In-House Development or Outsourcing: Which option to choose?

When it comes to creating a product, many choose inhouse or outsource. But how do you find the best option for software development that will perfectly suit your case? 

This knowledge might help you to create and upgrade your business, product, service, or any other solution faster, cheaper, or make it more independent. Let’s say, if you pick in house vs outsourcing development right, you get lots of opportunities like:

  • saving your budget;

  • saving your time;

  • getting total control over your team;

  • getting a great product;

  • working with specialists from all over the world;

  • etc.

Each of these benefits works with one of the inhouse or outsource development. We will help you to make the right choice because of your initial goals. 

In this article, we’ll break down both pros and cons of inhouse and outsource development. This will help you to make a decision for your final product and awe your users.

What’s the Difference?

To understand which option suits you the best and what to choose, you need to understand the difference and to see what is what.

What’s the Difference?

Inhouse development means that you create a product within your company. To do so, you have to hire professionals, provide them with employment benefits and competitive fixed salaries. Thus, you need to have your own space where you can place all the developers and all the amenities like hardware and software. To top that, you also need to hire a supporting staff to make your office work.

Outsourcing, on the other hand, is the delegation of software development tasks to hired organizations with the appropriate specialization or individual specialists with the necessary skills. In this case, the hired software development team will work remotely or even from another country. With outsourcing, you can hire offshore personnel on an hourly basis, with a fixed salary, or as per project requirements.

Even when it seems hard to pick a development strategy, you need to consider many factors like:

  • business goals;

  • project type;

  • budget;

  • timing;

  • and more.

Now that you have an understanding of the two concepts, let's start comparing inhouse development vs outsourcing.

Inhouse Development Pros and Cons

Let’s imagine, you’ve decided to create an in-house development team. You’ve found a nice space, hired an HR, office manager, and other people that will help you to work with your team.

Inhouse Development Pros and Cons

And let’s imagine your HR did an incredible job and found great specialists to work for you. It’s a miracle these days that takes plenty of time and resources, but let it be so.

But it is not enough just to hire people, you also need to form a friendly working team. Conflict situations are inevitable in work processes, which easily develop into enmity. And this can affect the quality of work. Most likely, the IT department will bring together people of different ages, both sexes, and certainly with completely different life values. As a result, the head of the department will have tasks not only of a technical but also of a psychological plan: to find the approaches to each employee, to limit the communication of poorly compatible people, to extinguish all the smallest conflicts, etc.

The salaries and motivations issue is also quite relevant. Someone is ready to work efficiently on a fixed salary, someone has bonuses, and someone wants to receive payment based on the number of tasks performed. One way or another, a monetary issue has to be resolved with each specialist.

And then there is a need to constantly upgrade your workers. They need to follow the trends and get extra education, which also affects the working hours. So in many cases, specialists ask for investing the company’s money and time into the upgrading of their skills.

In general, it seems that it is easier to control your own department than a third-party team. You just have to install the relevant software, set up cameras, and watch. On the other hand, you also need to either spend your time on this or allocate the time of another employee.

The only thing that needs to be monitored in the work of an outsourcing development team is the timing of the work. If the outsourcing team follows the general schedule, it is not so important how they do it and which projects they do more or less. The main thing is that there is a result, so you don’t have to be involved in the organization part.

If you see major inconvenience in such tasks, then a simple question which is better: outsourcing vs inhouse is obvious for you. But still, it’s better to know why. Maybe someday an inhouse solution will suit better.

Usually, only large businesses open their own development department, for which the disadvantages associated with costs do not exceed the advantages of controlling the situation. If a large offline business wants to go online and is not afraid of large investments in a website or other web services, this choice will ultimately become optimal.

Outsource Development Pros and Cons

We can name the benefits of the outsource team in several words: you just pay for the final product. With the outsourcing development team, the work process takes place in accordance with the regulations established by the outsourcing company. This might be the biggest in-house vs outsourcing software development difference. But, in our opinion, it is rather a pro than a con.

The specialists working on your product can be simultaneously involved in several other projects. It means that their work capacity is usually planned for several weeks ahead. But with a strong management team, it’s not a problem. Besides, developers work on one project most of the time.

Outsource Development Pros and Cons

Besides delegating all the management and troubleshooting to another team, you can surely cut down your budget, since outsourcing companies charge only for the job and not for the occupied space. The only risk might be that the deadlines can be prolonged, but let’s be real, this can happen in any case regarding the question of in-house vs outsourcing software development.

And when you submit all your tasks to someone else, which is hard to do sometimes, you get plenty of time to develop your business and create the best strategies.

Time and money have always been the most important things in any business. These two concepts are always closely related and often derive directly from each other. Any sane manager strives to cut costs on both. Let's check the advantages of IT outsourcing regarding finances.

  • You don’t have to deal with vacations, sick leaves, weekends, or any unscheduled issues.

  • You don’t have to deal with employee taxes since the outsourcing company takes care of it.

  • You don’t have to rent an office for your inhouse team.

  • You don’t have to purchase computers or any other office equipment.

As an outsourcing team, we’ve created many works that you can check our Portfolio for Mobile and Web projects.

Comparing in House vs Outsourcing Pros and Cons

Let’s compare inhouse vs outsourcing we’ve mentioned above in a table to make it more clear.

Comparing in House vs Outsourcing Pros and Cons

It is still not obvious which one to pick, because, as you can see, both work differently. But even when there is no strict answer to inhouse development vs outsourcing, you get an opportunity to try both.

In any case, you should take into consideration the fact that you don’t need an inhouse team if your business is rather small. However for a huge company like, let’s say, Facebook, this is crucial.

For smaller businesses, we do recommend hiring an outsourced team. It is cheaper: you don’t have to search for an office and all the workers. Besides saving your budget, you save the time that you can spend creating new businesses or strategies.

Inhouse and Outsource Teams Can Coexist

Haven’t seen it coming, right? Yes, it is not always in house vs outsourcing, sometimes people create an inhouse team but still need extra hands here and there. It can be an inhouse team of front-enders, and an outsourcing back-enders team.

So this is the best option if you are transferring from being a rather small business to something bigger. And if you are still searching for better designers in your city, you can check designer teams from other countries that create great projects for a smaller amount of money.

In this case, you can combine all pros and cons of creating an in-house team or hiring an outsourcing team. Even some businesses prefer a mixing system that allows them to delegate only some part of the work, leaving the most to their in-house team.

Final Thoughts

Some businesses develop the development teams independently, considering that outsourcing IT services is expensive. However, if a business owner plans to create a huge company with a superb product to cover every country, then it is better to actually create an IT company within your business. In this case, to form and to put in the picture takes lots of money and time (at least 3 months).

Hiring an outsourcing team, even for a specific amount of time, can give you the necessary time and push to develop your product. And later, you can think about building an inhouse team. Besides, outsourcing teams have great specialists that have released lots of different software and products before. And in many cases, that could be even more helpful.

Many big companies go to the outsourcing companies, like Owlab, when they are close to the product release, but there is not enough time to cover some of the issues. So they ask for the help of an outsourcing team.

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- Vitaliy, CEO

Harju maakond, Tallinn, Kesklinna linnaosa, Vesivärava tn 50-201, 10152, Estonia

- Head/Development Office

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