In-house vs Outsourcing Software Development: Pros and Cons

In today’s frenzied world market growth, companies are repeatedly faced with the dilemma:  in-house software development vs. outsourcing their projects to a third-party service provider. This decision has a significant impact on the further success and growth of a company, making it crucial to thoroughly evaluate the benefits and drawbacks of each approach. In this article, we will examine the aspects to consider when choosing between in-house vs. outsourced software development and provide guidance on making an informed choice.

Your development team is aware of what’s going on and has already touched base with each other. This has a favorable impact on the quality and speed of the project: they know the company’s aims and vision, they can collaborate well, and don’t need repeated explanations of the project’s requirements.

In-house development provides an opportunity to have complete control over the development process.  Since your internal team members are on your payroll, you can use the workforce efficiently. Employees can be taught the corresponding technologies, methodologies, and philosophies to pursue the direction required.

Your in-house team can be solely focused on a particular project/task and can provide prompt support. Well-trained staff will be prepared for non-standard projects and find solutions faster.

An internal team can update and manage both software and local hardware. Since this team can communicate with all business departments, they understand business processes at a deeper level, which leads to working out possible problems more accurately and efficiently.

When hiring full-time specialists, you have the possibility to handpick the talents with aligned competencies your company needs. You know each person is qualified for a specific position and performs a designated role. When you outsource development, you have no idea who is on the team or what their qualifications are.

With a team of employees working exclusively on your company’s projects, you develop a sense of commitment that positively affects the team’s productivity and product quality. One shouldn’t overlook this emotional aspect, as it may play no less significant role in the project.

Hiring an excellent internal team is costly for an employer. According to Glassdoor, it costs $4,000 and 24 days for an average U.S. employer to hire a new worker. Additionally, an employer has to pay salaries, which are on average $105K per year for U.S. developers. When the team isn’t involved in any project, you’ll still have to cover their fixed salaries. 

Skilled professionals aren’t waiting for you on the job market, as other companies quickly hire them. It always takes a while to find a good one that would meet your requirements and business philosophies. Looking for a specialist can become a burdensome, time- and effort-consuming task, which may ultimately not pay off.

Any project requires a particular set of skills. If any of them is missing, a new worker must be sought to close the gap. This delays the project start and negatively affects team productivity on the whole. In addition to it, other ongoing projects that your employees are involved in may slow down the project’s completion.

We shouldn’t overlook the phenomenon of employee churn. Some workers stay, but the reality proves that most workers come and go, since the market is always in search of vetted specialists. And each time, it costs tangible time and money for a new employee to adjust to the company, accrue experience, and touch base with colleagues.

Let’s say you hired a strong team of developers to handle the business processes. Then you add up to their workload a new project of utmost importance. As a result, your IT team has to switch focus from one task to another and in case of arising problems, some work may not be done as thoroughly as it could be.

The outsourcing company has to retain an edge in a highly competitive IT market. In turn, competition requires improving all internal processes: development, team management, and quality assurance. In this environment, an outsourced team can quickly assemble and dive into new subject areas.

Around two-thirds of employers name cost savings as a key advantage of outsourcing. The profitability of outsourcing depends on many factors. For one thing, you don’t have to pay full salary and annual bonuses to your employees, open a whole IT department on-site or invest in costly equipment.

Companies generally run from 9 to 6, so your regular employees will not provide customer support beyond this time without additional payment. In contrast, hiring an external team will let you choose 24/7 support to be available without overtime pay.

In an increasingly competitive environment, outsourcing companies seek to provide better and more secure services. Therefore, they are taking measures to improve data recovery and prevent data loss and technological downtime.

With outsourcing, you can select specialists tailored to the needs of the project. Such companies have a wide range of professionals specially trained to perform a specific set of tasks, so project managers hire people with a specific set of skills for each project.
Additionally, the outsourcer has experience in implementing products for different industries and thus can help the company decide flexible solutions and launch software on time.

Delegating a project to a service provider frees up your workforce and allows it to focus on other important tasks and manage workflow tech-wise. This will thereby favorably affect the project results, since building a quality future-proof product for an outsourced team is an utmost priority.

A full-time employee at work can simply idle between projects, covering the bare minimum. An outsourced engineer, in contrast, receives a fee only for a specific result required by the company. This ensures an efficient and quality-centered approach that will help build a better product within narrower time limits.

By all criteria, the contractor performs the work correctly, aligning with the requirements and quality standards. However, the business specifics and philosophy often pose nuances that need to be clearly clarified from the outset. Otherwise, it can delay the product launch and lead to additional costs.

When having an outsourced team working on your future product, you don’t get complete control over delegated business processes. Since tasks are handled by non-staff personnel, it is pretty challenging to have transparent supervision of their implementation. The solution is to find a reliable partner with detailed reports and the possibility to make adjustments at each project stage.

Privacy is the key problem of modern society. To minimize the risks related to the illegal use of confidential information or the possible transfer of it to third parties, it is crucial to carefully specify in the contract the rights and obligations of the company regarding the disclosure of information.

A reckless choice of the services to be delegated is a bad choice. Make a well-considered decision and outsource those processes that drain your staff most and hinder business performance.

Before starting the journey, make sure you know the ultimate aim of the project, be it an increase in security, ROI, or cost savings. Once you outline the goals for yourself, you will be able to clarify them to the outsourced team and set a solid foundation for the product you want.

There are much praiseworthy IT service providers on the market. Still, it doesn’t cancel out the existence of companies with poor reputation. Take a close look at all the aspects: portfolio, reviews, certification, etc. A thorough study is bound to help you find the right partner in line with your expectations.

So let’s sum up all the points before you choose one of them. There are a number of factors affecting the final choice: