In-House vs Outsourcing: Which Software Development Method to Choose

Today, more and more startups and companies need software development. Sophisticated software solutions are especially in-demand in the healthcare, telecommunications, and fintech industries.

However, whatever task a business faces — process automation or software product implementation — the eternal question will remain: is it best to use an in-house or outsourced development method?

Some companies prefer in-house development; others resort to the services of third-party specialists who provide outsourced development. To understand which model is right for your business, let’s take a closer look at each option.

Outsourcing software development: how does it work?

The concept of outsourcing involves the transfer of particular responsibilities and tasks to a third-party contractor. Thus, the customer company receives those services that it cannot perform on its own, and in turn, the contractor company ensures the high-quality execution of tasks assigned to it by a team of its specialists.

With outsourcing, communication between the customer and the contractor team is usually handled by the project manager. The client company discusses all issues with the manager of the contractor company, and the project manager distributes tasks to his team of specialists and monitors the work.

There are a lot of benefits of outsourcing software development, but also some potential issues if things are not managed properly.

Outsourcing software development: pros

Fast start

The ability to begin quickly is one of the main advantages of outsourcing for many companies. In urgent need, the execution of urgent IT tasks can be immediately transferred to an outsourcing company with a ready-made team of specialists who will immediately get down to work.

A global selection of experts

Outsourcing means the ability to work with highly qualified specialists not only from the city or country in which the business is located, but anywhere in the world. The choice of an outsourcing company is not limited to location, which means there is access to a larger number of specialists with a set of unique skills.

Save time

When choosing outsourcing, the contractor carries out the team selection, the division of responsibilities, control and payment for the work independently, which saves time for the customer.

Cost savings

Reducing costs in addition to other benefits is another bonus of outsourcing development. For example, paying for the services of an outsourcing company is much cheaper than hiring IT specialists, and you can plan your budget in advance.

In addition, the team works remotely, which means the client saves on office management, corporate expenses, HR, and other spending areas that are associated with in-house employment.

Reducing risks

You have the opportunity to study an outsourcing company’s successful projects, identifying strengths and weaknesses before applying for their assistance. The risks of misunderstanding or a failed project, in this case, are much lower.

Outsourcing software development: cons

Data confidentiality

As with any third party service providers, there is a slight risk of data breaches or other security related issues. Therefore, it is essential to ensure that outsourcing companies have established themselves in the market with positive reviews and comply with security standards.

Communication

Due to time or cultural differences, it can be challenging to establish clear communication.

Especially when there is a severe time difference between the customer and the contractor, without proper communication channels and a well-functioning method of cooperation, the effectiveness of work on a project can suffer.

Deadlines

Estimating time can present problems for the customer. Very often, third-party developers underestimate the timing and complexity of the project, which inevitably means more work time needs to be allocated, and accordingly, higher costs for the customer.

Eventually, for companies that want to remain cost-efficient but have fast and high-quality results, outsourcing is a good, convenient, and low-risk option. Additionally, you will have the opportunity to get the delivery you desire without having to control the entire process, as there’s a skilled team involved.

In-house software development: how does it work?

In-house development involves hiring the team with the necessary skills to work internally in the company. With an in-house team, you can track and control work processes, and monitor the efficiency and growth of employees more closely.

In-house software development also requires an office or infrastructure with all hardware and software. So let’s take a closer look at the pros and cons of in-house development.

In-house software development: pros

Confidence

When hiring in-house, you develop a better connection with the team, which facilitates communication and streamlined delivery processes. Additionally, employees that are part of an internal team are often more accountable and involved in the project.

Communication

The ability to communicate personally helps to make work more effective and reduce misunderstandings. In addition, since the entire team is working together in the same office and in the same time zone, it’s easy to make changes faster.

Understanding the specifics

Generally, the staff member better understands the business aspects, goals, and pitfalls, and responds more quickly to changes in processes.

In-house software development: cons

Expansion of staff

For the correct development of any project, a whole team is always needed — not only programmers but also designers, testers, product owners, and product managers. You need to put them together, and also to make them work effectively.

Searching for experts

The labor market does not always have the necessary specialists, and if there is, the cost of their services may go beyond the project budget. In addition, finding a good specialist with specific competencies is an expensive and challenging task.

High price

The cost of hiring in-house developers is significantly higher than that of outsourced developers because these costs include infrastructure, overhead costs, other employee benefits, training costs, and more.

In the case of retaining a specialist with a low workload, the company will essentially pay for the “downtime”.

Competitive Risks

Due to high demand and attractive packages offered by other companies, developers are increasingly changing jobs. Thus, there is always a risk that your lead developer might change careers at a critical stage in the project.

Hiring in-house as opposed to outsourcing might seem like a good idea at first glance, but it does pose some real problems. Finding and recruiting the right people, explaining your needs, and getting the most out of your developer takes a lot of time and effort.

In addition, it can distract you from core business functions, leading to confusion and at worst, loss of the project.

Choosing a solution

Based on what we have presented above, we have compiled a comparative table, “In-House vs. Outsourcing Development,” which clearly shows the effectiveness of both methods.

Based on this, for companies that are not focused on information technology and do not have competent IT specialists on their staff, it is better to choose outsourcing, entrusting all the work to outside professionals.

Outsourcing takes over most of the planning and execution of your workload, thereby freeing up your efforts to focus on the tasks that require your attention.

By choosing outsourcing, you can grow your business in an unstable market without any significant risk. Glorium has been a reliable provider of the best software development solutions for over 10 years, so if you need a trustworthy outsource partner, get in touch!

AboutDmitriy Stepanov

Experienced Chief Technology Officer with a demonstrated history of working in the information technology and services industry. Skilled in Scrum, Embedded Software, Object Oriented Design, SQL, and Medical Devices.