Custom Software Apps & SharePoint Consulting

Outsourced Software Development vs. In-House: A Step-by-Step Comparison

Every company needing custom software is faced with two options for development…hiring a team of in-house developers or outsourcing building or maintenance to an external team.  While many companies are opting to slim down their in-house development staff in favor of outsourcing, its important to understand the rewards and pitfalls of both options.

Access to Talent 

Whether you’re a startup or an established organization, outsourcing gives you the choice of top talent for building your software development team.  Often you can view qualifications and narrow your options before you even pick up the phone to engage directly with anyone.  Having a close-knit team, in-house, that is intimately familiar with your business needs can seem like big plus. Yet, you also have to weigh that against the chops that an external outfit, whose business is software, will bring.  Chances are they’ve used a similar tech stack on multiple projects, and have probably built apps with features similar to your vision.  It’s also likely that they’ve encountered problems similar to the ones you are trying to solve.

Flexibility & Scalability 

As a software project progresses, there is often a need for diverse skill sets.  Some of these skills are only needed temporarily.  Addressing this via in-house employees can be a bit of a heavyweight solution and few companies can afford to have workers sit idle during downturns.  And let’s face it.  Downsizing is painful and not helpful to team morale.  Outside developers have the skills needed to fill a temporary void and their cost is targeted to your specific requirements.  And when your needs change, upscaling and downscaling are easily accomplished.  It is important to consider the following.  How quickly do you need to kick off a project?  Do you have free resources available or will you need to hire more people? How might demands change in the future?

Collaboration & Commitment 

Before running out and hiring an external team to tackle your custom software project, it is worth noting some of the main benefits of keeping things in-house.  For one, the team you hire will be directing all their efforts toward the success of your particular project.  Also, since everyone is under one proverbial “roof,” collaboration is seamless and your team can more quickly react to issues that arise.  Outsourcing to the wrong company can mean their commitment to you only lasts as long as the project at hand.  With the right due diligence, this can usually be avoided.  Great software companies should have no problem providing you a long list of delighted customers that will crow about how awesome they are.  They will also be able to offer examples of apps they have built or upgraded, the problems they encountered through those experiences, and the approach and technologies they used to formulate solutions. 

Time & Cost of Development

Often an organization’s decision to outsource or not depends largely on the longevity of the project.  Like many things, the cost must be weighed against both short and long-term benefits reaped.  The question “Is it worth the time, effort, and expense to build an in-house team of software developers?”  depends on your situation.  If the software you plan on building will require a long-term commitment, then an in-house team may be the way to go.  A look at the time and cost factor is enlightening.

Let’s consider the time it takes to find good employees with a specific skill set.  The hours saved not creating job adds, scheduling interviews, or sifting through stacks of resumes are hours that can be invested in other areas of your business.  Think about a homeowner hiring a general contractor, instead of single-handedly managing plumbers, carpenters, and painters.  With outsourcing you leave the talent acquisition to a trusted partner and they bring their team of tech rock stars to your project’s needs.

Also overlooked is the cost involved in building an in-house team of developers.  Given the fact that the team you build will more than likely include one or more experts, the salary numbers alone can easily reach hundreds of thousands of dollars.  Also, consider the additional compensation, in terms of insurance and other benefits, that it takes to attract and retain top tech talent, and the upside of using an in-house team is dwarfed for all but the largest ongoing software projects.  And those are costs that exist regardless of how busy or idle those developers are.  Suffice it to say, building an in-house team of developers is costly.   

In-House Vs Outsourced Software Development: Summary 

In the world of software development, the only constant is change.  Building software that can weather that change requires well-designed architecture and the experience to address and overcome obstacles in ways that are maintainable in the future.  For companies with a consistent workload, bigger budget, and focus on building their culture, in-house development may be the way to go.  For scenarios with less predictable work-loads, and companies with an eye on cost reduction, improved speed, and the flexibility to work with exactly the talent needed, outsourcing makes a lot of sense.

Only you can truly assess which option is right for your organization.  At Entrance, we would  be honored to walk with you through that decision.  We’ve helped businesses find top talent for their in-house team and also played various roles in meeting our clients’ outsourcing needs.

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