In-House vs Outsourcing Software Development: Which Suits You Best?

Before starting to work on an IT project, it is crucial to decide what suits you better: in-house software development or outsourcing. Both have their own pros and cons, so it is important to take them into account before choosing one. In this article, we compare in-house and outsourced software development based on their benefits and pitfalls to help you choose the best option for your project.

June 28, 2022

9 min

When you have an idea of an IT product, one of the essential things to do is to decide what suits you better: in-house software development vs outsourcing. 

In-house development means that you create your own software development team that is involved in building the software you need. And outsourced software development means working with a third-party company that provides software development services.

Both in-house and outsourcing software development have their own pros and cons, so it is important to take them into consideration before choosing one. What will work best for your particular project depends on many factors like the budget, time frames, project requirements, team expertise and experience, and many others. So, in this article, we decided to have a look at the pros and cons of each approach and help you get some insights into the in-house vs outsourcing software development question.

In-house Software Development

If you prefer the in-house development approach, you need to build your own web development team from scratch. You can create a team filling all the necessary positions based on your company’s unique needs and requirements. You may pick the staff members with the right skills and experience to work on a particular project.

Choosing the right in-house development team is similar to hiring any other staff in your organization. You will need to go through the standard process of recruiting, interviews, and onboarding to create an IT team. This option is suitable if your company is focused mainly on an IT product. 

Advantages of In-house Software Development

In-house software development definitely has a lot of benefits that make it one of the most popular development approaches.

  • Matching your company’s culture and values

If you are hiring an in-house development team, you have the opportunity to build a team that fits your company’s core values and identity. This way, you can pick the most suitable employees for your team, and when a team works in synergy, they can achieve better results.

  • Face-to-face communication

In an in-house team, the team members have the ability to work within one space. Having the ability to communicate face-to-face allows to speed up the process of working on the project. You don’t need to send lots of emails and host dozens of online calls to get the work done. Another important factor is that it is easier to communicate when all the team members speak the same language.

  • Making changes without delay

When you are working on a new project, there can be some flaws or things that need to be corrected. If you have an in-house team, the fixes or changes can be made right away, while the response in an outsourced team may be significantly delayed.

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Disadvantages of In-house Software Development

With all its benefits, in-house development still has some disadvantages that need to be taken into account. ‍

  • It’s costly 

The high cost is one of the most significant disadvantages of in-house software development. It is much more expensive than collaborating with an outsourcing software development company. There are many additional expenses like taxes, rent, software, hardware, employee training, social security, etc.

  • Hiring IT talents can be challenging

Finding the best specialists for your company is quite a challenging task, as the demand for qualified IT staff is constantly growing.  In some regions, it is almost impossible to hire the right person. A new team member should not only have the required knowledge and skills but also fit into the planned budget, which is not easy to find due to the high demand from other companies.

See also: Why Is It Hard To Find a Good Developer? Freelance vs Outsourcing
  • Employee turnover can be high

It is tough to not only hire IT professionals but also retain them. Software development specialists are in very high demand, and other companies are trying to offer better conditions. So you may end up counteroffering your top staff with more benefits or losing some of your team members instead. And finding a new developer is usually a time-consuming process that can slow down work on the project. 

  • Upskilling the team is your responsibility

The technology industry is constantly changing; new tools, languages, and technologies are introduced. And you need to make sure that your team keeps up with the changes, especially if they are essential for your product.

In-house Software Development Pros and Cons

Outsourced Software Development

Outsourced software development means that the process of creating a product is delegated to an external company. It is all about handing the project over to a software development partner that is qualified to perform the required tasks. 

The demand for outsourced software development is constantly growing as the technology is evolving incredibly fast. With the competition higher than ever, it is crucial to adapt to the new trends in digitalizing and optimizing their business processes.

Related Reading: How to Choose the Right IT Outsourcing Model in 2022

Advantages of Outsourced Software Development 

Outsourced software development is a great way to build IT products that has its own advantages.

  • Lower costs

This is especially important for businesses from countries with high rates of local developers. There is an opportunity to hire an outsourced development team from the countries with lower rates with the same level of expertise. 

  • Large talent pool

The outsource development market provides an immense pool of global specialists. There are lots of options available, and the hiring process takes much less time. You can hire the best professionals from all over the world with different skills and experience.

  • Scalability

Another advantage of outsourced development is the ability to scale up and down. For instance, with a dedicated team of developers, you can make your outsourced development team bigger to speed up the work processes or decrease the number of developers when there are not many tasks for them.

  • Great choice of technology

With outsourced software development, you are not limited to a particular region. Even if specialists in this technology are hard to find in your region, you can hire qualified developers from practically anywhere in the world.

  • Faster development process

Outsource software development allows you to speed up your development process and reduce the time spent on recruiting. Also, it is possible to add more developers when it is necessary and make the team smaller in other cases.

Disadvantages of Outsourced Software Development

Nothing in the world is perfect, so there are some disadvantages in outsourcing software development that you need to be aware of.

  • Less control over the development process

Working with an outsourced development team, it is harder to have full control over the development process as you don’t have direct access to the team and what is happening on the project. Though reliable software development companies tend to take care of that, there usually is a project manager who is responsible for assigning and completing tasks, the development process, and communication with the client.

  • Communication issues

If you are working with an outsourced software development team from another part of the world, it can sometimes be hard to schedule meetings due to time zone differences. The language barrier can also be an issue here, as it can be difficult for speakers of different languages to understand each other.

  • Security

If you are working with an outsourcing company, you are sharing your confidential data with a third party. So it is essential to check the company's record and sign an NDA to protect your interests legally.

Keep reading: A Guide to Vendor Evaluation and Scoring in Software Outsourcing
Outsourced Software Development Pros and Cons

To Conclude

There is no universal solution on what to choose: in-house development vs outsourcing. If a particular approach works for one company, it doesn’t necessarily mean that it will work for all the others. To make the right decision, you need to consider your needs and requirements and the available resources. If you still have any doubts or are looking for a consultation with a professional software development team, feel free to contact us, and our experts will be happy to help.

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