In-House Development vs. Outsourcing
When starting a new project, everyone faces the same question: how to translate the idea into reality? Whether you are a startup or a prosperous company, you want to build your product fast, keeping quality high and costs low. This way you need to make a tough decision and choose who will take care of the development process: an in-house or outsourcing team.
Before we dig deep into both approaches and discover their nuances, let’s mention that it may be challenging to find a single perfect solution. To travel this distance easier, we will start with pros and cons of in-house and outsourced development. In the end we will sum up the key points and provide some experience-based recommendations.
In-house software development means leveraging company resources to develop or implement software according to the company-specific requirements. This approach supposes the company’s core competency is software development. To get increased control over development and intense project engagement within the team, you have to be ready for investing money and time in your team.
Pros of in-house development:
Deep involvement and quick response. It allows you to maximize the customization of the in-house engineering process and for every minor tech need of your company. You can make appropriate changes in the development process easily to adjust the project to your business.
Enhanced control. You have visibility over the day-to-day progress, know what your employees are working on, and can react promptly if some stumbling blocks are in the way.
High security. Your business data and know-how aren’t shared with third parties, and you keep all the knowledge gained during the project inside the company, which minimizes the chance of information leakage.
Cons of in-house development:
Slow launch. It takes a long time to hire the proper developer (usually it takes 30-40 days). You have to compete with other companies and offer better working conditions to attract top talent. And you not only have to think about getting qualified specialists, but also ensure they match each other by skills and personality to be efficient as a team.
Large expenses. It requires many funds to be invested in the initial stages, especially in small and large-scale projects: payroll, taxes, insurance, training, and maintaining the IT infrastructure are tough on the budget.
Expertise troubles. There is another classic problem with an in-house candidates pool. Naturally, it’s almost impossible to gather all the skills and roles in your team. In order to apply specific skills you’ll need to hire a specific candidate. The same situation is in the case of project expansion. Time spent can be crucial for meeting deadlines.
Staff dismissal. Another huge problem of in-house software development is the dismissal of employees. After companies have invested significant resources in their adaptation, they can just go away and you’ll need to invest in new members of the team again.
Outsourcing is a practice when an outsourcing company builds products for your company. Unlike it was long ago, now the primary driver for outsourcing software development is not just cutting costs. More and more companies are looking to cover their complex development needs with outsourcing. This is all about optimization: instead of spending vast resources on growing required competencies in-house, they can get them right away and at a better cost.
Pros of outsourced development:
Availability of top talents. Since there is no limit by geographical location, we can choose any world’s top professional you need, including those in emerging technologies and narrow domains. Moreover, you can select destinations that offer a better price and quality ratio than others.
Reduced costs. No expenses inherent to in-house development related to recruitment, salaries, retention, and more.
Smart time-to-market. Benefits of outsourcing include avoiding all major hiring and staffing issues, which usually occurs if you practice in-house development. You can add features that matter to your customers at any time, no matter which skills do they require. This definitely shortens the timing of the product launch.
Flexibility and scalability. It’s easier to scale an outsourced team up and down depending on your needs. A vendor will take care of adding the right specialists to the team when the project grows and requires more hands to handle.
Cons of outsourced development:
Less control. The development process isn’t as transparent as with in-house development, which can put a vendor’s performance in question.
Security risks. The lack of direct in-person control and communications can cause a lack of trust to have a place while project development. Although, it depends on the specific contractor/developer. This issue can be limited by choosing the right partner. Be sure that you agree on the way of reporting, acknowledgment, meeting schedules, which are comfortable for both parties.
Communication issues. Varying time zones, cultural differences and insufficient English (or any other language) skills may become a barrier to effective collaboration.
How to make the right choice?
To sum up in-house and outsourcing software development approaches, we must admit that both of the models have positive and negative sides. The choice depends on the specifics of the project. We can define a general rule: if your company’s core capability is far from software development, it may become a huge challenge to your team to get everything right. They may lack the experience or understanding, which will result in unsuccessful attempts to do it in-house.
On the other part, it can be smarter to outsource the project. It is much safer to rely on an expert who definitely knows how to fulfil your requirements. Luckily, today the outsourcing software development market is mature, so it won’t be a problem to choose the one that suits your business needs.
However, if you want to combine the advantages of both approaches and get the best from them, you can try to mix both models. This way you can start with developing an MVP with an outsourced team and then gradually grow your in-house team for further evolution and maintenance. The second way is valid for those who already have an IT department. A dedicated team or staff augmentation may be pretty cool options to keep core development activities in-house, while benefiting from outsourcing routine or, on the contrary, narrow areas of development.