can estimate it before signing with four adjustments to any man-month quote:
- Add every billed role, not just engineers: bridge SE, PM, QA and ramp-up months
- Add your internal hours at your real staff cost: specification writing, meetings, reviews, acceptance
- Add a rework allowance, larger when requirements are in Japanese and the team works in English through a bridge, or when the vendor has not built this kind of system before
- Convert everything to yen at a rate you consider realistic for the payment dates, not today’s rate
Then divide by the features in scope. Do the same for a fixed-price quote, where the vendor has already absorbed rework inside scope but your internal hours still apply. The comparison is often surprising: the quote with the higher headline figure sometimes has the lower effective cost because it needs fewer people around it.
We are happy to go through this exercise with you on a call, including with other vendors’ quotes on the table, without asking you to share their figures with us.
How does yen weakness change offshore development rates?
When the yen weakens, any offshore quote priced in dollars costs more yen, even though the vendor’s price has not changed. A yen-priced quote shifts that risk to the vendor, who usually builds in a buffer or reserves the right to review rates.
For Japanese buyers this is not academic. A dollar-priced man-month contract running for a year exposes you to twelve months of currency movement. A fixed-price project paid in milestones exposes you only for the few months until the last payment. That is one reason shorter, scoped projects can be easier to budget than long time-based engagements.
Ways Japanese companies manage it: agree yen-denominated contracts with an annual review; pay in milestones so exposure is short; ask the finance team to hedge larger commitments; or accept dollar pricing for small projects where the movement is minor relative to the total. Which approach suits you is a finance decision, and we do not give currency or tax advice.
Our quotes are in USD and payable in USD or JPY by Wise or bank wire, and the milestone schedule is written into each quote. If your finance team needs a yen figure for approval, convert at the rate they use for budgeting and add the margin they normally hold for currency.
Japan’s IT talent shortage and why offshore demand keeps growing
Japan has been forecast to run short of IT workers for years, which pushes more companies to look offshore and keeps demand, and therefore offshore development rates, firm for vendors that serve Japan well.
The Ministry of Economy, Trade and Industry’s April 2019 study on IT talent supply and demand estimated that the shortage could reach up to about 790,000 people by 2030 in its high-demand scenario. The same study highlighted that the gap is sharpest for advanced skills such as AI, big data and security, rather than for traditional system maintenance.
For a buyer, that has two consequences. First, Japan-ready offshore capacity, with Japanese-speaking staff and Japanese processes, is in demand and priced accordingly. Second, teams that do not wrap delivery in a Japanese-language layer can often be a better value choice for companies whose engineers can work in English, especially for AI, data and cloud projects where the skills gap is widest.
If you are comparing offshore with hiring in Tokyo, our guide to hiring React developers covers that trade-off for front-end work.
Are very low offshore development rates a red flag?
Not automatically, but a quote far below the others for the same scope usually means something was left out, the team is more junior than it looks, or the price will rise once you are committed. Ask why before celebrating.
- Role names without CVs, or CVs that change after signing
- Engineers shared across several clients but billed as full-time
- No written acceptance criteria, so “done” is whatever the vendor delivers
- Change orders for items any reasonable reader would consider in scope
- Code and cloud accounts held by the vendor rather than your company
- No sample of real work, no named people, and no direct contact with developers
- Pressure to sign a long minimum term before any delivery is seen
The opposite flag exists too: a high quote padded with roles you do not need. On a small web or app project, a dedicated project manager, a bridge SE and a QA lead can outnumber the engineers. Ask what each role will produce in a typical week.
Comparing three offshore quotes side by side
Put every quote on the same sheet with the same rows: scope covered, total cost in yen, your internal hours, contract model, who owns the code, and what happens after launch. Only then compare the prices.
Start with the scope. Mark any feature a quote excludes or leaves vague, and ask the vendor to price it. Next, convert man-month quotes to a total using the planned months and roles, including ramp-up. Then estimate your internal hours for each model: an English-first team needs clearer English specs from you; a bridge-SE team needs Japanese documents but fewer English skills.
After that, check the terms that change cost later: change-order process, defect responsibility after acceptance, maintenance price, and whether the code, repositories and cloud accounts are in your name. A cheap build that you cannot move to another developer is expensive in year two.
Finally, talk to the people who will do the work. Offshore development rates tell you nothing about whether you can explain a requirement to the engineer in one call. A thirty-minute technical conversation often settles the choice faster than a week of spreadsheet work.
What our starting prices include, and what they do not
Our prices cover the work needed to deliver the scoped result: planning, design where relevant, development, testing, deployment to your accounts and handover documentation, plus two months of free maintenance after launch. There is no separate bill for project management or a bridge layer, because there is no bridge layer.
Included in a typical quote: an itemised feature list, milestones with dates, a staging environment you can open at any time, code in your repository from day one, and a handover guide another developer can follow. Excluded: third-party fees you pay directly (hosting, domains, app store accounts, AI model usage, payment processors), Japanese copywriting, legal and tax advice, and on-site visits.
The starting figures are real entry points: static websites from US$150, SEO sites from US$300, ecommerce from US$750, apps from US$600, AI automation from US$600, custom software from US$900, and care from US$120/mo per month after the free period. Your itemised quote, sent in about two working days, sets the final amount for your scope. Nothing is billed before your written approval.
Offshore development rates for small projects vs long-running teams
For a project of a few weeks to a few months, per-project pricing almost always beats man-month pricing, because the ramp-up and management overhead of a time-based team is a large share of a short engagement. For multi-year roadmaps with many engineers, a man-month team can make sense.
Small projects suffer most from minimums. Many vendors structured around man-months prefer engagements of several people for several months; a single app or portal fits awkwardly and picks up coordination roles it does not need. Per-project pricing avoids that and fixes the budget at the start.
Long-running work is different. If you have a product backlog that will never be “finished”, a standing team with a monthly fee, sometimes called a lab-type or ODC arrangement, gives continuity. We can support that at small scale; the terms are agreed in your written quote. For the set-up details, see our offshore development center guide.
Many Japanese clients mix the two: a fixed-scope first release to test the relationship, then a smaller ongoing arrangement for improvements and maintenance.
Contract terms that protect the offshore development rate you agreed
Write down scope, acceptance criteria, change-order rules, payment milestones, currency and ownership before work starts. Most budget overruns in offshore work come from what was never written, not from the rate itself.
Scope should list features in plain language with what “done” means for each. Acceptance should say who tests, how long they have and what counts as a defect versus a change. Change orders should be priced and approved in writing before work begins on them. Milestones should link payment to visible progress, so you never pay far ahead of delivery.
Ownership deserves its own clause: code, designs and documentation belong to your company, and repositories, cloud accounts and app store listings are opened in your name. Many Japanese companies send their own outsourcing agreement or NDA; we read it and agree terms in writing before any code is written. Anything your agreement does not cover falls under our terms.
None of this is legal advice. Your legal team decides the contract form and governing law; we make sure the technical parts of the agreement match how the work will actually be done.
Buying offshore development from our team in India: how it runs from Japan
Our day starts when Japan’s morning is well under way, so we overlap your afternoon from about 12:30 JST. That is enough for a daily call or written stand-up plus demos, while your mornings stay free for review.
You deal directly with the three people doing the work. The third of us keeps the plan and the weekly report; one of us and another of us build and join calls whenever a technical question needs an answer. Messages on WhatsApp get replies seven days a week, in English or Hindi; Japanese text for your users is written or approved by you.
Payments are in USD, settled in USD or JPY by Wise or bank wire, against milestones in the quote, with invoices issued from India. Your accountant can advise on recording an overseas invoice; we keep each one clear about the period, the milestone and the amount.
The first two weeks follow a pattern: a scoping call, a written feature list with acceptance criteria for your sign-off, access to your repository and cloud account, and a first working screen or endpoint on staging by the end of week two. By then you can judge whether the effective cost looks the way the quote promised.
Example scenario: a hypothetical Nagoya parts maker compares two offshore quotes
This is an invented scenario to show how to compare offshore development rates, not a client story. Imagine a mid-sized parts manufacturer near Nagoya wants a supplier portal: suppliers log in, confirm purchase orders, upload delivery documents and see payment status, with an admin screen for the purchasing team.
Quote A is a man-month estimate from a larger vendor: a bridge SE, a project manager, two engineers and a part-time tester over several months, billed monthly. Quote B is our fixed-scope proposal for the same written feature list, starting from US$900, over roughly eight to ten weeks, with milestones.
To compare, the purchasing team first converts Quote A into a total, including ramp-up and the bridge SE. Next they estimate internal hours: Quote A needs Japanese specifications and fewer English meetings; Quote B needs a clear English feature list, which their IT lead can write, and a weekly English call. Then they add a rework allowance to Quote A, because it is time-based, and note that Quote B absorbs rework inside the agreed scope. Finally they convert both to yen at their budgeting rate with a currency margin.
The right answer depends on their team. If nobody can work in English, Quote A’s Japanese layer is worth paying for. If the IT lead is comfortable in English, Quote B’s effective cost is likely lower, and the portal is theirs, code and accounts included, from the first day.