In-House Software Development vs. Outsourced Software Development

In-House Software Development vs. Outsourced Software Development

By Vitaliy Kononenko

There are two standard methods for developing digital products: in-house software development and outsourced software development. To invest responsibly, consider the pros and cons of both methods and stay committed to your decision.

In this article, we go over the key areas of planning and implementation of both methods. By the end, you’ll be able to make a clear decision on which method is best for you and your organization. 

Businesses are first and foremost focused on their customers. More and more consumers, regardless of the industry and niche, are going digital and shopping, resting, planning, playing, and working online. 

There are two approaches to software development: 

  • You can find, hire, and train your own in-house team of IT professionals;
  • You can find, contract with, and outsource work to an IT vendor. 

Doing your due diligence for both approaches is essential. 

In-House Software Development

The Pros

Subject matter expertise

In-house teams are trained according to a particular company’s “best practices” and culture and tend to deliver consistency according to that company’s expectations. Product quality is always proportional to the company’s staff at the time. 

Flexible management

In-house teams are always accessible, offline or online, and are more deeply involved in the company’s processes and strategies. Cross-department communication is streamlined and managed internally. 

Flexible development

In-house teams focus solely on their company’s product, making them easier to maneuver from one task to another, whether that be debugging or major feature changes. Project changes can be mentioned, explained, and executed quickly. 

Cultural alignment

In-house teams are typically local (online/offline) and share similar timezones and cultural understandings. Team alignment positively affects interaction and promotes a better understanding of the project as a whole and the tasks to be completed.

The Cons

Slow team scaling

In-house teams need to be staffed with a variety of specialists, some are highly technical, and some are lightly technical. Hiring qualified professionals one at a time from various channels is slow, and often costly. 

Big investment

In-house teams must be built, trained, and maintained over a long period of time. It costs a lot to build out effective HR processes for recruiting (researching/interviewing), onboarding (hardware/software), training (professional development), and benefits (vacations/healthcare/discounts/etc.). 

Specialist competence and speed of development

In-house teams must be trained from juniors to seniors, or seniors need to be hired from the start. Developing a solid digital product is directly correlated to the immediate competence levels of the employed specialists; a.k.a., the better the specialist is, the faster the product will be developed. 

Staff turnover

In-house teams are difficult to satisfy. Staff turnover is the highest among in-house software developers because it’s not only correlated to salary. Atmosphere, corporate culture, and interesting work are all major factors playing a role in a software developer’s desire to stay.

Points to Consider When Choosing an In-House Team

  1. To select the right team, it’s necessary to have knowledge and experience in development. If you don’t have experience hiring IT professionals, consider hiring an HR professional to your company with an IT background.
  2. To test candidates, it’s important to have a CTO or senior developer who can participate in the hiring process.
  3. To prevent turnover, monitor team members’ performance and ensure they’re fully engaged in their work.

Outsourced Software Development

The Pros

Subject matter expertise

Outsourced teams are typically versed in multiple industries and comprised of middle+ to senior specialists. Third-party projects and years of experience allow the team to hurdle challenges more professionally, saving a company time and resources.   

Flexible management

Outsourced teams operate according to agile methodologies and best practices, making them considerably flexible in terms of management and development cycles. Timelines are established, regular meetings and demos are scheduled, and rules for project management are followed strictly. 

Quick team scaling

Outsourced teams are quick and easy to scale. Team members can be replaced or added as needed to ensure that the project meets the agreed-upon timeline and deadlines almost instantly. 

Low investment

Outsourced teams do not have any of the HR expenses needed for in-house teams. All expenses related to hiring, training, managing, and supplying software developers with hardware and software is done at the expense of the software vendor. 

Specialist competence and speed of development

Outsourced teams are built around professionals with many years of experience in their particular focus areas. An outsourced team of senior software developers is the best option for high-quality development done quickly. 

Staff turnover

Outsourced teams prevent the pain of staff turnover. If a developer chooses to leave a project, the software vendor can quickly replace him/her with another qualified specialist almost instantly, keeping the development cycle moving forward according to plan. 

Objective focus

Outsourced teams allow a company to focus on income-producing activities like sales and marketing. When more energy and resources can be delivered to business initiatives, success is more achievable.  

Points to Consider When Choosing an Outsourcing Team

  1. The first thing to consider when choosing a development company is its credibility. Before signing any contract, it’s better to research, look through reviews and portfolios, talk to managers, and ensure an understanding. To confirm the integrity of the information, ask for recommendations from other clients. Or look for a development company among your connections.
  2. The second important point is the security of data and ideas. If the software vendor doesn’t allow you to interact with the developers, doesn’t hold meetings, and doesn’t provide reports, this should be considered suspicious.
  3. It’s important to set your goals first and form the conditions and budget of cooperation according to them.

The emergence of outsourcing has dramatically expanded the opportunities for companies from other industries to enter the digital market. Outsourcing is considered more suitable for small and medium-sized businesses and startups. However, it’s also used by large companies when necessary.

About the Author

Vitaliy Kononenko

Vitaliy Kononenko, Chief Technology Officer at Computools.


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