In-house vs Outsourcing: What to choose?

In-house vs Outsourcing

Many businesses, whether its a startup developing new app or company implementing a digital transformation, are facing the important question – to hire in-house or outsource? 

Of course, each of these solutions has its pros and cons. There are famous companies like Amazon or PayPal – that prefer an in-house approach to software development. Others such as Slack, GitHub, and even Google, successfully outsource full or parts of their development work.  The main goal, though, is to arrange processes in a way to be as effective as possible for your business. 

We’ve prepared a brief overview of in-house and outsourcing solutions in software development, to help you make the right choice. 

In-house software development

Traditionally, in-house software development is considered the safest option. You have direct control over the development team without any third-parties involvement. The internal developers are fully integrated into the companies processes. They understand your special needs and share a common corporate culture. That, in turn, gives them an ability to solve some unique issues much faster than outsourcing contractors.

However, it can be difficult to find highly-skilled developers, especially if you need niche expertise. The integration of new employees into a team as well as their training may take some time too. That’s why the fast scaling of the development team is a real challenge for some companies. 

If you’re hiring in-house, despite providing an attractive salary level you should also consider hidden costs such as payroll taxes and benefits packages (paid day-offs, health insurance, vacations, sick leaves, childcare, etc.) This makes in-house software developers much more expensive than their outsourcing competitors. 

Outsourcing software development

The high expenses and difficulties with recruiting software specialists resulted in a mass shift towards IT outsourcing. The popularity of this approach is still rapidly growing. 

Mainly as a result of its cost-effectiveness. Reducing costs provided not only due to lower developers rates but also because you pay only for the work done. 

However, nowadays IT outsourcing is more than just cheaper development. It is the flexibility and opportunity to innovate, which helps companies gain a competitive advantage.

Outsourcing opens up the possibility of involving a broad range of tech talents with extensive experience in various fields. These are people with a clear understanding of planning and managing processes, who can suggest the best tech solutions for your project. 

IT outsourcing providers offer many cooperation models to choose from. You can get, for example, a fully formed dedicated team to work exclusively on your project long term and scale it as needed.  

Still, there’re some concerns regarding outsourcing software development. Usually, outsourcing providers are located in other countries. So it may be difficult to create a trusting relationship if you communicate only virtually. Cultural fit and lack of control are also among the major fears when it comes to this approach. How to minimize those risks? Learn more about what to consider when choosing an outsourcing software development company in our blog.

To sum up

Being an IT outsourcing company, we acknowledge the pros and cons of both approaches. 

Among our clients, some companies fully outsource their software development and some – use a hybrid model, having both in-house and offshore teams. 
It is very important to determine which approach (in-house, outsource or both) makes a strategic sense for your company.

Looking for a trusted outsourcing partner? Let’s get in touch! 

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