In-house development vs outsourcing – The good, the bad and the ugly.

Blog posts 06 November, 2018 Sean Boyle & Ha Bui

In-house development vs outsourcing?

Weighing up the pros and cons of in-house development vs outsourcing is increasingly a necessity for many businesses. Questions of cost, quality and capacity must be carefully considered, if the finishing line is ever to be reached with a cost-effective product that satisfies or even exceeds expectations.

With every project having its own software development requirements, there is no definitive answer as to which is the optimal approach between in-house development vs outsourcing, there are many factors to consider before choosing which path is right for you.

The good of in-house development

Long-term product development

The often grueling process of taking a product from development through to launch requires a flexible team of dedicated specialists. They have to be able to adapt to the changing demands of the project. By geographical proximity alone, an in-house software development team is better placed than a remote one to do so.

Shared vision

IT teams play a vital role in most businesses today, they are part of the fabric of your company, every day they work with and learn about your websites, apps and entire infrastructure. This understanding of who your company is and what your goals are takes time and money to impart.

Increased control

Are you a priority for your developers? How can you be sure that they are maintaining the company coding standards which are pivotal for the future maintenance of your product? How much are you going to end up paying? These are questions you should not have to ask yourself if you have an in-house software development team.

Shorter turnaround time

Local teams can offer closer monitoring of the development process and quicker emergency response times when issues do arise. Direct communication with the team provides an increased level of input and the ability to identify potential problems ahead of time. This can ultimately lower costs in the long run.

Increased productivity vs outsourcing   

Teamwork and collaboration breed productivity, it is difficult to replicate the existing culture of an in-house team when outsourcing. You could hire top freelance specialists, but if there are cultural clashes, you can be sure your project will not be running as efficiently as it can.

In-house software development – The bad and the downright ugly

Broad skills for niche work

When developing an app or software you want experts in the field on your project, they can be found, but you most likely will have to look beyond your own team. If the product has technical shortcomings due to a lack of specialized expertise, the long-term costs can be astronomical.

Hiring process

What are your IT department core function and focus, do they have the time and crucially the required know-how for your project? Finding and vetting the right people is a skill in and of itself. It is a process fraught with many hidden costs and it is one you do not want to get wrong.

Training

Even after finding a suitable developer, onboarding is a lengthy, possibly never-ending commitment. Developers’ skills need to be constantly updated and trying to adapt and shoehorn your in-house team into each new project is an unrealistic approach that will produce sub-standard results.

Productivity

Unless you are planning on constantly developing new software, it will be difficult to fully utilize the talent that you have hired and are paying a top developer salary to. Placing an extra burden on your existing IT team could also diminish their ability to support your core business functions. An overworked employee can quickly become an unhappy one.

Hidden costs

A custom tailored, highly competent, fit for purpose in-house team would surely bring great efficiency and productivity to a project. But assembling and maintaining such a team is at best extremely costly and at worst unfeasible. With salaries, benefit packages and project administration among a growing list of costs you will have to meet, in-house teams can become expensive endeavors.  

The good of outsourcing development

Efficient use of resources

Outsourcing tech development can greatly reduce project overheads, up to 60% according to a recent study. By harnessing lower labor costs and advantages such as more working hours due to time zone differences, a dedicated development team can allow for high levels of productivity at a reduced cost.

Flexibility

Specialized vendors are able to ‘parachute in’ to work to your schedule and project requirements. This means you can build a highly tailored team specific to the development and evolution of your project. This can be achieved much quicker than building your own in-house software development team.

Scalability

With experienced senior engineers, design teams and project managers, plus established quality assurance testing, professional outsourcing companies often have the capability and experience to go successfully from development to market.

Specialized outsourcing

Once you have decided to outsource, the challenge becomes finding the right talent to deliver results for your project at a competitive price. There is an ever-increasing market in outsourcing web development, both nearshore and offshore. Many have specialized areas of expertise and are experienced and well placed in various markets to bring the top talent from emerging markets to you.

Allows you to focus on core competencies

Like in any production line, the division of is key to efficiency. By working with an outsourcing partner, the development work is streamlined. This leaves you to focus on your company’s daily business operations.   

Outsourcing development – The bad and the ugly

Unexpected costs

The Aberdeen Group reports that 76% of outsourcing customers paid more than anticipated in order to reach completion of their projects. Often these costs are incurred by inefficient vendor management and project administration. Outsourcing providers need to have sufficient organizational capacity to meet your needs, to prevent any headaches in your accounting department.

Hidden costs

Some contractors will offer an eye-catching rate per hour, but if they are providing you with inexperienced developers, you will end up with non-scalable and low-quality code. A sub-par product will cost you much more in the long run, than paying for the best talent available. It is possible to find professional outsourcers who source and vet top talent for you.

Risk of varying quality

With huge pools of outsourcing developers available in markets such as Vietnam, India, and Bangladesh, the benefit of having a wide range of choices available is complicated by the wide range of quality also available. Open and direct communication channels are vital for trust and understanding between the in-house development vs outsourcing development team.

IT contractors high hourly rate

If you choose to use a freelance developer you may find the required expertise comes at a premium. Often freelancers will work on more than one project at a time and where your project’s importance will fall is anyone’s guess. You need to be able to ensure your project is prioritized as much by your developer as it is by you.

Security and confidentiality

The risks of a breach are present in-house and are even more prevalent when outsourced. Any company considering contracting work out must be able to feel confident of the integrity of their partner, this can only be done through due diligence and an extensive search for a reputable outsourcing development company.

In-house development vs outsourcing conclusions

With upsides and downsides to both sides of the in-house development vs outsourcing debate, it is a matter of examining your own needs and goals before choosing the path you wish to take.

If you plan to compete with the giants of your industry long term and are confident you can assemble a sustainable team to build and tend to your product, in-house development could be the best option. If you are a startup with a limited budget, a company pushing for a three month MVP or a business that wants to partner with specialized experts, outsourcing to one in the top software development companies for small businesses is most likely the right path for you.

Outsourcing is growing according to a Deloitte 2016 Global Survey. It cites cost-cutting, the ability to focus on core business and capacity issues as the most prevalent reasons for seeking tech development outside of their own business structure.

In-house development vs outsourcing is ultimately an issue of cost vs quality. It is a challenge of finding the right talent at the right price. With more and more success stories like Skype and Github coming from outsourced developers, it comes as no surprise that more companies are now going down the path of specialist outsourcing services. Please visit here for more outsourcing services fram^ offers or contact via business@wearefram.com.

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