In-House or Outsource – Finding the Right Fit for Your Digital Software Development Team

If your company needs to develop a custom software solution, choosing between hiring a development partner or hiring developers in-house is one of the first and most important decisions that you will need to make. There are a number of different pros and cons to consider in the in-house vs outsource debate, and what works best for one company may not be the ideal solution for you.

Advantages of Hiring Software Developers In-House?

For companies that can justify the cost of hiring in-house talent, hiring developers in-house does offer several key advantages such as:?

Increased Control?

Working with in-house employees provides companies with a greater degree of control than working with a third-party partner. In addition to getting to choosing exactly who you hire to work on your project, hiring in-house developers also allows for direct collaboration with those building your software solution and total visibility throughout the duration of your build.?

Improved Data Security?

As long as you are working with a trustworthy software development company, having your company's sensitive data fall into the wrong hands shouldn't be too much of a concern. Nevertheless, there's no denying the fact that transferring propriety data between companies does increase the risk that your data might become compromised. When working with a third-party partner, it often isn't possible to determine the exact measures they take to keep your data secure. If you choose to hire in-house, though, keeping your data secure will be something that you have much more complete control over.?

Becoming Less Dependent on Partners?

Complete dependence on a single partner can undoubtedly expose your company to increased risk. There's a benefit, therefore, to not having to totally rely on a third-party partner for your company's vital software development needs. Once again, choosing a trustworthy and reliable software development company can certainly mitigate this concern. Nevertheless, many companies enjoy the peace of mind that comes with knowing that they are not fully dependent on a third-party partner.??

Disadvantages of Hiring Developers In-House?

While hiring developers in-house does offer some unique advantages, there are several drawbacks to hiring in-house that are important to consider as well, including drawbacks such as:?

Hiring Developers In-House is Actually More Costly?

Unless you are continually developing new software solutions at a rate that allows you to justify hiring a full-time development team, hiring developers in-house is almost always going to be more costly than outsourcing your project - and hiring the wrong software developers is going to be even more costly.??

On paper hiring in-house often looks cheaper, but when you add up all the costs including:

·??????Salary & benefits

·??????Equipment, office space, tools & licenses

·??????Ongoing training & resources

·??????Management & oversight

·??????Security and access management

·??????HR, insurance & expenses

It starts to rival outsource hourly rates quickly, and we haven’t even mentioned the biggest cost, innovation silos. When an in-house developer runs into a challenge, or a wall, how do they overcome it? Who do they turn to? How long will it take for them to solve it themselves? This unseen cost is often the main reason companies who hire in-house return to outsourcing and break out of the high-cost innovation silos.

The other not-so-hidden cost is a bad hire. So how much do bad hires cost? The answer to this question is ultimately dependent on the scope and importance of your project. The payroll giant ADP reports bad hires as costing “30% of the employee’s salary and up to $240,000”! Those are the hard costs, but one bad hire can lead to mistakes and delays that could end up dismantling your entire project, costing you far more.

Even if you do manage to hire talented and hard-working developers, the cost of hiring in-house to complete a single project is still likely to be substantially higher over time than the cost of outsourcing that same project to a reliable software development company.?

Scaling Up or Down Becomes More Difficult?

When working with a third-party development company, scaling your software development needs in either direction is much easier to do. Most development companies offer readily scalable services that can be adjusted at any point depending on your needs at the time.

When working with in-house developers, though, scaling up or scaling down is a much more complex task. Scaling up means that you will need to hire and onboard new developers. Scaling down may mean that you must fire developers. In either case, the process is sure to be much more involved than simply requesting adjustments to services provided by a third-party development company.?

In-House Developers are an Ongoing Expense?

If you choose to hire in-house developers, pausing your project to maximize your budget isn't going to be an option. No matter what delays might arise, your developers are still going to be on-staff and are still going to be paid. When working with a third-party partner, on the other hand, you have the option to put your project on pause should any delays arise rather than having to pay the salary of in-house developers even when you don't have any immediate work for them to do.?

Advantages of Outsourcing Software Development?

In the hire vs outsource debate, outsourcing your software development needs to a reliable development company offers several substantial advantages, such as:?

You Only Pay for What You Need?

We've already discussed the fact that hiring an in-house development team means that you will be paying their salary and all associated overhead regardless of how much time they spend actually working on projects. If you choose to outsource your project to a development company, though, you are only going to have to pay for the actual number of hours they spend working on your project.

This ability to only pay for what you need is the biggest reason why outsourcing software development tends to be much more cost-efficient than hiring in-house developers.??

Freeing You Up to Focus on Other Aspects of Your Company?

Hiring and managing an in-house development team is a time-consuming responsibility. Outsourcing a project to a development company, on the other hand, is almost always going to be much less involved (especially from an operations point of view). By largely taking the responsibility of overseeing all aspects of the project off your shoulders, working with a third-party development company can free you and your staff to spend more time focusing on other important tasks and objectives.?

Easily Scale Up or Down at Will?

Another point we've already touched on is the fact that working with a development company makes it much easier to scale up or scale down your development needs. When outsourcing software development, scaling up or scaling down is typically as simple as communicating your needs to your partner and letting them take care of the rest. Scaling up or scaling down when working with in-house developers is sure to be a much more difficult process.?

Disadvantages of Outsourcing Software Development?

For most companies - especially those that only need to develop a single software solution - the advantages of outsourcing software development tend to far outweigh the drawbacks. With that said, there are a few drawbacks to outsourcing software development that are worth considering as well, including things such as:?

Difficulty Finding the Right Partner?

Not all software development companies are created equal. This makes it essential for anyone hiring a third-party development company to carefully do their research and choose a company that will be able to deliver on its promises. In the end, choosing the right development company isn't necessarily any more of a challenge than choosing the right hires for an in-house team. Nevertheless, finding the ideal partner for your company's needs is still an essential challenge to overcome if you choose to outsource your project.?

Dependency on a Third-Party Partner?

Working with a third-party development company means that you will have to accept a certain loss of control over your project. This dependency on a third-party company can expose your company to certain risks. This once again highlights the importance of choosing a trustworthy and reliable development company with a proven track record of success.??

In-house or Digital Partner: Which One is Best for Your Company??

There is no "one-size-fits-all" solution for software development, and whether you should choose to hire in-house or outsource ultimately comes down to your company's unique needs and priorities, but keep in mind:

·??????Focus on your company and how well you are outfitted to onboard in-house development talent

·??????Don’t assume hiring in-house is a cure-all

·??????Likewise, don’t assume outsourcing is a magic bullet

·??????Compare your needs vs costs (pay close attention to the hidden costs)

·??????Don’t underestimate the importance of innovation

·??????Consider a hybrid approach

With that said, most companies will stand to benefit more by hiring a development company than hiring developers in-house, but a hybrid approach can also be a powerful combination. Hiring in-house roles that can manage your talent and outsource partner progress is an approach more companies are adopting. This offers the best of both worlds by controlling risk, managing costs, and protecting against silos without having to build and oversee a full software development organization inside your existing company.

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TechFabric solves complex business problems by building software applications that scale with your company. The custom applications we build for you are secure, fault-tolerant and robust.?To discuss the many possibilities of?working with a trusted development partner and other?digital transformation services, contact TechFabric?today.