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In-House vs. Outsourced Software Development: What to Choose?

In-House vs Outsourced development

If you have the task of developing a desktop app, a mobile app, or a website for your company, you will have to find someone who will get into it. There are two main solutions: recruiting your own specialists or outsourcing the project.

Each of the solutions has its pros and cons, but the objective is the same: to arrange processes in a way that will allow you to gain maximum benefits for your business. First, you have to consider deadlines, available budget, and your experience in managing software product development.

In this article, we would like to assist you in finding your way around all these matters and help you make the right decision. So, let us consider the main differences between in-house and outsourced software development, as well as take all the pros and cons of each approach into account.

In-House Software Development: Pros and Cons

In-House Software Development model
The main advantages of this approach are:

  • Involvement in company processes. In-house specialists are always at hand, and their time belongs exclusively to your company 100%. Ideally, they understand the business run by the company for which they work, see all the processes from within, and are able to use this data in product development.
  • Ease of control and interaction. Communication with the in-house team is fast and integration with other company departments is quite close. You can interact directly with your employees who are in your office and do so as often as necessary.
  • Speed of problem solving. If you have necessary professionals in your staff, everything is clear: you can solve issues as quickly as possible. An in-house team is able to immediately respond to any challenges or problems. Employees will focus exclusively on your software.

Taking all the advantages listed above into account, assembling your own in-house team seems like an ideal work model. However, reality recalibrates everything, and this model has a number of flaws:

  • Difficult to hire. It has always been difficult to find people with a sufficient expertise level. This problem becomes even more pressing if there is no one in the company who can duly assess the level of knowledge shown by an applicant during the interview. You can spend months finding appropriate specialists. Making all team members work well together is your task as well.
  • Higher costs. Good professionals are always expensive. Consequently, a company that is going to arrange in-house software development will have to offer its future employees wages at least equal to the market average. Your company will also have to buy all the necessary licenses for software tools and equipment.
  • Growth and scaling issues. When an outsourcing provider needs to increase the amount of work or go in a new direction, they simply involve an additional employee, be it one or more. This situation will require very little effort and time when compared to an in-house division, which will have to look for a new employee on the market.
  • High operational costs. If an employee works for your company, you have to pay taxes and insurance contributions, provide premises and equipment, pay for your employee’s vacations, etc. If the amount of work increases, you will have to expand the staff and recruit additional staff again.

In-house development departments will serve well for companies that already have an IT infrastructure, keep up relevant processes, and possess a sufficient budget to support everything.

Outsourced Software Development: Pros and Cons

Outsourced Software Development model
Outsourcing a software development task to some external team is a widespread practice, and this approach is growing in popularity every year.

The main advantages of outsourced software development are:

  • Cost reduction. You only pay for the services you need and the amount stipulated in the contract. You do not have to spend time and money hiring employees, creating jobs, and doing many other things.
  • Quick start. If you outsource the development, you get a fully manned team. They will be people with a clear understanding of process planning and management, who are able to get to work in just a few days.
  • Flexibility and scalability. You can manage costs depending on your company’s capabilities and needs. For example, you can reduce work volumes in the current month or significantly increase them for some other period. An outsourced team will be able to quickly provide extra developers who will accelerate your business development.
  • Expertise level. You have experts available in various fields and with extensive experience. Moreover, for solving specific one-time tasks, you can involve highly specialized experts on a part-time basis.

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If we are talking about the disadvantages when working with outsourcing providers, we may include the following points in the list:

  • Virtual relationships. Most of the communication is conducted by email and phone, and it is harder to arrange personal meetings with team members who are working on your project. The customer and performers are most often located in different countries. On the other hand, there is nothing to prevent you from paying special attention to communication in the first place.
  • Control and response. Compared to an in-house team, an outsourced team will show lower response rates anyway. To achieve more response, the customer may need to make additional efforts in terms of involvement in the project.
  • Cultural differences. You will be unlikely to have problems cooperating with developers from Ukraine or other Eastern European countries. However, if we are talk about contractors from India or China, you may eventually face problems with language and/or cultural barriers.

You can avoid the problems listed above by choosing the right tech partner and adhering to the time-tested tips that we mentioned in our article (7 Best Practices for Successful Offshore Software Development).

Which Model to Choose for Your Business

Combine models
Both models have their pros and cons. It all eventually comes down to a clear understanding of your company’s needs, taking into accounts its capabilities in terms of budget, and assessing its other resources.

An in-house development team justifies itself for large companies. They can afford to form a fully fledged team consisting of experts with different profiles. In addition, they have enough time to arrange all the processes.

If your company is relatively small, the project is one-time and not too large an undertaking, it would be better to outsource your product development. This approach will provide you with much more flexibility and speed up the results. It is especially important if IT is not your main profile – the risks will be too great.

There is another option available — a hybrid approach. This is when some of the specialists are your staff members, and some are temporarily brought into the team from an outsourcing provider. In this case, the main work is carried out by an in-house expert while outsourced expertise is involved in performing complex tasks requiring specific tools or extensive experience.

If you have read this article and still have some questions, or you cannot select the best option for you, please write to us and we will help you make the right decision.

Lvivity Team
Lvivity Team

Flexibility, efficiency, and individual approach to each customer are the basic principles we are guided by in our work.

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