In-house Software Development Team vs IT outsourcing: Pros & Cons

You plan to expand your business by creating your software or application. Congratulations, it’s a great idea, no matter your company's stage or field! Once accurate planning starts, you need people to create it for you. This is when the question arises of whether to hire an outsourcing company or create an in-house development team. I compare both models to underline the differences and when each solution can benefit your business best.

Factors to consider when developing software in 2023

Both options have their pros and cons and it is sometimes tough to decide, especially if you have never done this or are not quite an expert in this topic.

No matter what you decide, you will have to face the current shortage of developers believed to continue and grow in the following years. This issue is challenging for all companies, from startups to large enterprises, and it touches both solutions, as every additional project requires new developers.

Digitalization in companies brings many benefits and improves most business processes. It is the best solution to reduce costs and upgrade your business. No wonder why there is significant market share growth in the IT area. More and more companies decide to expand and invest in a software solution that brings them great results. The key here is to choose the right fit for your needs and abilities. Let’s start with identifying the core dilemma you probably have.

The challenge that needs to be overcome

To develop your idea, you need to have a team. Setting up a high-performing group without the right people in place won’t get you anywhere. Even the most groundbreaking idea won’t stand a chance against your competitors unless you have someone to deliver it the right way.

Depending on your location, budget, business goals, and company policy, you have three options to choose from:

• in-house
• outsourcing
• mixed.

The strategy you decide to develop for your project should be based on the challenges you may have as a company.

Sometimes it is better to choose an in-house team, but before deciding, you need to consider the advantages and disadvantages of each solution.

What is in-house software development?

An in-house software development is a team of developers you hire in your company. Each of them is your employee and the level of their engagement and talent relays on your HR management and the talent pool in your area. Another critical factor is that their position could be in danger with the mandatory layoffs.

After the pandemic, the standards of the work model have changed and it is almost a norm for IT employees to work remotely. Therefore the need to keep them in the actual office is no longer valid.

Benefits of the in-house team

There are many advantages to having an in-house team.

• They are YOUR team

They are apart of your company, so naturally, they will fit in better. They are also more familiar with your problems or the background you are working with.

• Communication is easy

You can speak to them directly and do not have to wait for that much. According to the work ethic, there are still boundaries, as there would be with every other employee. However, once you need something, you can go straight away and there is no need to wait for the next scheduled meeting. as a result, the updates could be implemented dynamically.

• We all want to win

Since they work for their and your mutual success, they tend to have great dedication towards the project, which could be the best advantage! They feel as being a part of this and this could be the best motivation for them all.

Drawbacks of the in-house team

At the other end there is a downside to this solution. This could be a deal breaker fo some people, so it is worth acknowledging them to choose the best option for your company.

• Time and money

To have in-house developers on board, you must putadditional time into organizing and managing the team. The process of choosing, hiring and taring new employees is always time-consuming and money-consuming. If we add the increasing employment costs, the sum gets bigger and bigger.

• The quality of the team

Since it is such time and money-consuming, there must be some cuts in the budget.

This could affect the quality and the quantity of the staff hired. You also need to rely on the talent pool of the area you are based in and the abilities of your HR team.

• They could Quit

On top of that, if they are your employees, you must consider the rotation of people in your company. People often leave work, especially in the IT industry. Once your developers quit, the process starts over again and we are back to square one.

Examples of companies that choose in-house development teams

Here are a few examples of companies that have an in-house development team and take all its benefits and struggles in.

• Amazon
• Pay pal
• Lufthansa
• Booking

Choosing Outsourcing Software Development

Software outsourcing is when a company uses a third party to develop custom software for its own purposes. It helps to reduce costs connected with employment and management or it provides you with an especially selected team with no effort of recruitment.

Advantages of outsourcing

Outsourcing has a long list of benefits. In recent years its market share has grown quite a bit and with a reason. We should pay attention to them as they expand end present more new opportunities for other companies.

• Less time, less cost

This strategy is the cost. There is less money and time spent when you hire a ready-made team managed by someone else! There are no recruitment costs or maintenance costs. Many outsourcing companies start the project or present you with an offer within a week or two.

• In case of change

What comes with this is also the comfort of flexibility. Your project requires more developers than you assumed at first, or you need to scale up the team quickly as it grows more extensive. This also goes both ways: maybe with time, it will require fewer workers than at the start.

• Access to the global talent pool

Once you choose an outsourcing development team, the sky is the limit. With no need to be bound to the location of your office, you could hire people selected from many places that could be the best fit for your project. This also connects with cost reduction as the prices of hiring developers could differ in many parts of the world.

• Domain Expertise

Software houses are experts in their field and have done much more projects than your in-house team could have ever done. They have more significant experience working on other cases in the same domain. Each time they collected more knowledge that could be only learned through the amount of software made. They also have access to more understanding from people from their company working on other projects.

• Faster Turnaround

Because of the number of projects they worked on, they have developed a well-established working process. They know what they are doing and they often do it fast!

SolveQ has a battle-tested process that shortens the time to market your software and saves you time and money.

Disadvantages of IT outsourcing

The list here is a lot shorter but still present.

• Communication

Even though most software houses try their best to set and maintain the best solution for efficient communication, it could be better with the developer within your company. Sometimes it is your and their busy schedule or the problems of interests and approaches. Although it is not that terrifying and unsolvable, if you set good rules at the start, you could quickly minimize this problem.

• Confidentiality and Security

Once you hire people outside of your company, you have to be aware of the information you do not want them to share with others. You have to prepare special legal arrangements to feel safe and avoid any unwanted situations in the future.

• No full control

it is evident that if you hire an outsourcing company, you only control some things. You may make most of the decisions in the development process, but you may only be able to manage the team if you are delighted with this part. However, this is less dramatic than it seems because with a good outsourcing software company, there is no need for complete control and you will only feel the lack of it sometimes.

However you could avoid thoes drawback if you prepare youyrself when outsourcing. Be sure to read about the questions you should ask when outsourcing in IT on our blog. This will help you overcome thoes voids.

IT staff augmentation: mixing an in-house team with an external expert team

The good news is that the options here are endless; if you need them, you can have the best of both worlds. It is always best to meet the needs of your project and adjust your team to it, not the other way around. Therefore, if you already have an in-house development team and would like to expand your project or start a new one, you may have a team augmentation.

You could have a whole new team or even just one additional developer if needed. This way, you could build on your existing conditions and choose the best solution for you and your company. New developers from outside of the company could bring new, much-needed skills. If you lack an expert for a specific technology or there is a knowledge void, a new addition to the existing team is the best solution. It gives you flexibility, which is highly beneficial.

Wrapping up

Once you decide you would like to develop software for your company, there are two choices. Before you make up your mind and invest a significant amount of money, it is crucial to know the advantages and disadvantages of both solutions. From what we gathered, if your priority is time and money or the quality of the team, talent outsourcing is your solution. However, if you want a team you could reach any moment and don’t mind the additional costs, you could create your in-house development team.

Outsourcing is a great solution; the benefits outweigh any other solution, and the drawbacks are almost unsociable. As Peter Ducker once said: “Do what you do best. Outsource the rest”. This approach gives you a lot of space to focus on your business and let the other professionals take care of your software.

Solveq has great experts on board and a lot of experience in outsourcing.

If you are looking for a reliable software house to develop your project for you so you can expand your business and not worry about the rest, contact software outsourcing company.