In-House vs. Outsourced Software Development. How to Get the Best of Both Worlds?

Should I hire a developer in-house or outsource my web and software development? What about Staff Augmentation?Where to find experienced professionals and how to organize a development team? How to turn my idea into reality?

These are the crucial questions you will undoubtedly face at the start of every software development journey. And whether you’re a startup with an innovative product idea or a company looking for digital transformation, sooner or later you’ll have to make a decision.

Entrepreneur starting a business
Image by StartupStockPhotos from Pixabay

Development is a core part of every IT project and asking the right questions can set you up for success. Every software project has its requirements and factors to be considered, and it is hard to recommend one approach. This article will outline the key advantages and disadvantages of each approach and help you make an informed decision.

In-House Software Development 

In-house team working in a office
Image by Ronald Carreño from Pixabay

First, let’s clear things out. What is in-house software development?
In simple words, it is when the team of developers works in your company’s offices and builds the software to support the business operations and the specific needs of the company.

That means you are responsible for recruiting and hiring full-time developers and provide them with a regular salary and other employment benefits. Furthermore, you are also responsible for providing the resources and infrastructure to support the software development.

 Pros of In-House Development

  • Control. With an in-house team, you can have complete control of the development process from beginning to end. Additionally, you can manage teamwork and quickly resolve any issues that may come up. That means you have the opportunity to know the abilities of every team member and can assign them tasks accordingly.
  • Cultural Fit. Since you control the recruiting process, you will certainly choose people that share your values and organizational culture. That helps employees to integrate with the company efficiently and eases communication.
  • On-Site Availability. Being in the same office and within the same time zone makes the process faster and more effective. If you have a question, you can always ask your colleague and get an immediate answer. Although this point is slowly losing value as more and more people work from home.
  • Response Time. Having an in-house team increases the speed of implementing unexpected changes. If there is an urgent need to change a project’s features and make certain modifications, a team under your control can make the changes faster.

Cons of In-House Development

  • High Cost. In-house software development is time-consuming and way more expensive than outsourcing. Maintaining a team takes time and money. It is costly because it includes recruitment and onboarding and training costs, salaries, and other employee benefits. Plus, infrastructure, taxes, rent, and much more.
  • Narrow Talent Pool. Lack of talent is a serious problem for in-house business models. And with the fast development of the IT industry, the competition to hire the best developers is higher. The local talent pool available might not be adequate for your business plans and technical needs or fit into the planned budget. When there is a talent shortage with a specific skill set, your only option is to pay a significantly higher amount to bring in the required talent or consider the global outsourcing market.
  • Staff Turnover. The technology industry has the highest turnover rate for any industry. One of the most significant in-house software development risks is poor employee retention. Developers are in high demand and frequently switch jobs in search of better opportunities. There is always a risk that a lead developer will leave during crucial stages of the project, which in turn harms software development productivity and product quality and can even bring a project to a standstill.

Outsourced Software Development

Outsourced software developer working from home
Image by Free-Photos from Pixabay

Outsourcing software development is a business strategy of hiring an external company to fulfill your software requirements. In this case, your software development team will work remotely, usually from another country.

These teams have experience and skills gained while working on development projects for clients across various industries. Businesses from startups to enterprises turn to outsourcing specific business functions such as IT, marketing, or human resources. This helps them grow and get quality services at lower rates. Outsourcing has become an essential part of business management worldwide.

Recently, Opinium and LiveArea provided research that explores the impact the pandemic has on businesses and operations. According to it, 10% of companies already outsource their marketing department, and 32% consider outsourcing. To develop greater business agility and resilience, companies are looking to reduce risk through outsourcing, and it is expected that the outsourcing market will grow significantly in the coming years.

Pros of Outsourcing Software Development

  • Significant Cost Reduction. Software outsourcing allows companies to hire top-notch talent at a reasonable price. You’ll be paying local market rates for skilled labor. Since you are paying for the service, not for the work, you will reduce the cost of hiring, training, and housing staff. Plus, you’ll save much money on administrative expenses like equipment, rent, and software licenses. This allows a company to develop its product at a lower price.
  • Access to Top Talent. Software development outsourcing solves the problem of a lack of local tech talent. Outsourcing gives you immediate access to highly skilled experts from all over the world without any difficulties or increased costs.
  • Increased Efficiency. Delegating the recruitment and training process to an outsourcing partner will allow you to allocate your time and energy to focus on core business activities and future strategies. Having access to quality tech talent means that you can begin building your software almost immediately and launch your product faster, thus gaining a substantial competitive advantage.
  • Shared Risk. A quality outsourced IT service provider will take the time to study your project specifications and identify any potential issues. That will help mitigate any risks associated with your project.

Cons of Outsourcing Software Development

  • Less control. Although you will be working closely with the IT company, you won’t be able to control your IT functions as well as you could with an in-house team. You can’t monitor the development team and see how tasks are performed. However, this should not be an issue if you find a trusting outsourcing partner. Plus, you can always track your team’s progress using modern software and management approaches that will help keep them accountable and help you maintain visibility.
  • Communication Issues. Language barriers, cultural differences, and contrasts in time zones can significantly impact the whole project. Software Development is an industry that requires intensive communication, especially during the requirements phase. If your outsourced team doesn’t have a good grasp of English, that can be a valid concern. Moreover, if you partner with an offshore company located in an entirely different time zone, that will require an additional level of planning and management. When you don’t have face-to-face communication with your development team very often, you may not receive responses as quickly as you’d like, and it may slow down the project. However, experienced providers know how to deliver optimal services regardless of their location and offer you software developers who speak excellent English.
  • Risk of Exposing Confidential Data. When you outsource important IT functions, the outsourcing agency gains access to all of the information that passes through the organization’s computer system and there is a risk that confidentiality and security may be compromised. You can mitigate these drawbacks by teaming up with an experienced, reliable, and trustworthy outsourcing company.

Our Hybrid Approach 

If you still can’t decide which approach is better, you may consider a third option, a hybrid approach, or as we call it, staff augmentation. In some cases, the combination of in-house and offshore software development will deliver the most benefits. The blended workforce model will let you develop an agile, cost-efficient workforce that will match your business needs long term.

Providing a hybrid dedicated team for one of our clients

For example, your in-house employees can be a better choice at the start of the project, but as you progress to the next stages, it is best to hire a remote, dedicated development team. Using the hybrid model, you will get better quality, more timely production, and the ability to scale operations at a lower cost. Plus, if you are concerned about security risks, the hybrid approach is probably the most fitting for your business.

How do we do that?

By providing dedicated talent solutions for our clients, also known as staff augmentation. When you partner with us, you will usually get more than team augmentation. We can also cover various software-related services, such as analysis and design, quality assurance, project management, or support and maintenance. Our top-tier developers will become a part of your in-house team and will work closely with them for as long as you need them. The exchange of knowledge and ideas between in-house and outsourced developers can be highly beneficial and will help you overcome the challenges that come in the way. 

We have more than ten years of experience in shaping remote agile teams, and we have learned how to tackle the disadvantages of the above-mentioned models.

Pros of Our Hybrid Model

  • Control. Our clients have more control over every step of project development and implementation. We have client managers assigned to every team, and every office has its HR Manager. 
  • Cultural Fit. With close communication with our clients, we make sure every candidate we hire fits their company culture and unique requirements.
  • Response Time. Our dedicated client managers are there to help you if there’s any delay or issue. We will handle your needs in a personalized way, and the team will dig deep into your business and get to know your actual needs.
  • Communication Issues. We have team managers who are responsible for the availability and performance of their team members daily. Each member of the team is composed of highly experienced software engineers with the required talent and expertise. 
  • No Risk of Exposing Confidential Information. We sign NDA’s and follow procedures that protect every client’s data. 

Cons of Our Hybrid Model

  • Recruitment may take longer than anticipated. In exceptional cases, when the set of skills is not standard, the recruitment process can take longer than usual. Thus, we keep the client updated on the process at all points, and we are fully transparent.

All this and a combination of typical outsourcing benefits make Cosmic Development a close and trusted partner, not just a temporary service provider. Reaching a maximum level of productivity with our staff augmentation hybrid model is a very realistic goal. You can immediately benefit from reduced talent costs and increased development capacity to achieve your goals.

How We Can Help

Outsourcing is an excellent way to boost your business’s digital transformation and support growth through innovative solutions. By choosing this approach, you will not only save time and money, but you will build a team of dedicated developers without adding the expense of full-time employees and additional office space and equipment. Outsourcing will help you gain a competitive advantage and help your business work smarter.

Cosmic Development is a Canadian IT company specializing in providing IT solutions and staff augmentation to business owners who want to get outsourcing services for lower prices but excellent quality. With a decade-long experience and a range of successful software projects, we can provide the best software development services for your business. 

We are committed to building digital talent solutions that create rewarding results. 100 % of clients’ satisfaction is our priority and we always keep an eye on quality assurance, ask questions, and encourage strong client cooperation to ensure that.

We at Cosmic strongly believe that staff augmentation is not a purchasing project but a partnership, and we maintain a trusting relationship with our clients. We offer access to unique talent and expertise and will help you with any project regardless of its needs, size, and budget.

Let us know your needs, and we will help you build an agile remote team. Arrange a free consultation today, and we will get you started.

Free IT consultation


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