In-House vs. Outsourcing Software Development
Today, any new software project raises the dilemma of whether to build it internally or outsource it. An in-house team allows you full control over the development process, simplifies communication, and improves the company culture. Outsourcing is usually a faster and more cost-effective option, providing access to a diverse pool of specialists from all over the world.
Do you want to keep control or completely trust external professionals? Will the project be short-term or long-term? Do you plan to scale up? What is your budget? The answers to these questions will help you determine the cooperation model. In this article, we will discuss the basic principles of in house vs outsourcing software development to help you choose a solution.
GetTrusted is a platform for finding the perfect outsourcing partner with a full guarantee of quality results. We don’t work with freelancers and carefully check companies, their cases, and their public image. Also, we pick up only those vendors that work in your niche and convenient time zone. But first, let’s talk about which software development model is best for your project.
What Is Outsourced Development?
In 2023, the share of US companies that plan to outsource at least part of their processes stays at 60%. That type of development involves delegating the workflow to an external agency. The company takes responsibility for the entire project or specific tasks, depending on the contract terms.
For example, IKEA partners with Xiaomi and Sonos to enter the Internet of Things segment. At one time, GitHub turned to outsourcing to provide the platform with a reliable backend. And Slack would not have progressed beyond the idea if its founder had not turned to MetaLab to create his app.
Pros of Outsourcing Software Development
Why do companies turn to such services? This approach has many advantages:
If IT talent is expensive in your area, you can hire specialists from other locations. On average, in Eastern European countries like Poland or Ukraine, the rates are lower, but the qualification level is high. The difference is caused by living costs, the need for developers, and other factors.
Also, you don’t have to rent an office, buy expensive equipment, pay sick leaves and bonuses, and cover other in-house expenses. As a result, outsourcing leads to 40% to 70% development cost reduction.
Wide Access to Talent
50% of executives identify talent acquisition as a top challenge to achieving strategic goals. Outsourcing allows you to collaborate with the best talent from all over the world, choosing those with the necessary skills and experience. Just imagine what opportunities it opens up for your project.
No Technological Restrictions
Artificial intelligence and machine learning, augmented reality, blockchain… The world of technology is very dynamic, and few companies keep up with all the innovations. Does your project require different skills and technologies? Cooperate with several IT companies.
Fast Recruitment Process
In outsourcing, you don’t have to spend time searching for the right candidates, hiring, and onboarding. You only need to articulate your requirements and wishes — and the company will find the right developers. In addition, such specialists quickly delve into the workflow.
Your needs may be affected by seasonal demand fluctuations, rapid company growth, or unforeseen circumstances. With outsourcing, you can easily scale up and down, depending on the project’s specifics. This means you can grow your team without going through a lengthy recruitment process.
Working with a reliable vendor, you don’t have to worry about the team’s qualifications. Your project will be delivered on time and according to the approved budget. The company is responsible for work quality and speed, having well-adjusted processes, and experience in overcoming typical challenges.
Focus on the Core Activity
By outsourcing certain software development processes, you free up resources and attention to focus on core activities and improve strategic planning. On the one hand, your company continues to strengthen its market position in familiar fields of activity. On the other side, you develop other directions without intensive participation in related processes.
Cons of Outsourcing Software Development
If you think everything is too good to be true, don’t worry. This approach also has drawbacks:
If you like to control everything, outsourcing may not be the best choice. Under this model, you don’t have 24/7 access to the team. Instead, you are in touch with a project manager who keeps you updated on intermediate progress. You can’t get instant responses, and it takes longer to fix bugs.
That is why finding a reliable vendor that guarantees process transparency and regular reporting is so important. We at GetTrusted cooperate only with reputable IT companies. All of them have well-structured processes and extensive development experience in your niche.
Remote work has become a common practice for many businesses. However, working with people from different time zones and speaking another language can be challenging.
The good news is that working with GetTrusted helps you avoid these kinds of issues. We will select a vendor based on your wishes so that nothing interferes with productive work. Language, time zone, and even cultural differences will all be considered.
Privacy and Security Concerns
Are you ready to entrust confidential information to a third-party developer? Such a need may cause you concern. However, 81% of companies use third-party vendors to strengthen their cybersecurity. It is important to work with a trusted company, sign an NDA, and ensure proper security measures are in place.
GetTrusted can guarantee all of these points. We always check the vendors’ reputation, security, and compliance measures and ensure the contract protects your interests.
Team Integration Issues
Another potential outsourcing challenge is integration with the in-house team, processes, and company culture. You may worry about the collaboration of new and existing professionals, their communication, and ability to solve problems together. Can these risks be reduced? Sure.
We work with experienced companies that establish clear protocols for smooth cooperation, communication, and feedback.
When is the Outsourced Team Model Suitable?
Outsourcing can become the project lifesaver in the following cases:
- You are a startup with a limited budget, which cannot assess its prospects and afford to hire an in-house team.
- You want to optimize your budget and attract qualified developers at a lower rate.
- You can’t find specialists with the right experience and tech stack in your area.
- Your project has a tight deadline, not having room for error and time to find and adopt new team members.
- You need to develop a complex solution you don’t know how to manage.
- You have a development team but lack the specific skills or experience to develop the required solution.
- You can’t be fully involved in the workflow and control its progress but want to focus on other business processes.
What Is In-House Development?
Internal development is the creation of a team from scratch. This involves recruiting, interviewing, hiring, and onboarding. Here you will need designers, developers, testers, managers, and other specialists.
Pros of In-House Software Development
Having considered the advantages of outsourcing, it would be fair to emphasize the pros of in-house development as well.
Company Culture Fit
22% of executives are concerned about the negative impact of third-party specialists on company culture. Maybe, you should create a team promoting the company’s values and culture. You can also manage employee engagement through team building, training workshops, and other activities.
One of the benefits of having your in-house team is direct communication. Since all specialists are in one place, nothing prevents the project discussion as soon as possible. The likelihood of misunderstandings is much reduced, and issues are resolved many times faster.
When creating a new product, bugs and bottlenecks will surely appear. It is essential to make timely changes to the code, add modifications and updates. Full-time specialists can do this much faster because it is enough to change the priority of current tasks. The outsourcing team may be less responsive due to busyness.
Control Over the Development
If you like to keep your finger on the pulse, an in-house development team is what you need. Direct access to experts allows you to track progress, resolve issues, and change processes as needed. It is vital if you want to meet the required standards.
In-house development leads to the accumulation of knowledge and experience within the company. Over time, the team gets a deep understanding of the specifics of the processes and the organization itself, increasing efficiency. It will also make it easier for you to make changes and improve the product.
Cons of In-House Software Development
Outsourcing has become so popular because of the in-house team disadvantages. Let’s look at them in detail.
In-house development is not only about salaries. Be aware of hidden costs such as sick days, insurance, vacation, and social security. Add to this recruiting, hiring, and onboarding expenses. Also, specialists need the office, computers, and other necessary things. And when the team has a break between projects, you still need to pay them a salary.
Lack of Qualified Specialists
Finding good professionals with specific skills and in the desired rate range is not always easy. Especially when it comes to office work in a particular region. And if the time for finding and adapting employees is delayed, this may affect the project’s success.
Only 29% of IT professionals are happy to stay with their current employer. Good specialists with advanced technologies are in great demand, and competitors constantly want to lure them away with more favorable conditions. To retain employees, companies must also periodically review salaries and other bonuses.
In IT, new languages, technologies, and tools are constantly emerging. A lack of the necessary qualifications can significantly affect the growth of your product and its market position. Therefore, your main task is to improve team skills through courses and training programs.
At any time, you may need to significantly expand your team due to sudden growth or market changes. It is not a problem for large companies that run several projects simultaneously because specialists can move between them. But for startups and small or medium-sized businesses, such changes can be challenging.
Internal development may take longer than planned. This is especially true if you are doing such a project for the first time. It is important to understand that if you delay, you may lose a winner advantage because other companies will implement similar ideas faster.
An in-house team that has absorbed the company’s culture and values has one significant disadvantage. This creates a kind of bubble leaning toward traditional approaches, which makes it difficult to find innovative solutions for software building. However, external developers, working with companies in different industries, have access to a larger pool of technologies and methods that can be brought to the project.
When To Use In-House Development
We have already discussed the pros and cons of in-house development. So in what cases is this approach most justified?
- Software development is your main activity, so you should have enough control.
- Your area (fintech, healthcare, legal) is heavily regulated, so it’s easier for you to personally check compliance with regulations and standards.
- You are not in a hurry with the project deadlines and have a significant budget.
- You want full control over the project and the ability to quickly make changes.
In House Development vs Outsourcing: Comparison Table
We have prepared a table to help you compare the building of software in house vs outsourcing:
|Higher initial cost due to hiring and maintaining an in-house team. Ongoing expenses include salaries, benefits, and infrastructure
|Lower initial cost as you only pay for the development services
|Development may take longer due to the time required for hiring and onboarding
|Faster development, especially if the outsourcing partner has relevant expertise
|Full control over project management
|Effective project management to ensure alignment between the company and the outsourcing partner
|Easier communication and collaboration
|Communication challenges when dealing with different time zones and cultural differences
|Access to specialized knowledge and expertise within the company
|Access to a wide talent pool with experts in specific technologies or domains
|Recruitment & hiring
|Time-consuming and requires dedicated HR efforts
|Less involvement in the recruitment process
|Offers better control over data security and intellectual property.
|Requires careful consideration of the outsourcing partner’s security measures and data protection practices
Hybrid Approach: How To Get The Best Of Both
Can’t decide between in house vs outsource software development? Combine the best two strategies to get the most out of your business.
Leave the core tasks to the internal team that you excel at or that give you a strategic advantage. Along with this, delegate processes you are new to. An outsourcing team will help you close the gap in experience and qualifications, as well as provide some flexibility and a fresh perspective.
Thus, you can control core processes, optimize the budget, attract talented experts, and do everything planned on time.
And what about the cons? Nothing is perfect, and the hybrid model has its downsides too. There may be issues with maintaining communication between internal and external teams and integrating work between them. It is also important to ensure common quality standards so that this difference does not affect the final product. But all this is easy to solve with the help of a competent project manager and well-organized processes.
Benefit from Outsourcing with GetTrusted
In house vs outsourcing software development: what to choose? There is no single answer to this question, as it all depends on your needs. An internal team gives you control over processes, dedicated employees, and effective communication. Outsourcing allows you to optimize the budget, attract highly specialized professionals from all over the world, and also guarantee the completion of the project just in time.
If you want to delegate a part or the entire development process to an external vendor, you’ve come to the right place. GetTrusted will not only match you with a reliable supplier in your niche but also double-check the quality of the product.
Tell us about your requirements, desired timeline, and budget. In 48 hours, we’ll provide an approximate project calculation. And if everything suits you, we will select the three most suitable IT companies from which you can choose the best one. This is not the end of our partnership, as we will provide technical supervision and a project manager. And the vendor will get the money only after a positive assessment of their work.
At the same time, you pay nothing for finding a vendor or our support during development. Our partner companies have already passed due diligence on legal and technical issues. No freelancers here, only trusted development teams. You can also choose any company from our catalog and ask us to become a guarantor.
Contact us to learn more and start realizing your ideas as soon as possible.
What types of work can be outsourced?
You can delegate any process to an external vendor, including product discovery, UI / UX design, product development, testing, support, scaling, and modernization.
All these processes are extremely crucial for building software and require narrow technological skills. It is quite difficult to create a team consisting of all these experienced specialists, who are also well-versed in your industry and its specifics. Therefore, outsourcing at least part of the processes will be a relief for your project.
When outsourcing, are there risks of data leakage, and how to avoid them?
Data leakage is always a risk, but reliable outsourcing companies minimize it. The whole team signs NDAs, letting you protect your intellectual property, and also ensures the safety of the development process.
Ask potential vendors if they use secure networks and systems, data encryption, and protected communication channels and protocols. Also, consider ISO 27001 and SOC 2 certifications to guarantee robust information security.
Are all projects suitable for outsourcing?
Theoretically, yes, but it all depends on the needs of the project and your personal preferences. If you like to be in control, we recommend not outsourcing core processes or hiring additional developers for specific tasks.
But if you want to adopt new technologies or innovative approaches, attract niche talent, speed time to market, and reduce development costs, outsourcing is the perfect solution. Moreover, you will be able to mitigate certain risks, as the vendor is responsible for achieving goals at the appointed time with a certain budget.