Offshore development in 2026: from cheaper hands to capacity and capability

Offshore development in 2026: from cheaper hands to capacity and capability

On 16 September 2026 we counted the firms in our catalogue whose own websites show they offer staff augmentation, meaning they place their developers inside a client's team. We found 770: 545 in India, 165 in Ukraine and 23 in Pakistan. Behind them sit our live listings by country: 2,695 in India, 653 in Ukraine, 198 in China, 138 in Pakistan and 35 in Saudi Arabia.

The more telling count is what those listings leave out. Almost none of the 770 firms publish a founding year, a team size or a rate on their listing, and none of them has a client rating with us. A buyer comparing offshore partners therefore starts with a list of names and very little else. The firms compete on the promise of capable people at a good price, but they rarely put the facts that would let a buyer test that promise where a buyer can see them.

That gap matters more in 2026 than it did five years ago, because what buyers want from offshore work has changed. Cost still matters. But the argument of this article, drawn from the figures below, is that buyers increasingly need capacity they cannot hire at home, skills they do not have in-house, and a delivery model that holds up while AI tools change how routine work gets done. This article looks at those shifts using published figures, and ends with a set of decisions a buyer can work through before choosing a model and a partner.

What our offshore count shows, and its limits

Our count of 770 firms is based on evidence on each firm's own website: a page, a service description or a case study showing that it provides staff augmentation. It is not a count of every offshore firm, and the country split reflects our catalogue as much as the market. India's large share is not surprising given the size of its industry. Relative to its listings, Ukraine has the higher rate: 165 of 653 live Ukrainian listings (about a quarter) show evidence of staff augmentation, against 545 of 2,695 in India (about a fifth).

The missing facts are the real finding. Founding year tells a buyer whether a firm has survived a downturn. Team size tells them whether it can replace a developer who leaves. Rates tell them whether a conversation is worth having. When none of the three is published, every buyer has to ask the same questions from scratch, and the firms that would compare well lose the chance to show it.

Elsewhere in our catalogue, 171 of 1,000 randomly drawn company listings checked on 24 September had websites that no longer led to the business as listed. Offshore firms are not exempt from that churn. The practical lesson is that continuity has to be designed into the contract, not assumed.

The market is still growing, but not the way it used to

A common line in 2026 is that AI will make offshore development unnecessary. The published export figures do not show that, at least not yet.

The World Bank's data on ICT service exports, drawn from balance of payments statistics and last updated on 13 July 2026, shows:

Country	2023	2024	2025
India	$162.6bn	$177.7bn	$200.3bn
Poland	$16.9bn	$19.8bn	$22.1bn
Philippines	$7.1bn	$8.1bn	$8.8bn
Ukraine	$6.9bn	$6.6bn	not yet published
Pakistan	$2.7bn	$3.6bn	$4.2bn

National sources tell a similar story for 2026.

• India. NASSCOM, the industry body, projected in February 2026 that the technology sector's revenue would reach about $315 billion in fiscal 2026, growth of 6.1%, with exports above $246 billion. NASSCOM's figure covers the wider technology industry and is not meant to match the World Bank's.
• Pakistan. State Bank of Pakistan data, reported by Business Recorder in August 2026, put exports of telecommunications, computer and information services at $4.6 billion in the fiscal year to June 2026, against $3.814 billion the year before, growth of about 21%.
• Ukraine. The IT Ukraine Association, citing National Bank of Ukraine data, reported computer services exports of $3.343 billion in the first half of 2026, up 4.1% on the same period of 2025. The United States was the largest destination, with the United Kingdom third at $267 million. The association's chief executive described the growth as modest but a sign that the sector had moved beyond survival.

So the honest answer to "is offshore development shrinking?" is no, not by value. What the figures also show is that the growth is uneven, and that value is growing faster than the number of people doing the work.

Revenue is outgrowing headcount

The clearest published signal of change comes from India. NASSCOM's fiscal 2026 projection paired 6.1% revenue growth with headcount growth of just 2.3%, about 135,000 net additions, for a workforce of nearly six million. More revenue from proportionally fewer new people means each person is producing more, is being billed at higher value, or both.

The large firms say plainly why. Infosys, in its annual report on Form 20-F filed in June 2026, lists among its risks that increased adoption of AI and automation may "reduce demand for labor-based delivery models" and raise clients' expectations of productivity improvements and outcome-based pricing. Its headcount rose only modestly, from 323,578 at the end of March 2025 to 328,594 a year later. Accenture's annual report for fiscal 2025 says that some tasks its people perform "have been and will continue to be replaced by automation, including AI-enabled solutions".

For buyers this cuts two ways. Routine work that used to justify a large offshore team, such as manual testing, simple maintenance and repetitive code, is exactly the work AI tools are absorbing fastest. A buyer who still pays for that work by the head may be paying for effort that is no longer needed. On the other hand, the people who remain in demand are the ones who can design, review, integrate and take responsibility, and they are not cheap anywhere.

We discuss who keeps the productivity gain when delivery gets faster in our companion article on IT service providers and buyers in the AI era.

Global capability centres: when the buyer builds its own offshore team

The other change is that some large buyers skip the outside firm altogether. A global capability centre is an office a multinational runs abroad for its own work: engineering, data, operations or testing. In India, figures from the Ministry of Electronics and Information Technology, cited in NASSCOM's February 2026 review and reported by CXOToday, put the count at more than 1,700 centres generating $64 billion in revenue in fiscal 2024 and employing 1.9 million people.

Capability centres matter even to buyers who will never build one.

• They compete for the same people. A staff augmentation firm in Bengaluru or Hyderabad hires from the same pool as the capability centres nearby. Senior engineers have choices, which affects retention on your team.
• They show what the model has become. A company that runs its own centre is choosing to own the capability, such as product engineering, data platforms or security, rather than rent it. In our view that is the direction the wider offshore market is moving.
• They set a benchmark. If a large company can run its own engineering centre abroad with its own culture and standards, a smaller buyer can reasonably ask an outside partner for the same stability: named people, low turnover and real ownership of the work.

For a mid-sized buyer, a full capability centre is usually out of reach. The middle ground is a dedicated team from a partner, working only for you under your processes, sometimes with an option to transfer the team to your own entity later. If that is the goal, raise it before signing, because transfer terms are much harder to add afterwards.

Nearshore, time zones and how teams actually work together

Cost comparisons often ignore the working day. For a UK buyer the time difference shapes how a team collaborates more than almost anything else.

• Ukraine is two hours ahead of the UK for most of the year. Ukraine and the UK change their clocks on the same dates; Ukraine moves back to standard time on 25 October 2026. A Kyiv or Lviv team shares almost the whole UK working day.
• Poland and other central European countries are one hour ahead. They are the classic nearshore option for UK and Western European buyers, and Poland's ICT service exports, above $22 billion in 2025 on World Bank figures, show how established that market is.
• Pakistan keeps Pakistan Standard Time all year, four hours ahead of the UK in British Summer Time and five hours ahead in winter.
• India is four and a half hours ahead of the UK in summer and five and a half in winter. Our guide to staff augmentation in India sets out the overlap hour by hour.

Nearshore teams suit work that needs constant conversation: product discovery, fast-changing requirements, pairing with in-house engineers. Teams further away suit work that can be handed over in writing: well-defined features, test suites, maintenance queues. Many buyers now mix the two.

AI tools shift this balance slightly. Some of the work that once filled a follow-the-sun handover, such as overnight test runs and boilerplate, is now done by tools in minutes. What remains needs more judgement and more conversation, which favours overlap. It does not rule out distant teams, but it raises the value of the hours you share.

Staff augmentation or managed delivery

The model you choose matters as much as the country.

Staff augmentation puts individual engineers from a partner into your team. You direct their work, set priorities and review their output. The partner employs and pays them and replaces anyone who leaves. You carry the delivery risk, because you are managing the work.

Managed delivery hands a defined scope to the partner, who runs the team, the process and the delivery, usually against a fixed price, milestones or service levels. The partner carries more of the delivery risk, and you carry the risk of specifying the work well.

How AI changes the choice:

• Under staff augmentation, you are paying for time. If your augmented engineers use AI tools well and get more done, you keep the gain. But you also need to manage how they use those tools, including what code and data they put into them.
• Under managed delivery, the partner keeps any efficiency it achieves inside a fixed price. That can suit you if the price is right and the outcome is clearly defined. It suits you less if the price was set on old assumptions about effort.
• Routine work is a poor fit for pure augmentation now. If the work is mostly routine, paying by the head for it is the arrangement most exposed to AI. Consider a managed service priced on output, or an in-house engineer with good tools.
• Scarce skills are a good fit for augmentation. Where you need a specialist you cannot hire at home, such as a data engineer, a security engineer or someone who knows a particular platform, augmentation gives you direct control of a scarce person.

Our buyer's guide to offshore staff augmentation covers contracts, replacement terms and interviews in detail, and our rankings for India, Ukraine and Pakistan list the firms we have documented. Our rankings are ordered by how completely and verifiably each firm is documented, not by client reviews, which are still very few.

Decisions to make before you choose an offshore partner

Work through these in order. Write down each answer; it becomes your brief.

1. Why are you going offshore? Pick the main reason: cost, capacity you cannot hire at home, or a skill you do not have. If it is cost alone, check first whether the work is routine enough that AI tools or a managed service would cut the cost further. If it is capacity or skill, cost becomes a secondary filter.

2. How much conversation does the work need? If requirements change daily, favour overlap: nearshore, or a team that agrees to shift its hours. If the work can be specified in writing, a larger time difference is workable.

3. Who carries delivery risk? If you have engineering leadership to direct the work, staff augmentation gives you control. If you do not, managed delivery with clearly defined outcomes is safer.

4. What evidence will you require? Because firms rarely publish founding year, team size or rates, ask for all three in writing, plus the legal entity and its registration. Check that the company exists on its national register and that its website leads to the business you are talking to.

5. Who exactly will do the work? Interview the named engineers. Ask how they use AI tools, on what terms, and what they would never put into them.

6. What happens when someone leaves? Agree replacement time, a handover period, and who pays for the new person's ramp-up.

7. Who owns what? Assignment of intellectual property, ownership of repositories and cloud accounts from day one, and a rule on which AI tools may process your code and data.

8. How will productivity gains be shared? For augmentation, schedule rate reviews. For managed delivery, define outcomes precisely and revisit the price at set points.

9. How do you leave? Documentation delivered as work progresses, an exit assistance period, and access you can revoke on the day.

10. Could the team become yours? If you might want to bring the team in-house later, agree transfer terms at the start.

A buyer who can answer these ten questions will have a shortlist that is much shorter than the market, and a contract that holds up if the market keeps changing. For the same approach applied to software products, see what buyers look for in new software.

Sources

• ICT service exports (BoP, current US$): figures for India, Poland, the Philippines, Ukraine and Pakistan, 2023 to 2025. World Bank, World Development Indicators, updated 13 July 2026.
• NASSCOM projects Indian tech sector to grow 6.1% to $315 billion in FY2026: revenue, growth, exports, headcount and net additions, and ministry figures on capability centres. NASSCOM figures reported by CXOToday, 24 February 2026.
• Pakistan IT export receipts stand at over $400mn in July 2026: State Bank of Pakistan figures for fiscal 2025-26 and 2024-25. Business Recorder, 18 August 2026.
• Ukraine's IT exports grew by 4.1% in H1 2026: National Bank of Ukraine figures, destinations and the association's comment. IT Ukraine Association, 6 August 2026.
• Infosys Form 20-F for fiscal 2026: AI risks to labour-based delivery models, employee numbers. Infosys, filed 15 June 2026.
• Accenture Form 10-K for fiscal 2025: automation replacing tasks. Accenture, filed 10 October 2025.
• Daylight saving time changes 2026 in Kyiv: Ukraine's clock change on 25 October 2026. timeanddate.com (read 25 September 2026).
• TrustList offshore count: 770 firms with evidence of staff augmentation on their own websites, and live listings by country. TrustList Editorial, 16 September 2026.
• TrustList catalogue sample: 171 of 1,000 randomly drawn company listings with websites no longer leading to the business. TrustList Editorial, 24 September 2026.