The Pros and Cons of Hiring In-House Vs. Outsourcing Developers

Whether you’re a startup or an established company, if you’re trying to find a way to build a software product, you want it done correctly. You want a top-quality end product developed quickly with minimized costs. Is the best way to accomplish these using in-house developers or outsourced software development?

The answer lies in selecting the best solution for your individual situation. There’s no one solution that will work for all situations as each software project and the company it’s intended for is unique.

Here you’ll find helpful information on each approach and a little advice that may help you decide which solution is best for your project.

In-House Development

In-house development simply means assigning your own employees to the project. The approach has always been the favorite of CEOs for many reasons. An in-house team is part of your company. They’re trusted employees who work for you because they share your ideas and your vision. If they have the skill set, they might be your best bet.

Successful companies like Amazon, PayPal, and Salesforce frequently use in-house development solutions. They find these solutions provide quality products and to protect their intellectual property.

Advantages of In-House Solutions

  • Better understanding: Your in-house team already works for you. You know each member and their skill set so you can assign them parts of the project on a schedule you set. Since you’re familiar with the team, you’ll be able to resolve any issues that come up fast. You’ll be able to set priorities within the project and direct the team’s schedule. With an outsourced project, the team may be working on more projects than just yours.
  • Building a team: If your company is new, the project can establish a new creative team. You can set a precedent for how you want things to go as far as workflow, ethics, events, and conduct from the start. Team spirit can be a driving force. It can greatly influence the end result and achieve great things. You’re not going to get that from an outsourced team.
  • Personal participation: Isn’t it more rewarding to work on a project yourself? Even if you’re just managing the work of others, there’s a sense of pride in knowing you and your company created a truly excellent product. Such an internal project would inspire fellowship on the team and enhance their investment in your company. The result is a sense of loyalty and increased job satisfaction among your employees. The psychological impact of that can’t be understated.
  • Company expertise: You save a lot of time when you are your own client. There are no meetings, teleconferences, or phone calls explaining what you want and when. You don’t need to explain your company’s mission or the parameters of the project to someone unfamiliar.

Disadvantages of In-House Solutions

  • It will cost you: You have to make payroll and your employees get paid no matter what. Whether they are full-salaried employees with benefits or with you on a more temporary basis, they get paid the same. You’re responsible for health insurance, personal time benefits, travel and meals, equipment, and more. It’s on you to keep your developers engaged and retain them. The end result might mean you keep your business very simple or you find some investors.
  • Team hiring and management: The responsibility of hiring and managing your team will be yours. When you go with an in-house solution, you’re directly involved in the management of project staff. With outsourced solutions, the service provider does this for you. Prepare to be busy because it will be a lot of work. Chances are that the management of the team doesn’t fall under the umbrella of your main tasks. Perpetually finding the best developers to commit to your company and getting them on board may be an ongoing task of yours moving forward.
  • Low versatility: If yours is an IT company, you just might focus on one or two niches like mobile app development, Ruby on Rails, and more. Your employees are likely knowledgable in those specific areas but not be well-versed in a number of different areas. The IT landscape is ever-changing and to be competitive, you have to be flexible enough to offer different products. With the new product you hope to develop, if the technology is fairly new, you may not have a team member who can take on the task. You may have to hire someone with the skill set or pay for classes for your team so they can learn. Either scenario will take time and money.
  • Skill development: It takes time to build a solid team with the right blend of experience and knowledge to handle the constant changes in the IT arena. Even then, you’ll have team members come and go. Putting together an in-house team of professional, qualified developers will be an investment of effort, money, and time. If you’re just getting started, it can take months.

Developing the knowledge and skills of your team will be a perpetual task. To stay competitive in the market you’ll need to keep your team trained. At first, it might be a challenge to organize and pay for training. But it’s the only way to elevate the performance of your team. And as team members build their skill sets, they can mentor new team members who come on in the months and years to come.

When should you opt for an in-house solution?

If yours is a project where you need to maintain control, then an in-house solution is likely the way to go for you. If you’re serious about keeping your unique product optimized, secure, and properly updated, then in-house is probably the best approach.

If you opt for an in-house development approach, don’t start with a team that’s entirely novice. Otherwise, you’ll set your company and your project back as far as time.

Outsourced Development

Outsourcing IT projects is no longer the gamble it was believed to be only a few years ago. Today it’s pretty common. There’s a huge market for companies that accept outsourced projects and new ones pop up each day. The profits of the outsourcing market have doubled in the last two decades.

Do companies outsource to save money? Sure, but it’s not the only reason they have to outsource their projects. There’s a lot of talent out there. Instead of having to train their own team up, there’s likely a team out there that can take the project and has the experience to do it now. How to find app developers? There are many reputable directories for outsourcing companies.

Successful companies like Alibaba, GitHub, Google, and Skype outsource projects to third-party companies. Some send smaller projects to other companies to save time. Some need the talent of the market for a specific project. Some companies couldn’t exist without outsourced teams to devise solutions for them.

Advantages of Outsourced Solutions

  • Save money: It shouldn’t be about the money. It should be about producing a top-quality product in a timely fashion. Still, money has to be considered. Where you go to find your team will matter too. It may be a lot less expensive to outsource your project to a team in Argentina or Ukraine than it would be to a company here in the U.S. Remember too that it’s a temporary contract that you’ll pay for once. There may be one or two follow-ups but rarely more than that. There won’t be extra expenses as you’d have with an in-house team effort. You won’t have to worry about getting the training you need, nor any hardware or software.
  • No recruiting required: This is one big advantage of outsourcing development projects. You don’t have to worry about recruiting someone who could complete the project and offer them everything that goes with employment. If you’re a start-up looking to build street cred, you may not have the capital needed to recruit your own team at first. In that case, finding a professional vendor who can get the job can be advantageous.
  • They have the talent you don’t have: The pool of talent available for outsourced projects will almost always yield the talent you need for any given project. If you can reach an agreement with an external vendor, you’ll have a fresh take on the project with perhaps a bit of that developer’s culture infused in it. External vendors can produce dynamic and unique products for you too. If you’re developing an app or site intended for a worldwide audience, an external vendor may be the perfect solution.
  • Getting priority tasks done: Sometimes outsourcing a project that’s a priority can help you better manage your workload. It might also buy you time to set up an in-house team if that’s an end goal of yours. Let the external vendor worry about development, talent, parameters, and the rest. Take the time that you’re not using to manage the project and spend it where you need it most. You free up your internal team too to work on other projects.

Disadvantages of Outsourced Solutions

  • Lack of direct control or access: Not only are you not directly involved in the project when you outsource it, but you also may not know at times the status of it. What if you can’t reach someone right away to get an update? That can be stressful. If you have a hard time relinquishing control on things important to your business, this solution may pose a problem for you. Transparency isn’t always offered or available.
  • Time zone differences: Ever notice when you see people outsource projects on sites like Upwork that they will require the contractor hired to be available in their time zone? There’s a good reason for that. Differences in time zones can wreak havoc on communication and delivery. If you don’t need a quick turnaround on the project, the time difference may not pose a huge problem. If you need the finished product quickly, however, you may want to outsource to a vendor in your time zone if possible.
  • Security: When you’re dealing with a remote workforce, there’s going to be the risk of compromised confidentiality and project details. What happens if someone leaks details about your great new product and move to produce it before you do? That could be disastrous for your company. If you go with an outsourced solution, do your homework on the vendor. Ask for a portfolio, references, and more. Take a close look at their work.
  • A sense of commitment: When you outsource projects, the vendor you hand the project to for development isn’t necessarily going to share your enthusiasm for the project. That doesn’t mean they will do a poor job on your project. It just won’t be anything groundbreaking and exciting for them as it is for you. For the vendor, it’s just their next project. To help combat this, communicate to the vendor your mission and explain why the project is important and what it means to you. The more they know about your project, the more their interest may be engaged.

When should you opt for an outsourced solution?

If your company doesn’t specialize specifically in software development, an outsourcing solution might be just the ticket. If your project is a side project, it’s definitely something to think about. If you are an IT company, outsourcing could work. If your internal team is overwhelmed, give it a try.

Outsourcing may also bring new ideas and innovation to your internal team. If you can find the right external vendor, they could be of great benefit to your business.

In Conclusion

Determine what’s important to you before making a decision. Decide what you need and what will not be accepted and go from there. By making key decisions before you begin developing your project, you’ll save yourself time, money, and much frustration.

Both options can be highly successful. Determine your budget, goals, needs, and time frame and make the best decision for your project and your company.

Author Bio:

Irina Sidorenko is lead content and marketing manager at She has many years of experience in IT and Business industry, which include establishing and running her own small business.

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