Bespoke Software Development: In-house or Outsourcing?

Marcin Małaszuk
03 September 2020 · 6 min read

Every company with a brilliant product idea eventually has to answer a fundamental question: should I build it with my own internal team or have it outsourced to a software development company? Startups and SMEs often run into the dilemma of choosing between the pros and cons of these two approaches.

In this blog post, we will define in-house and outsourcing software development. In addition, we will explain the pros and cons, as well as differences between them. Lastly, we will go over how to select the right technology partner for bespoke software development projects.

What is in-house software development?

Software that is developed “in-house” is created by an internal team. It involves leveraging company resources—an in-house team—to develop software according to the requirements specified. This requires recruiting all sorts of professionals like software developers, QA engineers, tech leaders or testers.

It is reasonable to build such a team for your main projects and for business activities you perform daily but bare in mind that this requires a company to invest money and time in assembling a competent team dedicated to your project.

Pros of hiring an in-house software development team

Zero language or cultural barriers

An internal development team will most likely share the same cultural and language background as you. There are fewer limitations and boundaries when dealing with an in-house developers. In addition, you will be able to build a sound corporate culture with your team from the beginning.

Face-to-face communication

When you choose to develop software in-house you will share the same working hours as your development team. You’ll also probably work in the same office. This makes the communication process much smoother and intelligible. Face-to-face communication increases the effectiveness of your interactions and helps to avoid the misunderstandings that arise when communicating via technology.

Fast adjustments

Having an internal development team gives you better access to them and allows you to make changes to a product’s features, or add a feature more quickly. In addition, such team generally tackle software bugs faster than outsourced ones due to high-speed communication.

Cons of hiring an in-house software development team

High cost

In-house software development often ends up being much more expensive. There are a ton of expenses that go into running such team including rent, software, hardware, and taxes. In addition, employees will require expenses for training, sick days, and benefits.

High turnover rate

Software developers have a high turnover rate. That means they have a tendency to switch jobs frequently. When an employee quits, it often slows down the project. Retaining technology professionals is a major headache when developing with an internal team. As is hiring in a highly competitive landscape.

When to choose in-house development?

There are certain situations where it makes sense for companies to choose this approach to software development:

  • if a company’s core competency is software they would be well advised to develop in-house. However, they should be sure that they have enough resources and infrastructure to support the development of the project.
  • when you want to maintain full control of the project
  • when you require quick bug fixes or want to keep your product continually optimized and updated.

What is outsourced software development?

Outsourcing software development involves a company hiring a third-party developer to create their software development project. Which this approach, companies can focus on their core competencies.

Outsourcing requires zero infrastructure or hiring of personnel, unlike in-house software development.

Pros of hiring an outsourced software development team

Low cost

Companies from all over the world provide software outsourcing services. In many situations, the cost of hiring external team is substantially less than the equivalent cost of development in one’s home country. In some situations, the quality of work is stellar despite the low cost. For example, Poland is ranked as having the 3rd best developers in the world by HackerRank yet their developers charge a fraction of what American developers do.

Scalability

Scaling a project both up and down is made easier with a proper technology partner. If you need to make your development team either bigger or smaller, it’s easy to do when outsourcing.

Limited recruitment process

When hiring a vendor, the process is simple, finding a proper partner and onboarding. When compared to building your internal team from scratch, we can shorten the process and miss couple of steps: preparing and posting job offers, negotiating proper salary and working conditions, preparing workspace and equipment, or mentoring.

Time-to-market

If your priority is time, you should opt for a trustworthy technology partner. Software development companies are prepare to build a proper team in a speed of light and start coding just after the project scope is set. The quality is also high and all processes optimised to build your digital product effectively. Whereas internal team needs some time to work together to be as effective as an external team.

Cons of hiring an outsourced software development team

Security risks

When you outsource software development you are trusting a third party with your software and any sensitive data related to it. Despite the risk, the security of your data is always a priority for any software house.

Barriers in communication

Timezone and linguistic differences can affect the speed of development and the final quality of a product. When looking for a technology partner, try to contact companies from countries with high English proficiency level to avoid communication barriers.

Different time zones

This may seem like a problem for some companies. Working with an external partner located far away may cause communication problems or in extreme situations delays. Arranging meetings may be also problematic. However, when you find an experienced partner, you can only benefit with different time zones. Your company will extend working hours and if you hire nearshore, the difference won’t be so large and you might also have similar cultures and mentality.

When to outsource development?

When you require scalability

When your project will require scaling up or down, nearshoring or offshoring is the best choice. It lets you increase your company’s output without raising fixed costs.

When you need to move quickly

You can benefit greatly when you need to speed up your product development. It gives you access to a dedicated team much faster than hiring in-house.

When you require a cost reduction

Outsourcing can help you save a large percentage of your development costs. You may be surprised by the cost of software development in Poland.

How to choose a software development company?

First, browse the website of the company you are considering outsourcing to. Look over their software development services and browse their portfolio. Verify that the services they offer are compatible with your current and potential future requirements.

Next, you should check the company’s reviews on platforms like Clutch and GoodFirms.

Lastly, set up a call. You’ll be able to best gauge the fit of your potential new developer over the phone.

Conclusion

If you’re approaching your project with a long-term perspective, it is best to build a strong in-house team. However, in many situations, it makes sense to outsource software development. If you’re a newcomer on a relatively low budget, building an MVP with an external team is a great way of getting your project up and running to see if it works.

Outsourcing development isn’t something you should be scared of — even if it’s your first time!

If you are looking for a company to develop your product, get in touch with us. We will help you build products and services tailored to your needs.

Contact us

Related blogposts:

Free guide on IT outsourcing for C-level executives

Why better software development demands a discovery workshop?

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