In-House vs. Outsourcing Software Development

You have a software development project for your company, but how will it be produced? When it comes to in-house vs. outsourcing for software development, which is right for your project and your company?

Here’s your chance to learn more about in-house and outsourced development, a few common questions about each, and some of their pros and cons.

In-House Software Development

In-house software development is when an organization oversees and directs every aspect of the software development process. From ideation to final publication, everything is produced with employees within the organization.

Here is what you need to know about in-house development and the pros and cons of choosing it over outsourced software development.

What Does In-House Development Require?

For even the smallest development project, your in-house team needs to cover all of the necessary roles in software development. This includes:

  • Project manager – A project manager sees the big picture of the project and is responsible for making a software plan to follow. They are responsible for the budget, schedule, and execution of the project.
  • Team lead – A team lead takes the project manager’s vision and pacing of the project and works with software developers to make it a reality.
  • Software developer – This is a broad category. In larger in-house teams, each developer can specialize in a specific area of development. But in smaller teams, it’s more common for a single developer to have experience with multiple tools and programming languages.
  • Testers – Testers are responsible for making sure the software meets the demands of the project manager’s vision of the project. They ensure the quality of the project remains consistent throughout the final product and catch any bugs, errors, or issues in development before release.
  • UX designer – A user experience designer is responsible for ensuring that a software is functional and enjoyable to use. They study how easy it is for users to complete tasks within the software and make improvements.
  • UI designer – A user interface designer creates the interactions and visual touch points that a user encounters in a software application. Their job is focused on ensuring that the navigation process is seamless and visually appealing.

Those are the core roles that should always appear in every project. For larger or more complex projects, you may also need to include the following roles:

  • Business analyst
  • Process analyst
  • Software architect
  • QA engineer
  • Tech lead
  • Scrum master
  • Change control manager
  • Localization manager

In-house software development gives you more direct input and control over the development process, but its success requires you to provide all of the resources and talent.

How Much Does In-House Development Cost?

The cost of in-house software development varies depending on the size and scope of your project. Even a small project like a mobile app can quickly add up depending on the intricacies involved. An in-house project can cost anywhere from 2-6 salaries minimum.

The most important part to remember when choosing to develop in-house is the additional costs and fees associated with the program. Your organization is responsible for the salary and benefits of every team member involved, but it is also responsible for the soft costs of development like computers and software.

Pros of In-House Software Development

In-house development is the right choice for some projects. Here are the key benefits of choosing to create an in-house team.

  • Becoming a Software Company – If your new software will become a key differentiator in your market and you plan to transform your company into a software company, building a team in-house is a common strategy. It includes building in the processes and infrastructure but for a software company, that’s what it takes.
  • Direct Involvement – In-house development gives you complete control over the software development process. You have the power to make the entire process exactly how you want it. If a process or system within your development team isn’t working, you’re free to change it or entirely remove it.
  • No Language or Communication Boundaries – Because you are establishing your own team, you can hire a team without cultural or language barriers that you have to overcome.
  • No Scheduling Issues – Working with some offshore outsourcing providers, you need to stay awake in the middle of the night for your schedules to align. By moving all software development in-house, you remove this conflict. Your team works in the same office as you, making it simple to collaborate.

Cons of In-House Software Development

In-house development isn’t right for everyone. Here are some of the biggest reasons companies avoid creating their own in-house team.

  • Cost – This can often be a disadvantage of choosing in-house software development. Hiring, managing, and maintaining an in-house software development team can amount to a very high price tag.

You are responsible for hiring and paying the salary (and benefits) of the entire in-house team. Still, there are additional costs that some organizations don’t consider when hiring an in-house team. A few of those additional support costs include:

    • Recruiting and onboarding
    • Additional payroll and accounting support
    • Additional office space
    • Hardware and software needs
    • Insurance and retirement plans
    • L&D trainings and educational support
  • Staff Churn – Software developers and other technical jobs have high turnover rates. It’s estimated that roles like software engineers have an average lifespan of around two years and some professionals advise developers to change their job frequently. Typically, only the largest companies hold on to software engineers for longer than two years.

This means once you have taken the time to sort through the market, find the right qualified employees, and finally get through training those employees, you may only have a year of work with them before you have to start searching for someone new to fill their position. When you consider the high employee turnover rates and the size of your team, there’s a real chance you will always have at least one position soon to be empty, recently filled, or in training.

This continual flow of employees can seriously impact the efficiency of your team. When a team member leaves, it can take months to find, fill, and train their replacement to be at the same level of productivity.

Additionally, there are often complications when one developer has to pick up where another one left off. They may not understand how or why the program works, how to fix it, or how to continue its development. In the worst-case scenario, a new developer will be unable to work with the existing content and will need to start from scratch.

  • Lack of Expertise – When you’re hiring an in-house team, you are limited by the skills of the people in your local area. If there isn’t anyone local who has experience in a niche programming language or design aspect, then there is no hope for you to have them on your team.

This is not just a problem for companies based in rural or small cities; it is a problem that even larger corporations face. Because they are limiting their job openings to people locally, they exclude skilled and experienced workers from the global market. By choosing to go entirely in-house, it’s not uncommon to settle for a less-than-perfect candidate who has the knowledge and experience you need.

software developers pointing at screen

Outsourcing Software Development

Outsourcing allows getting your project completed without managing the entire process yourself. It provides faster results at a reduced cost while still maintaining a professional quality standard.

Here are some common questions about outsourcing software development and the pros and cons of choosing to outsource.

What Does Outsourced Development Require?

Working with outsourced development can happen at all stages of development. If you have a rough idea of what you want to develop or if your in-house team has a completed project that needs to be tested for quality, outsourcing can help.

Legally, there are no US federal laws that regulate outsourcing. To outsource, there are no forms to fill out or legal requirements to follow.

What Software Development Services Can You Outsource?

Outsourcing is a flexible option you can use as part of any project. This can include large scope design and development or be limited to smaller projects or final testing.

Outsourcing can fill the role of any member of a software development team. If your team requires a UX/UI designer, outsourcing can temporarily fill that role or throughout the project’s lifespan.

What Is the Process of Outsourcing?

Because each outsourcing project is a little different, it’s difficult to give specific details of the exact process. In general terms, outsourcing starts when an organization goes to an outsourcer with a need. This need can be everything from a long-term goal with multiple projects to helping with a specific area within a single project.

The organization and outsourcer work together to write up a contract. This contract establishes boundaries and expectations, including what the project will entail, major deadlines, expected forms of communication, and payment.

Is Outsourcing Ethical?

There is a wide variety of outsourcing available within that market, and there are both ethical and non-ethical solutions. In the most general sense, outsourcing is perfectly ethical. It is a common practice, and it is ethically sound.

Ethical issues with outsourcing arise when outsourcing takes advantage of foreign workers and economies. Companies that knowingly and willingly use sweatshops that perpetuate unfair wages, horrible work conditions, and child labor are not ethical.

When you choose to work with Tech9, you are choosing to work with an ethical international outsourcer. Tech9 treats all of our workers with respect and like they are part of our family. We’re a happy team of artists, creators, and engineers who work together to help you fill your software needs.

How Much Does Outsourcing Development Cost?

Exact pricing depends on the size of your project, what is involved with that project, where you choose to outsource, and the base costs of the company you choose. It can be difficult to set a ballpark figure for how much development would cost with all of these variants.

Pros of Outsourcing Software Development

Outsourcing is the best choice for many organizations. Here are a few reasons companies continually choose to outsource software development.

    • Access to High-Quality Talent – Outsourcing allows direct access to the most talented candidates in the world. Rather than restricting yourself to local candidates, outsourcing gives you access to candidates with the highest skillset. This helps ensure you are not settling for lower service simply because it’s what’s locally available.
    • Saves Time – Outsource providers are experts at what they do. They have the experience to turn around projects on time and have a refined system that works. They’re able to quickly and efficiently finish the development tasks you need so you can meet all your deadlines.
    • Only Pay for Services – The outsourcer manages their staff, is responsible for providing them with the hardware and software they need to succeed, and takes responsibility for hiring and training every employee. The only cost you are responsible for is the services rendered. This makes outsourcing significantly less expensive than in-house development.
    • Free to Innovate – When you work with an outsourcer, you are responsible for ideation and direction while they are responsible for making that dream a reality. Because you’re no longer wrapped up in the logistics of development, you’re free to innovate and create something that is uniquely your own.
    • Easily Scale – When you choose to outsource, it’s easy for your projects to scale. Outsourcers already have the talent and bandwidth to increase a project’s size and scope. This makes it possible to quickly expand your project and gain access to the qualified talent you need.
    • Ease the Burden on Your In-House Team – Your in-house team is great at what they do, but everyone has felt the crunch of deadlines. There will be times when your in-house team struggles to meet their demand. Outsourcing is a great temporary solution and can be used to augment your existing team to get through a rough time and back ahead of schedule.
    • Less Stress – Outsourcing takes the stress of project development and puts it on someone else’s shoulders. It takes away all of the stress and headache of managing a team and lets you focus on more meaningful tasks. Once the contracts are signed, you can rest easy and know your project will get done by professionals in time for your deadline.

Cons of Outsourcing Software Development

Outsourcing does come with a few cons. Here are two of the potential downsides some companies face when outsourcing software development.

  • Communication – An in-house software development team is easily accessible. It’s easy to have a watercooler discussion about the project and any concerns and get casual and consistent updates. When you choose to work with an outsourced developer, communication is more formal and scheduled.

Other communication issues can arise when working with outsourcers from different cultures who speak different languages. Some ideas and concepts may not translate well, and there can be some confusion in understanding the project requests. This is easily fixed with communication based on transparency but can be frustrating for some people to deal with.

  • Security – To accurately create your company’s software, an outsourced developer needs access to key pieces of information. You will have to share access to information with your outsourcer. Outsourcers will have security measures in place, but the information is still at risk of being leaked or hacked.

Which Option Is Right for You?

For many companies, outsourcing is the best option for software development. While you might not have the same level of control when you choose to outsource, you’ll get the final product faster, more affordably, and with less hassle than if you chose to build the entire team and process in-house.

In-house development may be the best option for large organizations that want direct control over the production process and have a larger budget to make it a reality.

Tech9 makes outsourcing possible for any organization with onshore, nearshore, and offshore outsourcing solutions. Find out more about how we can help you with the services we provide.

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In-House vs. Outsourcing Software Development