In-House Development vs Outsourcing: Which is the best option?

The question of which is better, in-house or outsourcing software development, has different answers depending on many factors to analyze, such as:
  • Type of company
  • Customer type
  • Personal preferences
  • Time and money to invest
  • Business goals
Once all these points have been analyzed and before deciding, we recommend that you also take into account the characteristics, pros, and cons of each of these development options.

In-House development

Insourcing or an in-house development team is simply a group of developers who are part of your company, i.e. they work directly as regular employees. This team will work under your control, strictly on the tasks assigned to them, and will do so under the culture, mission, and vision established by your company.
Some of the most popular companies that hire in-house developers are:
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What are the advantages of in-house development?

  • Communication
Face-to-face communication is always going to be an advantage within companies because it ensures transparency and immediate feedback, since the team can be contacted any time.
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  • Direct Control
The company has complete control of the development process, and therefore, team coordination is easier.
With an in-house team, you can be able to appreciate the skills of your team first-hand so the task assignment process can be done in the most optimal way, taking your goals as a team into account.
  • A better understanding of needs
As we are our own client, the requirements are much easier to understand and this eliminates the need to spend hours explaining what is expected of the project, its tasks and how they should be executed.
  • Quick troubleshooting
Another advantage is the speed at which the team can address bugs or issues that may be critical.
Sometimes you have last-minute tasks or changes that are usually urgent. With an in-house development team, these tasks can be easily re-prioritized according to the needs of the project and the company.

What are the disadvantages of in-house development?

  • High costs
We refer specifically to the time and money it takes to form your own development team. It is necessary to invest in management and the process of hiring varied personnel to cover all the needs.
There are many other expenses to an in-house development team that arise from them being employees of the company, such as legal obligations, office supplies, vacation days, to mention a few examples.
The time could come when developers have finished all tasks and have no project to work on, but that does not exempt you from paying their salaries, this would imply paying for a team that is not necessarily being 100% productive.
  • Lack of tech knowledge
To attend all aspects of a project, it will be necessary to hire a variety of professionals with unique knowledge and skills: DevOps engineers, frontend developers, backend developers, managers, designers ...
But as we know, it is not possible to find people who know everything, this means that the team will not always know how to complete certain tasks, which could lead to the need to hire new engineers or training staff in this unknown subject, which leads to the next disadvantage.
  • Continuous investment in training
If you are going to have your own in-house team, consider that to keep up with the market and to tackle any new project, your employees must continually update and perfect their knowledge and skills.
These training opportunities represent a sound investment of time, money, and effort. Are you willing to take them?
  • Employee dismissal
With the great demand for talented developers in the market, it is common for them to change jobs often, so consider that you should create the right work environment to keep your employees.

When should you choose this option?

  • When the core of your business is Software Development.
  • When you have the budget and resources to build and maintain a team with all the implications, we saw earlier.
  • When you want a unique product that perfectly meets your requirements of what and how to develop it.
  • When you want to have absolute control of every detail of the project.
  • When you can ensure that there will be permanent work for all team members.
  • When the idea is to have a team always available for the maintenance and updating of your products.
  • When time is an issue, waiting for a fix can be business-critical.

Software development outsourcing

Outsourcing software development services means we are going to hire a team from a different company to develop a complete project or support us with implementing specific tasks. If you want to complement your in-house team because you don't have a Python developer, you can find an excellent one in, for example.
Many companies are opting for this modality. In fact, according to Statista, in 2021 the turnover in the IT outsourcing market is expected to be approximately $ 96.7 billion.
There are a lot of companies that offer high-quality outsourced software development services because they offer developers with superb skills and extensive knowledge.
Some of the most popular companies that outsource are:
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What are the advantages of outsourcing software development services?

  • Cheaper than in-house
The costs of assembling a team, training it, and everything that this entails are eliminated so that the investment to develop a project is much lower.
  • Speed of development
In an in-house team, the speed of development depends on the number of developers the team has. With outsourcing, integrating a complete team or supplementing your own temporarily is much easier and faster.
  • Avoid the tedious hiring process
As we mentioned in the previous section, hiring staff and putting together a complete team is an entire process that involves interviews, analysis, tests and this becomes time, money, and effort.
When outsourcing a software development service, you only have to worry about being clear about what you expect as a result, and voila!
  • Wide variety of high-level professionals
This is one of the greatest advantages of outsourcing, because it puts at your disposal a pool of technical specialists with impressive skills and a lot of experience in the area, making the hiring process simpler, faster, and more effective.
If we talk about a hybrid modality, outsourcing allows you to complement your in-house team with the specialists you need for specific projects. Now you will have a team with all the experts that your project needs: designers, managers, and developers of all the branches that are required.
  • Diversity of ideas
Usually, the companies that offer the outsourced software development services are not in your same location and often have employees from different parts of the world.
So you can be sure that apart from a software development service you now have an inexhaustible source of new and innovative ideas that will make your product a more inclusive product that is not focused on a single market but could be universal.
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Foto de Thirdman en Pexels

What are the disadvantages of outsourcing software development services?

  • Less direct communication
This limitation occurs in the sense that communication will mostly be online and in very few cases face-to-face, this makes relationships somewhat impersonal and it can be slightly more difficult to reach the team.
Communication could also be affected by time zones, language and cultural differences.
Tip: There is no reason to worry because you can always overcome these limitations, we recommend you review our blog How-to: Team Communication 2021, where we give you some tips that will be very useful if you decide to outsource.
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  • Security risks
Security risks are present both for in-house development and for outsourcing, but we can consider them a little higher with outsourcing since we are talking about people who are not part of your company.
In this sense, it is important that before subcontracting you know well, the trajectory of who will provide their services to you, and above all that you sign an NDA contract to protect the rights and the idea of the project.

When should we choose this option?

  • When your budget is limited.
  • When you do not have enough time to coordinate the entire development process and the general management of the project.
  • When the line of business is not exactly software development and you need a specific project.
  • When you prefer to save time and hire an already trained team with a high level of expertise.
  • When you prefer a team with experience in projects similar to the one you want to develop.
  • When you want to complement your team with technical specialists that you do not have in your core team for temporary projects.
  • When you can't guarantee continuous work for an in-house team.

Final thoughts

As you can see, the decision depends strictly on the needs of the project to be developed and your company.
Both modalities have different pros and cons, but in summary, we can conclude that outsourcing guarantees you the optimization of expenses: money, time, and effort; while in-house development offers you to strengthen the commitment with the company and the relationships within your team.
As for security risks, in both, you will need to take intellectual property protection measures.
In more complex situations, you may need to use both development types together, which is a very valid decision that in fact, can bring you certain advantages, such as:
  • Completing your team with talented professionals
  • Flexibility in development
  • Competitiveness
  • Innovation
  • Commitment
The right decision is the decision that is best fits you and your company. Carefully analyze all the aspects mentioned in this article regarding the company, your objectives, the advantages and limitations that in-house development/outsourcing have and make the right decision for your company!