AI Drives Down Developer Rates Globally While Latin America Holds Steady

AI's Impact on Developer Rates: What IT Pros Need to Know

The 2025 Accelerance Global Software Outsourcing Trends and Rates Guide reveals a clear shift: software developer hourly rates are dropping worldwide. The decline ranges from 9% to 16% in many regions, with Latin America standing out as the only area where rates have remained steady.

This change reflects a tougher market for developers. Clients are negotiating harder, and outsourcing firms are offering more discounts and off-rate card deals to close projects. Eastern Europe saw a 9% dip in rates, while South Asia and Southeast Asia experienced sharper 16% cuts.

Why Are Developer Rates Falling?

The report compares 2024 data with 2023, showing a softening demand driven by tighter enterprise IT budgets and intense competition among software providers. Many firms are aggressively reducing prices to win limited business.

Peter Bendor-Samuel, founder and chairman of the Everest Group, points out that AI is a key factor. Companies are leveraging AI internally, which reduces their reliance on external developers and allows for more aggressive pricing strategies.

Latin America’s Rate Resilience

Latin America is bucking the trend due to the increasing value of time zone alignment for AI-driven app development. Proximity leads to higher productivity, supporting sustained or even higher rates in the region.

AI Cuts Costs, Changes How Development is Done

Ray Wang, CEO of Constellation Research, shares an example where AI-enabled efficiency drastically reduced project scope and timelines. A firm led by Sunil Karkera won a bid with less than 10 people working half as long compared to a competitor’s 100-person, year-long plan. This demonstrates how AI-native approaches scale development faster and cheaper.

Amazon’s AI initiatives also highlight the impact. Using its Q Developer agent, Amazon migrated thousands of applications to newer Java versions, saving over 4,500 years of manual work and $260 million annually in costs. This is a clear example of AI-assisted modernization delivering tangible value.

What Does This Mean for Developer Rates Going Forward?

• About 50% of outsourcing providers expect to raise rates by 1% to 5% in the next six months—still far below the double-digit growth seen during the pandemic.
• Specialized tech roles may see some inflation-driven increases due to shortages.
• Discounts and off-rate card deals will remain common, reflecting a competitive market environment.

AI and Automation: The Future of Software Development

Estimates suggest that by 2025 to 2027, 70% to 90% of development tasks could be AI-driven. Phil Fersht, CEO of HfS Research, notes that 83% of US enterprises are increasing investments in automation and AI to offset geopolitical and tariff-related uncertainties.

Despite recent geopolitical tensions and trade uncertainties, the software outsourcing market continues to adapt, with AI playing a central role in reshaping how development work is priced and delivered.

For IT and development professionals looking to stay ahead, exploring AI skills and automation tools can be a smart move. Resources like Complete AI Training’s latest AI courses offer practical learning paths to build relevant expertise.