Outsource software development needs or build an In-house development team? This one question daunts every company that operates in the technical niche. It is generally because you will not find a definite answer to this question. Still, the outsourcing business model is expected to grow by $98 million in 2024. This is huge. However, even if the outsourcing market is overgrowing, it doesn’t mean that it is the right solution for your business.
What is working for someone else may not work for you. Hence, you should weigh the pros and cons of outsourcing software development for your business before concluding.
Let’s dive deep into In-house vs. Outsourcing Software Development
In-House Development
In-house development refers to a process where a business builds its development team in the office. You will have to hire people to fill all the important positions of a development team based on their projects’ experience and skills. Hiring in-house developers are similar to hiring permanent staff in an organization. They will work full-time and assist all development needs. For instance, if you are a tech giant and will concentrate majorly on IT products, it is practical for businesses like you to hire in-house development teams.
Pros of In-House Development
- Direct Communication: It is one of the most apparent benefits of having an in-house development team. You have them available in your workspace and hence can get your work done at any hour. You will not have to go through the pain of bouncing back and forth on emails to make a point clear to the entire team. Decisions are rapidly made, and the problems are worked on effectively.
- The Team will Align with your Company’s Culture: You can forge your company’s core values in your team. Your in-house team will align with your company’s culture, and they will know exactly what you want. Furthermore, it will help your business achieve better results.
Cons of In-House Development
- Upskilling your Development Team will be Your Responsibility: Technology keeps evolving, and when the industry experiences constantly change, developers are also required to stay updated with the latest trends. With an in-house development team, you need to ensure that your developers keep up with the changes. That said, you will have to invest in training your employees, which can affect your startup’s resources.
- It’s Expensive: You should stay prepared for the hidden and visible costs of hiring an in-house team of developers. The average salary of a developer doesn’t include the expenses incurred on sick leaves, social security, insurance, vacation, recruitment, and on-boarding. Even if the team is idle for a while, you will have to pay them fixed salaries.
When to Use In-House Development?
We are not saying that you should not hire in-house developers since the cons outweigh the pros. This business model works great for businesses in certain situations. Despite the high costs involved in hiring an in-house team, some sound reasons to hire one are explained below.
- You are looking for full control: If you can not afford any risk or problem, in-house development is for you. When you have your team, you will make every call regarding the development procedure of your product. Also, all problems will be immediately addressed in an in-house development setup.
- You Don’t Have a Tight Budget: If you have plenty of capital at your startup’s disposal and are not running a bootstrapped startup, then in-house development would be a great choice. You will obtain several benefits on in-house development with minimal cons.
Outsourced Development
This business model has gained popularity in recent years. As the name suggests, outsourcing refers to delegating a business aspect either entirely or partially to a third party. It is generally done through a contractual agreement, where you will convey all your requirements to the outsourcing team.
Businesses choose to outsource over in-house development because of its scalability and cost-effectiveness. Slack and Google are the two renowned names who outsource their software development needs. The outsourcing trend has evolved dramatically in recent years, and it generated a whopping amount of around $66.5 billion in the year 2019.
Read also: Software Development Outsourcing, A Complete Guide for 2021
Pros of Outsourcing
- Access to a Large Pool of Talent: When you choose to outsource, your project will not stay confined to the limited choice of developers you have in your realm. You will have a global pool of talented developers to pick from for your project. You will not have to go through the pain of rejecting resumes to choose the right developers.
- No Technical Constraints: A few projects require a diversified skill set, and it isn’t easy to hire individuals who are well-versed in all technology stack. With outsourcing, you stay worry-free since outsourcing companies have developers who are proficient with different technologies, and they will assign the developers that are required for your project.
Cons of Outsourced Development
- Communication and Language Barrier: If you happen to choose an outsourcing firm that is located halfway across the Earth from your location, you will find it challenging to schedule meetings with the team. The time zone will be different, and picking a time that would work best for you both would be a challenge. Managing Time Zone Differences between you and outsourcing company could be challenging. The use of other languages will also be a problem if the outsourced team is having difficulty understanding your goals and concerns.
- No Complete Control: The outsourced team will not have one project to work on. They work on several different projects parallelly. It means that you will have very little or no control over your task and troubleshooting progress. Lack of direct access with the team can make you oblivious to your project’s status. Bug fixes will not be immediate, and they may take days to reply to an email.
When to Use Outsourced Development?
Outsourcing will work best for you if your business is going through the below-listed situations.
- Tight Deadlines to Meet: If you are new to the development industry and are unsure where to start, outsourcing is for you. With tight deadlines, you cannot afford to delay a project.
- Lack of Available Talent: You may not be able to find the right talent in your city. Instead of spending considerable time and resources to train one, outsourcing it to an experienced IT vendor would be a good choice.
- Constraint on Budget: Startups generally have a tight budget, and they cannot afford to hire their team. In such a situation, outsourcing gives better flexibility when it comes to cash flow. Also, the commitment of a fixed monthly salary will not be a burden.
Conclusion
There is no definite answer to conquer the debate of outsourcing vs. in-house. There is no one-size-fits-all, and what works for one company may not work for you. You should understand your project very well and then comprehend the capabilities of your business to conclude. In some cases, businesses can also choose to make the most of their development needs by obtaining benefits of both worlds. Picking between outsourcing and in-house development is challenging. Weigh the pros and cons adequately and then make a wise decision. Based on the project, a model will work best for you.
