In-House vs Outsource Development: What’s Right for Your Software Business

Every project has different needs when it comes to software development. It leaves companies to choose between their in-house team or outsourcing development. While both options make sense, it is better to compare and then decide what’s best for your project.

For starters, in-house software development utilizes your current team’s abilities to create the software you need at the moment. Contrarily, outsourcing development implies working together with software developers working overseas to do the needful.

That said, we are here to help you understand the pros and cons of each option so that software companies can make informed decisions for their business.

Let’s start.

In-House Development

In-house development relies on a team of software developers to accomplish project needs. It involves screening and hiring team members for developing software or app for a business client. It grants the business total control over the project, although the costs can be higher.

The people you hire will be in charge of the software or app you intend to develop. You’ll have to go to job postings, review job applications, interview people, and hire the candidates you think are suitable for the job. Hence, it can be a bit time-consuming, but you’ll be in full control of the composition of the team.

If you choose this option, you should make a list of the positions you need for the project. Some of the most common include

• UI/UX Designers
• Developers
• QA engineers
• Data Analysts
• Project Managers

It’s common among big brands like Amazon or PayPal. They prefer gaining complete control over the project cost rather than risking sensitive data or information to a remote team. Before you decide, let’s determine the advantages and disadvantages of in-house software development:

Advantages of In-House Development 

An in-house software development team can build the product or software you want.  Let’s understand the advantages of relying on your in-house team for your development project:

• Efficient Communication 

Communication is key when it comes to the successful completion of any project. The project runs smoothly and without any communication gap if the team members are working under one roof or a common facility. 

• Cultural Sameness 

The in-house team you hire will share a mutual understanding of the company’s culture and values. This way, team members will share similar energy and enthusiasm to drive the project to success. They are less likely to be affected by cultural conflicts or communication barriers.

• Immediate Support 

An in-house software development team is readily available to fulfill your project needs. Add new features, extra functionalities, fixing bugs, or anything more to assure 100% quality assurance. You will have a dedicated team to assist without any delay.

• Hire Tailored Team

One of the most notable advantages of hiring an in-house development team is that you’ll know exactly the skills you need for project completion. Be it the skills, experience, or even knowledge of tech stacks, you have complete control over your project hiring needs.

Disadvantages of In-House Development 

While we spoke a lot good about in-house development, there’s another side to it. Let’s determine the disadvantages of in-house software development: 

• Expensive 

Hiring an in-house development team can get costly. All thanks to the skill shortage most US companies are battling with.  A Payscale study also confirms that an IT developer earns an average of $86K in the United States. And this does not include other costs such as training, annual bonus, and vacations.

Ironically, employers still have to pay salaries if the team fails to achieve the project goals. In the long run, it can put a strain on your company’s budget and resources, especially for startups and small companies.

• Talent Crunch 

Studies confirm that US companies are glaring at an acute talent crunch. Over 70% of employers are struggling to close positions. In grim situations like these, companies are left with little options but to look beyond local recruitment such as outsourcing.

• Longer Time to Market 

A typical in-house team works on multiple projects that can increase development time. Either developer would have to work extra hours or compromise on project deliverables. In both situations, companies would be at risk of losing out to their competitors.

When To Choose In-House Development?

In-house development can be a good choice for companies in the following three cases:

• When Budget Is Not A Problem: For companies that have sufficient capital to hire an in-house development team can be a better option.
• When Working on A Long-Term Project: For companies planning to build a scalable product with complex features and multiple functionalities, having an in-house development team makes more sense.
• When Retaining Control Is of Importance: For companies that can’t afford to risk sensitive company data such as Amazon and PayPal, hiring an in-house development team is a good option.

What is Outsourcing Development?

Outsourcing development is another viable option for IT and software companies. It means outsourcing the development work to a third-party agency instead of pushing it to the in-house team.

Generally, it is a contractual agreement between the company and the outsourcing partner. Big enterprises like Google or Slack use this model. Herein, the development work is done by a remote team of professionals while you carry on with your usual business.

Let’s determine what makes companies outsource software development. Starting with, study the advantages and disadvantages of outsourced software development.

Advantages of Outsourcing Development

Outsourcing development projects come with many compelling advantages.  Let’s find out what it brings on for your business: 

• Reduced Development Costs 

The most significant benefit of outsourcing software development is the reduced cost. It can be especially beneficial if hiring local talent is expensive in your country. You can reach out to IT outsourcing companies in Asia, central Europe, and many other parts of the world.

You can hire dedicated developers in India, Ukraine, and Indonesia where the hourly development rates can be more reasonable than those you would find in Western countries. Plus, you do not have to spend on an office’s operations and management, thus maximizing the total savings to up to 70%.

• Quickly Hire Local Talent 

When you choose an outsourcing development partner, you gain immediate access to a huge talent pool with diverse skill sets and experience. Screen them and hire the right person for the job. It won’t take weeks or months like traditional recruitment. In fact, you can hire dedicated developers in a few days and get on with your project! 

• Scalability 

Outsourcing enables you to hire an offshore development team of any size! Scale up or down as per your varying development needs. The control is in your hands. Choose who’s in and who’s not and compose a team that’s pitch-perfect for your project.

• Access to Flexible IT Infrastructure

The IT industry is constantly evolving with new technologies getting obsolete faster than you can imagine. Thus, it’s important to find IT firms that quickly adapt to varying development needs across industries. 

• Shared Project Risk 

When you work with an in-house development team, the weight of the project’s success or failure will always fall on your shoulders. With a software development service provider, you will get a fair insight into potential risks and issues in the future. You’ll have a more realistic project timeline and what’s to be expected out of the project.

Disadvantages of Outsourcing Development 

What could possibly encourage you to second-guess your outsourcing decision? Let’s find out the disadvantages of outsourcing software development:

• Limited Control

When you outsource software development, you have to be prepared to relegate some of the control of your project to remote professionals. The hired team may or may not have similar working methodologies, coding practices, and other working practices. Although most outsourcing companies dedicate a project manager that acts as an interface between you and your hired team of developers. 

• Communication 

Having an outsourced team working surfaces the communication challenges. From the absence of face-to-face communication to timezone differences, companies have to adjust and adapt to the new norm.  This however is workable if you partner with a dedicated offshore development team like us. Our team establishes common communication protocols that ensure client support calls are heard at their preferred time.

Data Security 

Outsourcing deprives companies of a sense of security as their project is handled by a remote team of developers.  One can perhaps work it out by signing a Non-Disclosure Agreement. Set up confidential terms that protect your product code and sensitive data from copyright infringement and other legalities.

When To Choose Outsourcing Development?

Outsourcing development can prove to be a good option for companies

• Looking for Budget-friendly Development Solutions: Many companies especially startups and small businesses can’t afford to hire a team without spending big bucks. So, what do they do? Outsourcing development enables them to get a top-quality solution at a reasonable price.
• Facing Specialized Talent Crunch: Finding the right talent for the job can be a nightmare. Do not lose your sleep over poor-quality candidates. Instead, outsource and access a global talent pool of developers. Screen and hire specialized talent for your project needs without any compromise.
• Overloaded With Work: Outsourcing development can relieve pressure off your in-house team and enable them to work on improving quality. So, delegate some projects to a remote team and balance the rising market demand.

Wrapping Up: It’s Time to Decide

The software development industry is growing rapidly. Studies also confirm the demand for developers is slated to rise by 22% by 2029. As an IT or software business, you have to look for alternative options to meet the growing market demand.

While it’s natural to rely on your talented in-house developers, you can’t overburden them to the brink.  It is too big of a cost to pay, right?

Likewise, outsourcing development is not an easy business decision but if push comes to shove, it makes the most sense.  You get best-in-class development solutions at a fraction of the cost. So, why not?

We as offshore development services recommend you weigh both options and figure out what works best for your evolving business needs.

Unsure What to Do Next? 

Build Offshore Team is happy to answer all your questions or clear doubts if any. Honest and unbiased, we help IT firms and software companies achieve their development goals.