Outsourcing Vs In-House – Which One is Better for Software Development?

Outsourcing your project to a software development team or hiring an in-house team, what should you consider in 2022? Here is a detailed comparison for both from a business perspective.

Outsourcing software development is a business trend that keeps on booming in the next decade. Businesses are encouraged to outsource their projects due to significant cost reduction. Today, cost is no longer a priority, but outsourcing software development is still booming to gain access to top development skills and ingenious software development techniques.

As per the survey published in Statista, 64% out of the 4,498 CIOs considered offshore software development, while 32% of them have planned to increase their spending on outsourcing. This demand further boomed due to Coronavirus pandemic, encouraging CTOs and CIOs to hire a remote team working delicately on their projects.

Graphs showing spending of offshore software application development
Image source (Image Source)

If you are still facing the dilemma to choose the offshore software development or hire an in-house team, then you this blog will guide you to make an informed decision.

Outsourcing Software Development Understanding the potentials and risks

Outsourcing application development is based on delegating the task of making software products to another company. Such companies typically have state-of-the-art advisors with top experts on board and support organizations operating in a variety of industries.

Potentials of outsourcing software development

Software development agencies offer a great deal of flexibility in their outsourcing models, providing companies with dedicated development teams, but also team development or body leasing services.

Significant Cost Reduction

Sourcing and hiring talented developers are difficult, expensive and time-consuming. By outsourcing your application development, you avoid paying all the costs associated with hiring and maintaining full-time employees. If there is a change in the team structure, be sure to check if you don’t need to pay to add new people to your team.

Easy Scalability

Your provider can easily increase or decrease outsourced teams to suit the changing needs of your product, depending on your project and meet new business needs. It’s impossible to achieve the same level of flexibility with an in-house development team – recruiting new team members takes a long time and firing them can ruin your team’s morale and reputation.

Make sure the provider is able to set up a dedicated team for your project and the number of people in the team is not fixed, but flexible and can be changed during the development process to suit your changing needs.

Faster Time to Market

Outsourcing app development means you can start building your product almost immediately. It will take you longer to build an internal team of software developers. In our experience, it takes 2-3 months to hire a skilled specialist. Doing this, and then joining your team and setting up the process can be very time-consuming. Outsourced teams help accelerate the market-to-market of your app.

Proven Workflows and Processes

Outsourcing providers offer experienced teams that have written multiple applications for different areas. They know how to collaborate efficiently, and use well defined processes and workflows to increase their productivity and deliver the best quality of code.

In addition, the software development company can provide all the development roles you need – not only software developers, but also Scrum Masters/Project Managers,

Significant Cost Reduction

Sourcing and hiring talented developers are difficult, expensive and time-consuming. By outsourcing your application development, you avoid paying all the costs associated with hiring and maintaining full-time employees. If there is a change in the team structure, be sure to check if you don’t need to pay to add new people to your team.

Easy Scalability

Your provider can easily increase or decrease outsourced teams to suit the changing needs of your product, depending on your project and meet new business needs. It’s impossible to achieve the same level of flexibility with an in-house development team – recruiting new team members takes a long time and firing them can ruin your team’s morale and reputation.

Make sure the provider is able to set up a dedicated team for your project and the number of people in the team is not fixed, but flexible and can be changed during the development process to suit your changing needs.

Faster Time to Market

Outsourcing app development means you can start building your product almost immediately. It will take you longer to build an internal team of software developers. In our experience, it takes 2-3 months to hire a skilled specialist. Doing this, and then joining your team and setting up the process can be very time-consuming. Outsourced teams help accelerate the market-to-market of your app.

Proven Workflows and Processes

Outsourcing providers offer experienced teams that have written multiple applications for different areas. They know how to collaborate efficiently, and use well defined processes and workflows to increase their productivity and deliver the best quality of code.

In addition, the web development company can provide all the development roles you need – not only software developers, but also Scrum Masters/Project Managers,

Risks in offshore Software development

Naturally, with outsourcing comes several risks that you should consider before signing a contract with a software development agency. Before we discuss these risks, here’s a question: How do you avoid them? The answer is simple. The best way to avoid the following risks is to partner with an experienced, reliable and trustworthy company.

Low-Quality Code and Documentation

Sometimes companies decide to move from one development to another or continue to work on their product internally. If an outsourced team fails to develop proper code and documentation, moving the project to another team will be very problematic and will involve unforeseen costs (especially if it turns out that you need to rewrite your application).

Business Failure

Remember that a software development agency that acts as your outsourcing partner is not protected from the usual risks faced by businesses. It may go out of business or be forced to reduce its operations dramatically due to a lack of staff. This can pose a risk to your mobile app development project.

Limited Control over the Development Team

Outsourcing the critical work of creating high-value software can be risky because you have limited control over the development team. Don’t forget, however, that such teams adhere to project management standards that enable frequent communication, so the chances of being left out of process are very small.

Communication Issues

When it comes to communications, other potential risks come from partnering with an agency located in an entirely different time zone. However, experienced providers know how to deliver the best services regardless of their location.

Limited Motivation

Easy to monitor in-house development team engagement. Doing this with an outsourced team is more challenging. That’s why it’s best to partner with a company that offers dedicated teams where each team member works only on your project.

When to outsource your app development?

• You lack a development team and experience in product development – ​​By outsourcing your app creation process, you will benefit from the skills and experience of a software development company that has helped many other business owners build great products.
• You lack the necessary expertise – even if you are a medium-sized business and have an internal development team, you may still need specific skills or expertise (for example, a Scrum Master) to make your application successful, roles such as UX/UI Designer, or QA Engineer). It is difficult and costly to hire such specialist’s full time. So, outsourcing makes sense in this case.
• You want to reduce development cost and accelerate time to market. You have no internal team and you do not have the time to build, join and maintain a team. But you want to build an app quickly and at a reasonable price.
• You have an internal development team, but your employees don’t want to spend their time on new app development projects. This is where hiring an external team for the job will help you save internal resources for mission-strategic tasks.

In-house software development team Understanding the Potentials and Risks

A company that wants to build a software product can also create an internal development team. This includes the process of attracting, sourcing and hiring software developers, QA engineers, UX/UI designers, testers and other professionals needed to build successful products. In addition, such teams often require a technical leader who ensures the implementation of best practices and maintains high quality of code.

Potentials of in-house Software development team

Engagement and Cultural Fit

Software developers who are permanent members of the team tend to be more aware and knowledgeable about the business requirements of the company they work for. They tend to be more engaged and motivated to achieve the best results and provide value. And if there is a problem, you can see it and respond immediately.

Efficient Communication

Working an hour from the same office helps streamline the communication process, making it clear and comfortable for the entire team. Direct communication helps to save time and avoid misunderstandings, ultimately speeding up the development process.

Increase Agility

An in-house team of software developers can quickly tweak project features, add new ones, and closely evaluate their technical background. Internal teams also deal with bugs and errors quickly.

Risks of hiring an in-house team

High cost

Internal development is more expensive than outsourcing the process to an experienced and trusted vendor. Final costs are made up of expenses that add up over time, for example, office rent, taxes, software, hardware, overhead costs, training, sick days, benefits and more.

Difficulty in finding skilled IT specialists

The huge demand for technical experts makes it difficult to find and hire the right professionals in some cities or regions of the world. Also, as a recruiter, you need to be able to source candidates and accurately assess their technical skills (or pay someone who knows how to do it and will do it for you, which incur additional cost).

High employee turnover

Software developers are aware that their skills are in demand and they frequently change their workplace. Finding a new developer for your project can seriously affect your speed and slow down your app development process significantly.

When to develop your app in-house?

• You are planning a long-term development project – this is where it makes sense to build and maintain an internal development team that looks after your product. However, it is also possible to work closely with an outsourcing partner for a long-term, fruitful collaboration.
• You have a lot of money and want to keep your team – if cost is not an issue, you can allow your team to make mistakes and optimize their process, and not need to release your product right away Well, there is an internal team to solve for you.

In-house Vs. Outsourcing Software Development: A Detailed Comparison

a. Quality output

Software development companies have battle-tested quality assurance processes that guarantee high product quality. In addition, such outsourcing partners employ multiple software developers who share their knowledge and experience with each other. If quality is important to you, it’s best to rely on the skills and expertise of an outsourced team.

b. Time to Market

If you want to start developing your application as soon as possible, outsourcing is a better option. In doing so, you will not need to hire software developers, deal with the formalities, onboard them and train them before you go down to develop your application.

In addition, it will take time for your team to synchronize and optimize their process to become proficient at building software. By outsourcing the development of your application, you will get an experienced team of developers who follow battle-tested processes that expedite the creation of your application. You also benefit from workshops and counseling sessions that help clarify your business vision for the application.

c. Cost

Outsourcing comes at a lower cost than building and maintaining an internal development team. When outsourcing software development, you don’t have to worry about any costs associated with hiring developers full-time, such as sick leave or vacation. You can also benefit from scaling up or down the team efficiently and at a lower cost.

Final Thoughts

We hope this article will help you determine which model is right for your software development project and business needs. Choosing between an in-house development team and an outsourcing partner is not easy as both the solutions come with their own unique advantages. However, by carefully evaluating their shortcomings and keeping in mind the short- term and long-term business needs, we are confident that you will make the right decision.