Outsourcing is a process of hiring an outside company not affiliated with the business to complete tasks. In-house, or insourcing on the other hand is a business practice done within the company’s operational infrastructure. The major difference between insourcing and outsourcing is the methods in which the tasks, projects, and work are divided between different departments and companies for strategic goals.
So, which would it be, software outsourcing or in-house?
Growing an in-house development team brings more control over the development of your brand, as well as extensive project engagement within the team. You gather trusted persons with comprehensive understanding of the culture of the company and business specifics. Certain conditions have to be observed however for it to work.
- Smooth flow of communication. The same face-to-face discussions, working hours, and the possibility of fast feedback from the side of the business results in faster reaction time and shared software vision of the team of developers in change implementation.
- Full project control. You get visibility over the daily progress, know what the employees are working on, and could promptly react if there are stumbling blocks in the way.
- Unlimited support for post-delivery. The in-house team will remain dedicated to the project after delivery time and is available all the time for bug fixes, further maintenance, and updates upon your request.
- Improved security. Know-house and business data are not shared with third parties and keeps all the knowledge acquired during the project within the organization, minimizing the possibility of leakage of information.
- Costs on keeping the in-house team and turnover risk. Taxes, payroll, training, insurance, and maintaining IT infrastructure are rough on the budget. With that, you have no guarantees that the employees will not leave in the middle of the task.
- Slow launch. Hiring one developer takes from 30-35 days on average, and by high demand, the task could get complicated. You must compete with other organizations and provide better working conditions to lure top talent. You not only think about having qualified custom software development specialists, you also have to make certain that they match each other’s personality and requirements to be efficient as a development team.
- Scant expertise. You naturally could not gather all the roles and skills in the team. Still, you require more competencies as the project unfolds, for instance, to resolve problems that could arise or complex technical tasks.
The main driver for software development outsourcing is not only on cutting expenses. More and more organizations are on the lookout to cover complex development requirements with outsourcing. All this is about optimization; rather than spending huge resources on growing the competencies needed in-house, they could acquire them immediately and at a better cost as well.
Outsourcing is a great fit for startups and for non-IT organizations opting for digital transformation, wherein budget and time do not favor growing the IT department with a complete scale development team. Outsourcing furthermore helps companies hasten market time and scale an organization through boosting development output.
- Lesser Costs. No inherent costs to in-house development when it comes to salaries, recruitment, retention, and more.
- Top talent access. There’s no geographical location restraint and could tap into the talent pool in the world to look for any skills you need, including those in narrow domains and emerging techs. You furthermore could choose destinations offering better quality and price ratio.
- Fast launch. You have an assembled team with members who are likely to know how to work already with one another from past projects, thus there’s no risk in inner collaboration hurdles and need not spend time on hand-choosing every staff.
- Flexibility. Scaling an outsourced team up and down is easier, depending on your requirements. An outsourcing vendor handles the right specialists to the team when a project grows and needs more hands.
- Lesser management. When you outsource, you get a self-managed team, freeing up your resources to concentrate on high activities level.
- Effective problem-solving and simplified development. You get established processes, with most of them automated and refined already, in accordance with the best practices. A vendor’s team in general has a rich experience of handling development hurdles because of the different projects they have participated in before.
- Gaps in communication. Cultural differences, different time zones, and insufficient skills in English could be a hurdle to effective coordination.
- Less control on the project. The process is not as transparent compared to in-house development that could put in question the performance of the vendor.
- Possible breach of confidentiality. Business information sharing could possess some risks that stem from the human factor, and insecure communication channels as well.
- Inferior quality. Issues over the quality of code are valid. Many development companies hire ill-equipped, low-level talent to work with customers, or pitch in an ‘A Team” and then within a few months to less experienced developers, known otherwise as ‘bait and switch’.
The absence or presence of risks that are related to outsourcing depends on the vendor of your choice. Avoid vendors that offer a lesser price. By opting for a more established outsourcing service provider, you focus on getting value for your money. You may pay more, but still lesser than having an in-house team, but acquire long-term savings from good work quality.
When dealing with the pros and cons of in-house and outsourcing, trust is indeed a crucial component. Keep in mind that not all roles are right for outsourcing, and not all roles should be full-time in-house hires as well.
Keeping expert developers around for the few times you need them is completely unnecessary and very expensive. Outsourcing all business aspects on the other hand without thinking of the customer could end up killing the momentum that you have built.