In-House vs Outsourcing Software and App Development

At the start of any project, you will invariably be faced with the same question: how to convert your idea into reality? Where to find accomplished professionals and how to assemble a team for development?

We all know how laborious choosing can be, so let’s outline the largest benefits of both options. This article will assist you with deciding which path to follow when you are deciding on in-house software development vs outsourcing.

Development Pros and Cons

In-house development is relatively self-explanatory, in essence you are using your own employees (permanent or temporary) to build your software/hardware project for you. Typically, this will be managed by your own management team too, putting all responsibility and all work, budgeting etc entirely within your own team’s remit.

This is called in-house development and requires hiring and choosing a team the project requires. Although, the cost of hiring staff is expensive, there are lots of advantages of in-house software development. Additionally, long term a full-time development team can be less costly depending on the regularity with which you are developing projects.

To understand the in-house process, let us assess the pros and cons.

Pros of In-House Development

There are of course numerous factors that will determine whether in-house development is the best option for your business. But some of those that top the list are:

• No language/cultural boundaries. This is a group of qualified people, more often than not from the same city/country as you, with the same language and cultural background working within the same company. The advantages an in-house team provides you with are face to face communication, fewer boundaries and limitations, and (generally) a better overall understanding of the task in hand.
• Deep involvement. This allows you to amplify a built in-house engineering process, for every tech need of the business, large or small. It also allows for relevant changes in the development process and the project can be more easily altered to suit your business’ aims and objectives.
• In-project expertise. Internal professionals master their skills in constructing the project you began, and soon become closely focused and more specialised in your required disciplines. In turn, this means that you reduce bugs, the support given is uncomplicated and structured, and your business has adequate skills to continue the project independently.

Cons of In-House Solutions Building

There are of course a good number of disadvantages, too:

• High cost. The initial stages require a lot of upfront investment. Whether you will be using your in-house team for small or large-scale projects you’ll still need to recruit a team with the right skillsets, aptitude and experience. Once you have them on board as full-time employees this means you are then carrying a cost, even when there isn’t much for them to do.
• Staff dismissal. One of the largest financial risks of in-house development is the possible necessity to fire employees who do not meet requirements or demonstrate an inability to work with the rest of your team. Depending on how long they are with you before this happens there is likely to have been significant investment in their training, their project role, the work they did and so on. This investment is generally not recoverable when they leave. Then of course you have the further cost of investing in new people for the team.
• The lack of expertise in different areas. This is a common and difficult issue with the in-house model. In order to implement specific skills, you’ll need to employ specific people, meaning you may be faced with the need to constantly hire in new skills. There are so many different areas of coding, software development and IT into which people can specialise that you’re just not going to find people who can do it all.

The exact same situation arises if there is ever a need for you to expand the project parameters to include more complex or specialist functionality. Alongside, this if an employee works full-time in-house, you will have to pay for premises, equipment, insurance fees and holidays to name just a few of the associated costs.

Companies Working with In-House IT Teams

Now we’ve got our head around the pros and cons of in-house development, we need to decide whether the pros exceed the cons. However, the answer is always going to be dependent on your particular situation.

Some examples of large companies using in-house teams include:

• Amazon. This large eCommerce business hires in-house developers to provide ingenious solutions for the global online retail industry.
• PayPal. This company is focused on the benefits of in-house software development, which can be viewed every time you make a transaction.
• Salesforce. This is a SaaS CRM system and has committed clients all over the world. It also employs an in-house IT support team.

Outsourced Software Development: Pros and Cons

Just in case you are unsure what exactly constitutes outsourcing, we define it as acquiring the services of a third party (an independent organisation or company) to develop and build software products for your organisation. As with in-housing, outsourcing software development also has its pros and cons.

Pros of Outsourcing Development

• Price wise expertise. Outsourcing is typically more appropriate in price than in-house software development. This is due to outsourcing teams generally having more experience in different areas. Additionally, if an unexpected issue arises or new functionality becomes necessary there is no need to hire the expertise into your in-house IT team, this instead becomes the task of the outsourced contractor.
• Time. The advantages of outsourcing are the avoidance of all hiring and staffing issues and the time and investment that that entails. You are in essence hiring a ready-made team in with all the necessary skills in place to deliver your project. This typically means fewer (if any) delays in getting started or in any project changes.
• Scalability. In the event of needing to expand or decrease the required resources this becomes easier too, you can hire in additional outsourcers for different aspects of the project or even place the responsibility for this onto your outsourcer. This allows you to be more flexible within your financial allowances.
• Streamlined process. When assigning a specialised development agency, you can trust that it will be a well-built, well-planned and correctly established process and development experience throughout.

Cons of Outsourcing Software Development

• Mutual understanding. If you hire overseas development teams there is always the chance you are going to hit language and cultural barriers. Furthermore, the absolute project necessities are the principal source of coherence for your business and developers. In other words, communication is key, and it can break down if not well manged. It is paramount that you ensure you are all on the same page in regard to the acceptance criteria.
• Transparency and security risks. The absence of one of your employees being in control and communicating throughout the development project, can cause a lack or loss of trust. Although this is dependent on the particular practices of the contractor/developer. This problem can be reduced by ensuring you select the correct partners with whom to work. It is also advisable that you both agree on acknowledgement, meeting schedules and reporting, to ensure you are both secure. In addition, ask to see their confidentiality and data handling terms if they don’t volunteer them within their contract with you.
• Risks of receiving the unsupported code. If you outsource, you need to ensure you maintain the legal rights to all the product code (in its entirety) without the contractor’s participation. This is essential, without it you risk your project becoming tied permanently to the particular exterior developer who has worked on the project. However, the quality of the code is reliant on the honesty of the contractor, make sure you ask them this very important question at the outset and have it in your contractual terms. Nonetheless, with the right partner you can steer clear of these outsourcing issues.

Roles You Can Outsource

Now you are aware of all the pros and cons of outsourcing software development it might be helpful to understand what responsibilities you can distribute to your software outsourcing partner. There are of course many options, but predominantly you can boil it down to three primary areas:

• IT engineering roles. In the context of in-house vs outsourcing, the costs of engineering services make a huge difference. If you desire a high-end iOS mobile solution, it could cost you as much as ￡45 per hour in eastern European countries and up to ￡150 per hour in the in the USA or UK. However, you are having to take on all the management, communication and language/culture/time zone issue responsibilities if you outsource to somewhere in Eastern Europe for example.
• Customer support service. If you are a small or mid-sized company considering in-house or outsourcing services, bear in mind that it is more logical to team up in the country your customers are based. Such a support team will be more appropriate at meeting the needs and answering questions if they reside in the same area.
• Marketing responsibilities. A professional marketing business can advocate your product in a more effective way than an in-house IT team, in fact IT teams are rarely (if ever) skilled at marketing in any way shape or form. An outsourced development agency will often incorporate several specialisms. If this include marketing, they will be able to help develop a dominant advertising and marketing campaign for your product following it’s build.

Companies that Outsource

In 2018 the global outsourcing market reached over $85 billion, $62billion alone was spent on outsourcing services. Below are a few examples of companies who regularly make use of the practice:

• Google. This multinational organisation chose to outsource due to the benefits, predominately in its software development and technical support.
• Alibaba. The profit is increasing every year for this China-based eCommerce platform. Astonishingly, its trail to success was begun by outsourcing a small eCommerce website to a US development organisation.
• Basecamp. Basecamp is a device for structured product development and management. The company initiators observed the growth demand of their product had increased, so opted to outsource.

Hybrid Approach

The hybrid approach is a blend of onsite and offsite (in-house and outsourcing working in tandem) software development. So, if your unable to select whether to use in-house development or to outsource, this is a different alternative with a lot of potential value. In essence what you are looking to do with a hybrid approach is to nullify as many of the cons as possible by attempting to combine the two options.

Pros of a Hybrid Approach

There are two key elements of why the hybrid approach is favoured by companies:

• Optimal project organisation. The approach creates an advantageous environment for organised structured planning, task obligation and extensive analysis. It also allows for you as a business to decide which services to outsource and which to keep in-house.
• Optimal costs. Software outsourcing allows for a reduction in costs. However, on the other hand in-house engineering can be more cost effective. The hybrid approach enables businesses to decide on which offshore specialist to collaborate with and which services are better placed for hire or kept in-house.

Cons of the Hybrid Approach

The hybrid approach method can be demanding, there are two reasons for this.

• Time losses. Time spent analysing the current market situation and anticipating which steps will conduct optimal outcomes will be increased. In many cases it is likely that you’ll also need to hire in someone with the experience to organise the cooperative nature of the work between your in-house and outsourced teams.
• Complexity. In-house procedures generally differ quite dramatically from arranging outsourcing tasks. The hybrid approach looks to integrates them, hence generating challenges for company owners to control both types of operations.

What is your Best Choice?

When summarizing the issue of outsourcing vs in-house software development options, it is clear to see both models have their pros and cons. The decision comes down to the specific intricacies of the project.

The principal rule when selecting in-house or outsourced web application development is that, if a web app or maintenance is not the centre capability of your business then it could put a huge strain on your IT team to get it right. They may lack the knowledge, understanding and experience to get it done. It is common in these cases that, after several failed attempts, you may finish up having to go with an outsourced approach in the end anyway. This will invariably mean you’ve wasted a lot of money, time and effort in the process.

An app development agency or company that is a master in its niche, will ensure your product is competitive and will pull in more clients. Fortunately, today there are several business app development service providers out there, this means that the only real issue you face is finding the one that best suits your project needs.

How We Can Help

The Altitude Agency is one of the leading app and software consultancy firms in the UK. We have a diverse portfolio of software and app development projects and boast lots of returning customers. Our software and app teams are experts in their fields and differing disciplines.

In a nutshell, we can help you with any project regardless of your needs, size, and budget. Get in touch today to find out more.

Call us on 0203 150 0565 or email [email protected]