Outsource vs. in-house, it has been an ongoing debate since the emergence of Software Development. Companies and developers have been discussing it for many years now. So is there a hard and fast rule to decide which approach is best for your business? Well, there is not something which we can declare as white and black when it comes to Software Development. But there are questions and differentiation factors which might help you in deciding the right one for your business.
What is in-house software development?
In-house defines as the team of developers working for the company full time. Like the management hires the developers and IT experts of different domains and they become a part of the organization. And they take care of all the developments for the company. How wonderful it must be to have the team by your side all the time. And they are always on board to take care of any unexpected bug as well.
And they have the first-hand experience with your company, as a result, they are learning about your firm and your IT infrastructure on a daily basis. This approach acts very helpfully as developers have the same interests and objectives as yours and they become loyal to the organization as well. But it is not that easy and practical. This approach has a lot of positive and negative aspects which plays an integral role in selection or rejection of it.
The hiring process:
The biggest factor in in-house technique to be followed is the developers and the team you have selected for your company. It is a very complicated process of scanning and finding the best developer available in the market for your firm. Because your profits and the image of the business is going to be represented through their work. Hence deciding and hiring the best man with the right skill sets and expertise is very much important.
Companies use their qualified resources to find the gem in the first place and then a whole process is conducted to check their expertise and match them with the requirements of the company.
Cost of the in-house team:
If you have successfully selected and hired the team of your dream then you have to get ready to start paying them big chunks every month. Because according to the survey’s results:
Here is an overview of the annual salaries of IT experts in 2018:
Web developers – $88,000
Android developers – $98,000
iOS developers – $108,000
Back end developers – $70,000
Data scientist – $120,000
Project manager – $80,000
Web designer – $56,000
All of them are a fundamental part of the developer’s team and you can’t cut any of them off to save the money.
The intensity of work:
If your business requires constant Software Development and your In-House Software Developers are always busy working in the development of something new for you then probably the figures defined above might change. Because developers charge you a fortune to help you make one later on. Therefore when your in-house team is occupied, you might have to look outside for your new projects.
What are you doing here? You are paying a huge chunk to the in-house team and now for some other work you have to hire someone else from outside. It is going to double up your spendings. Sounds scary, isn’t it?
What is outsourcing software development?
Outsourcing is actually the process of hiring help from some outside source. There are many local and international companies who are offering facilities for software development. You have to find the developers who fall in your budget frame and after this, the official proceedings can start.
But you need to keep this thing in mind that wasting money on the cheapest deal possible and then redoing the whole process again is not going to help you at all. Finding a reasonable option and then starting work is the right thing to do. Outsourcing the team of developers and explaining what exactly are you looking for and then it is the work of them to produce what you need and deliver it to you.
Like In-House Software Development, there are also some main factors which decide what exactly is beneficial for you.
Comparison between outsource and in-house software development approaches:
Both of them have their significance and it just depends on the business which decides the approach. But here are some benefits and disadvantages of each approach, which will help you in making your mind.
Benefits of in-house software development:
Here are some main benefits of software development
No language and culture boundary:
In the case of outsourcing, the team of developers can be from a different part of the world and might be possible that their first language is not English. As communication is the key, through communication only the business owners are able to explain what exactly they have in mind. And developers also five their feedback to it. But it outsourcing, language can be an issue.
But not in an in-house approach. Because the team you have selected for your firm is most possibly from your city. And they will be able to speak the same language and they must have the same culture. So there will be no communication gap between both of the ends.
Deep involvement in the project:
In the house, the developers are working in the same office so the owners have the direct excess to them. It makes the changing process really easy and content. It helps you in giving your feedback and making live changes on the spot. And developers also have a huge benefit of staying and working close. Because they can get your response and opinion any time they want. As a result, the developers can make changes which will be in favor of business easily.
Expertise in the project:
When you hire the team of developers and IT experts, the first thing you look into is their set of expertise. And now as you have the competent team which can help you in creating the magic you have in mind it gets really straightforward. All the members of the team are experts and a strong grip. In addition to that, their close analysis of business and your firm gives them an upper hand from an outsourcing company. They have the same objectives as you. As a result, you are getting the best result possible. Security and external access:
When it comes to In-House Software Development, the whole is the part of the company already. Hence you don’t have to be worried about privacy or sharing the details. They can have access to all of the data as well as the mobile application details as well. They will use for the benefit of the project only. There will never be a question of a security threat because they represent the same organization and going against your own company is never an option.
So you are in safe hands.
As you are working in the same office, it gets a lot easier to collaborate. All the employees will be able to get the required information instantly and a team of developers will be able to get able easily as well. This way if anything like an unexpected bug happens, it is very convenient to resolve it. The team can help you with maintenance too when you will be in need of it.
Full control and surveillance:
You will have full control over the whole process. Different departments of the organization will have access to all the updates and daily happenings. So the developers will work under surveillance and they have to answer their work and justify it. As according to on research almost 76% of the companies complained that the outsource developers exceed the time limit which leads to more money.
But it is not the case in in-house development. As there is proper surveillance over the process.
Disadvantages of in-house software development:
As described earlier, the biggest negative point of the in-house software technique is the cost of the developers. They charge a lot of money and that just a huge burden on the spendings of the company. If it is a small or large scale company then there are more changes for things to mess up. As in moderate level business where the resources and products are valuable the scheme usually works out.
It is just not the salaries of the developers and IT experts but the cost of the tools they need as well cost a lot. In addition to that, the stress of bonus, taxes and many other things also pile up.
It can count as the biggest risk when it comes to the in-house software development approach. The member of the developing team can leave the staff any time they want. There is always a place for that. And as you have invested in that particular member, it cost you a lot. But in addition to that loss, you have to Hire a New Developer which will again cost you more. So this is a pretty big disadvantage of an in-house approach.
Lack of expertise in some particular area:
Like the team you have hired will be the expert in their fields. They will have command over their skills only. Like a web developer can’t work like data scientist for you. And in case if you don’t have the whole team, then in the middle of the project you have to arrange somebody with the required skill set to help you out.
This is also very inconvenient in terms of practicality because you are already paying a huge amount of the experts you have, you are covering their holidays, salaries, taxes, equipment, insurance, and many other things. In addition to all of this, a whole new member doesn’t sound easy on the money.
Paying them huge amounts is not enough; you have to pay your in-house team of developers even there is no task to perform. Even if the team is just hanging around, drinking coffee and discussing politics, you still have to pay them the complete salary.
Recruitment of the team:
Whenever the process of scaling the talent you are looking for starts, it is very expensive and slow as well. The process starts with an advertisement for a job vacancy and then going through CVs leading to many interviews and then coming down to few who you actually need. In that team, the outsource team can finish up the whole project.
So in-house comes with its own benefits and negatives factors. At one peak it can be the superlative and most productive things for your business. And at the second extreme, you will be bothered a lot by the money you have to pay for the services along with many other factors.
Advantages of outsourcing software development:
Price of the process:
The price of outsourcing the team is way less as compared to the in-house team. According to one research, one developer charges $175 per hour and if you hire the developer from some different part of the world, let’s suppose, India than it cost around $35. You are saving $140 per hour. Yes, the quality of the work varies. But you just have to find the good developers. As there are from a range of very bad to very good in the same market.
And once you have hired the team, who has way more experience as they work in the field, it is completely their responsibility to deliver you the final product. You don’t have to be worried about any of the experts or any other additional expense.
Short time to market:
As described earlier, in house technique, you have to go through a long and very slow procedure to hire the team and which can cost you a lot as well. But it is not the same in outsourcing. You just have to select the company and all the other things are part of their work. Even if you introduce something new which they don’t have the expertise for, they will manage someone for you. That just doesn’t fall easy on the budget but it shortens the time o deliver to the market as well.
Only Pay For Services:
When you Outsource a company to develop your software, then you are just paying for that service. You don’t have to invest in the tools and the equipment they need to perform the job. And you certainly don’t have to pay when if they are not working. Because you are offering them money on the basis of hours and they are not your permanent employees.
So you just have to invest once and only on the company which you want to outsource for your software.
Free time to focus:
When you are developing software that is not the only thing you are looking forward to success. Marketing, content, customer services, promotions, maintenance, customer’s relations, and branding, these are also very important to decide the success rate of the project. So when you outsource you done have to b worried about the development of the software. All the other departments can focus n their tasks and you also can focus on what is more important to you. This way you will be getting the best software plus the entire campaign to proceed further.
Negative factors of outsourcing:
Selecting the wrong company:
When you are outsourcing, you are meeting face to face. You just believe what the company has portrayed in its portfolio. And here are companies who have fake references to impress. But they don’t work like that. Therefore there is always a possibility of outsourcing the wrong company. And that can cost you a big loss at the end.
Security risk and transparency:
When you are not working in the same office you don’t have the idea what exactly is going on. That can cause trust issues for both parties. And the security of the data is always a concern. Even though they are official documents being signed beforehand still there is always a chance of leakage of your essential and key information in the market.
If you are outsourcing a developing team for a vital and fundamental product of your business, then you should make it sure that you can maintain it without the team of developers later on. Otherwise, you will be depended on the developers for its maintenance throughout. And that will be an additional expense.
Short term commitments:
Outsourcing companies go for short term commitments with their clients. Once the project is over, the commitment is over as well. You have to again pay for additional services if you want to get some extra things done later on.
Your outsourcing company is not just working with you. They have multiple projects at a time. As a result, you never know where your project falls on their priority list and how they are treating it. Lack of interaction is one of the biggest reasons for it.
Just like in-house outsourcing approach also have multiple positive and as well as negative aspects. It is depended on the company which approach they feel is right for them
Amazon, PayPal, Salesforce are the big names which have developed their setup through in-house software development. While giant like Google was developed through outsourcing software development. So it is always depended on the company and their resources. Sometimes the quality of the work and the ability to trust blindly with the sensitive data of the company is way more important than money; in that case, in-house is the perfect approach. But sometimes, getting your work done in as less as possible while keeping the quality is significant, then going for outsourcing companies is right.
There are some questions you should ask before selecting any approach
Do you really need to do this?
What are the reasons for doing it?
Why do we need change, what is limiting about the setup we already have?
What are the maximum risks?
What is your definition of getting the project done?
What are your priorities and what limits you can exceed?
Once you have answers for all of these and you have done your research properly, it will be very easy for you to identify which is the right approach for you.
Let us know which approach is best for your business?