Have you ever wondered how brands like Apple, Starbucks, and Netflix manage to achieve worldwide recognition and success? The secret lies in their global strategy.
Are you a company owner who is struggling with changing the software? Do you feel it is time to create an in house team that will take care of it, or would you rather delegate all activities related to it to an external, professional company?
We have prepared this article in order to compare both approaches and present the list of in house and outsourcing advantages and disadvantages. We hope that it will help you choose the option that suits you best.
In house vs outsourcing software development
One of the factors that influence a company’s success is software development. The world we live in is constantly changing, and so is technology. Due to this, business requirements also evolve, which means that you have to adapt to them regularly. Otherwise, customers might get frustrated and choose your competitors’ offer.
If you need a change in the software, you can choose between two options: internal development vs outsourcing. What is the difference between in house development and outsourcing?
Advantages and disadvantages of in house software development
Let’s start with in house software development. What is it about? Simply, the software is created and updated by the developers you have hired. It is a separate part of your own team that carries out the tasks you commission on a daily basis.
Benefits of in house software development
In house development team works for you exclusively
Business owners often do not want the people working on their software to work for someone else because know-how is usually top secret.
In house developers are available all the time so you do not have to wait until they finish other projects
When collaborating with various companies, you must take the prior arrangement of work into account. With an in house team, you simply prioritize tasks, while they carry out assignments using best practices.
You have full control over an in house development team
You can train a software development team to ensure that all activities are in line with the company’s strategy.
You can communicate directly
If your in house development team works with you at the same office, then you do not need to schedule calls or meetings to discuss any matters. You can just come to their desks and have direct conversations.
You can decide who is on your team
When working with an outsourcing provider, you will not know all the members of the external team. You will just meet the representatives or a contact person, which can be problematic if you want full control of the development process.
Disadvantages of software created by an in house team
You have just got familiar with in-house software development advantages, so now it is time for the disadvantages. Unfortunately, this solution is not free of them. Take a look at the list below:
The biggest disadvantage is all the costs associated with hiring full-time employees. You have to pay them a fixed monthly salary, as well as cover the costs related to an in house software development team (fees, office space, employee benefits, etc.). This puts a heavy burden on the budget.
In house team has to be permanently employed
It is problematic, especially if your software needs to be updated almost constantly, as software developers must be on permanent employment. If building software is not your core business, maintaining the in house development team may become an unnecessary burden.
Time consuming hiring process
Recruiting a new developer requires some time. You need to post an advertisement, establish how many days you would like to spend on collecting CVs, interview suitable candidates and finally, choose the right person. Then comes the trial period, which can last up to three months, making the process even longer. It is also worth mentioning that talented developers are difficult to find, as they usually are occupied all the time and do not need to look for the jobs.
You need to help solving problems
The disadvantage of in house software development is the necessity for solving issues internally. If there are any problems that the employees cannot deal with, they will come to you. By hiring a reliable vendor to take care of the software, you do not need to worry about this since the external company solves the issues within its own structures, as there are many specialists with specific skills.
Pros and cons of outsourcing software development
Let’s move on to the advantages and disadvantages of software development outsourcing – a situation where activities are delegated to contractors outside the organization. This solution also has pros and cons that you need to know in order to decide if it is good for your business.
The disadvantages of software development outsourcing
The cons of outsourced development are mainly related to the amount of time taken to perform duties and communication, something you need to be aware of. The main disadvantages are:
As we have mentioned, choosing in house development means having technical specialists at your disposal and within your reach all the time. In the case of an outsourced development team, you can only rely on communication through a telephone or email. You also must be aware that the specialists are working on more than one project, so they might not respond immediately.
The development process takes place out of your reach. You only get the desired result and updates finished tasks. Many people may consider it an advantage, but there are others that will be very frustrated about this lack of control.
Workshop of the company’s policy and mission necessary
Your software development team knows the company’s culture in which they are employed. In the case of an outsourced team, several meetings are needed to familiarize them with corporate culture and to discuss the activities.
The advantages of outsourcing software development
Of course, this solution also has a lot of benefits that actually outweigh the disadvantages, which is why so many companies decide to go with outsourcing. The biggest advantages are:
When you hire an outsourcing company, you only pay the negotiated salary. You do not need to provide additional work space, which means your overhead costs are significantly reduced. That is why more and more companies decide on outsourcing software development. The reasonable price of outsourced software development is very important if cost savings are a priority for you.
Scaling a team
Depending on what specific project is in progress at the moment, you can scale the outsourced development team up or down without hiring and firing software developers. Outsourcing allows you to collaborate with a team of professionals only for a specified period of time according to the requirements of the business operations. Thanks to this, time to market is shorter. It is a good approach when you know that the end of the project is coming because all you have to do is to inform the company you are working with about it.
You outsource software development, and professionals work on the project. You do not waste time on extensive training, as in the case of new employees, and you do not have to solve problems – you only get the final product. This allows you to focus on core business. In addition, the company that takes care of the project is responsible for the time and resources of employees, so it takes a huge responsibility off you.
Diversity of software development companies you collaborate with
If a software house you outsourced development to is not competent and does not meet your expectations, you can quickly end the contract and work with a new company. Thanks to this, you avoid the recruitment process, notice period, etc. What is more, when it comes to in house development, numerous rotations may have a negative impact on team morale. Of course, both sides usually want long term cooperation, but when it does not go your way, you do not have to stick to it.
In house and outsourcing pros and cons
It is also worth mentioning that there are two types of outsourcing: nearshore and offshore. Nearshore outsourcing means that you work with people who are in the same time zone, within your area. In turn, offshore outsourcing involves collaboration with a team from different time zones.
Will the fact that you live in the UK, while someone is based in America, prevent you from cooperating that way? Absolutely not, but you need to be aware of a few areas where a problem may arise because of this situation! Here they are:
- Communication process – it is influenced not only by the language barriers, but also by cultural differences.
- Working hours – you need to reach a compromise regarding time of meetings or phone calls. There is a risk that you will meet rarely due to the time zone difference.
- Availability – you might not get a fast response to emails you send if you decide to outsource your processes offshore, so it will be necessary to plan inquiries in advance. It also means that you will not have a chance to make quick decisions.
Offshore outsourcing is a partnership model that is becoming more and more popular in the IT outsourcing market. It often enables you to reduce development costs. It is suitable for well-organized people who are willing to give full control of their activities to the other party.
How can you prepare for a project with an outsourcing company?
Are you convinced that outsourced development is the way to go, and you want a professional company to take care of your software? You should prepare for such cooperation.
Choose the right outsourcing partner
The key for successful collaboration is to find the right outsourcing partner, i.e., a company that understands the mission of your business and will follow the rules that you set. They also should be a good match when it comes to communication.
In addition, it is also worth checking the portfolio and recommendations of such a company to ensure that you are hiring talented developers with extensive experience.
Have a kick-off discussion that tackles all the issues you are concerned with
Such conversation is not only about getting to know tech specialists, and learning about their experience and skills, but also about communicating one’s needs regarding the collaboration. Only defining the goals clearly will allow the outsourcing company to know if they are suitable for the job.
Choose the right model of software outsourcing
You have to decide whether you need someone to develop software from scratch or just update it, as those require different tasks. Other forms of software changes that you can choose from include comprehensive solutions, designing a single product, frontend and backend development, or code implementation.
You should provide the potential contractor with all the necessary information because it influences many things, for example, how many software developers need to be assigned to the project.
Another important thing to keep in mind is outsourcing qa processes when you may want to have certain paths prepared for the QA team to execute on the product.
Use project management tools
Ask the project managers of the software development company to provide you with tools where they would show the steps of a specific project. Thanks to this, you will gain control over the process and be up-to-date with the progress.
Communicate your doubts
If anything goes wrong, makes you frustrated, or you feel tasks are not being carried out properly, do not give up on the outsourcing company. It is better to tell them about your concerns and try to fix things together first.
The cost of outsourcing vs in house software development
As we have mentioned earlier, in house software development comes as a disadvantage due to the costs associated with hiring full-time employees. Outsourced development allows you to cut the budget considerably as you only pay a fixed salary, without any additional fees.
If you are still trying to find an answer to a question “when should a firm outsource instead of developing the software in house”, contact us and we can schedule a free consultation! We are a custom software development agency that can also offer you a tech partnership. Our high quality services and custom solutions will help you save time and money!
Insource or outsource? It is up to you! However, we hope this article helped you understand the difference between in house and outsourcing. We also believe that the provided list of pros and cons of in house and advantages of outsourcing software development will allow you to choose the perfect option for your business.