HebronSoft is a socially responsible software outsourcing company that helps medium- and large-sized businesses across the world maximize their business value and operational efficiency through IT and custom software development with proven methodologies and deep industry expertise. We help companies harmonize their business goals with social impact.

With social responsibility in our DNA, we balance between delivering quality custom-built software products to our clients and making this world a better place by providing vulnerable youth with complimentary IT education and career opportunities.

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Innovative digital experiences have already become an indispensable part of any company in today’s competitive market. Launching a start-up or modernizing an existing project, you can get befogged with the question “How to develop a software product quickly and effortlessly at a low cost?”

The article under consideration is meant to deliver an honest comparison of in-house vs outsourcing software development models. You could have already come across numerous articles highlighting this problem, but still you are at a loss. Here is one more chance to get a deeper look into the issue so to make a final reasonable judgment.

Challenges of software development: How to choose the right model?

Before picking either an in-house or outsourced software development approach, you should first consider the challenges your business project faces. These factors may include the objectives, time and resources you have at disposal.

It is always great to do some market research beforehand, just to borrow some bright ideas from successful use cases of top software in-house and outsourcing projects, and eventually compare advantages and disadvantages of various options.

While doing your own research, just keep in mind that a number of world-known companies like Amazon, Salesforce, PayPal opt for in-house software development teams. Whereas another part among which are Google, Slack, Expensify, Alibaba, and GitHub prefer collaborating with outsourced software development companies. Further on, we’ll elaborate on key benefits of both variants.

The services offered by both in-house and outsourcing teams may vary from creating mobile business apps to building blockchain-driven online payment systems. This said, the scope of issues they can address is almost the same. No matter what variant you are going to choose: your in-house development crew, an outsourced software development company, or even the combination of two – the biggest challenges of software development are as follows: (source)

Also, as proved by the State Of Software Development Report 2020, nearly 38% of business owners have already outsourced software development activities in the last 12 months. What’s more, 56% of organizations prefer dealing with trusted dedicated software development companies, rather than casual freelancers or multi-business agencies.

With this in mind, set your final goals first and define the budget you are going to spend on the project. Now, it’s high time you can select the variant that better suits your business needs. Not to leave any reasonable doubt about in-house vs outsourcing strategies, let us take a realistic and unbiased look at some pros and cons of these two alternatives.

In-house software development explained

In-house or insourcing development implies creating software by the company’s own team of experts without any external help. The developers engaged in the project are fully employed specialists of your enterprise. In a broader sense, this may also include some other professionals and resources assigned within the same company.

The in-house approach can be quite time- and effort-consuming. Still, you are free to A/B test your employees and reassign their roles for better results. If you do this right, you are likely to get a tight-knit squad to rely on. For now, let’s assume you have such a team. What are the pluses and minuses of having it at your company?

The pros of in-house software development

No doubt, in-house development has some unique benefits, which are truly significant regardless of time and space.

• Absolute Control
  With in-house engineers you can always keep tabs on what they are doing, which resources they are using, how effectively they are working to meet the company’s philosophy and strategies. Your own staff is sure to know perfectly well the company’s specifics and roadmap, so they can adjust the product development way quicker than an external team. Moreover, you can always tell your team leads or PMs to literally come and discuss some urgent matters with their dev teams.
• Coordinated Communication
  Regular face-to-face meetings, which is not always possible in case of outsourcing, helps avoid misunderstanding and opposing views on product design. What is more important about having in-house specialists is the possibility to discuss the slightest details on the go and implement urgent changes if necessary. Maintaining constant collaboration with your developers, you motivate them to work faster and more efficiently.
• No barriers
  Unlike an external team, the in-house one is made up of people coming from the same country, region or city, which brings cultural and language misunderstanding as well as time zone discrepancies to zero. Being roughly on the same page, permanent workers are more loyal to the project. In addition, business data and innovative ideas aren’t shared with third parties that allows for avoiding information leak.

The cons of in-house development

Nothing is ideal in this world, so is in-house software development, otherwise, outsourcing will not have gained the credit it enjoys nowadays.

• Enormous Cost
  Having an in-house software development team means payroll. You have to pay salaries, raises, vacation days, sick leaves, insurance, and travel expenses, which drags you into never-ending investments and extra expenditures. Moreover, you must pay the developers no matter whether they are working on a new project or just introducing some changes to the existing one.
• Search for Talents
  According to Gartner 63% of CEOs claimed that a talent shortage is a key problem for enterprises. Therefore, to establish a group of professional developers at a given site you are challenged to find the best and make them an offer they would never reject. Good skills are in high demand. That is why a competition for a good expert can be rather strong among the employers.
• Brain Drain
  Even if you managed to create an in-house software development team, you risk facing an outflow of brainpower. Losing some middle developers will require additional expenditures on finding and training the replacement, but losing a senior developer will cost you a bomb. Such losses will affect other departments of the company and can delay the product deployment date.

Outsourcing software development explained

Outsourcing means delegating software development to a team of developers outside your business. You can hire specialists from a particular company or a freelancer who will create necessary solutions or provide a service required. Freelancers and multi-business web agencies, however, are definitely not the best option, as they tend to have way less competencies and qualifications, when compared to a seasoned IT company, to fully meet you development tasks.

A big choice of web dev companies proves the fact that this type of software development services is steadily gaining traction and the global outsourcing market is expected to grow by US$108.3 bn. Given this, most businesses that have already practiced outsourcing acknowledge to be quite satisfied with the results gained.

Like in-house software development, the outsourced services pose some arguments for and against getting implemented. Let’s check how well external vendors are capable of suggesting and designing efficient IT solutions (source) .

The pros of outsourcing software development

• Reasonable Cost
  A big pool of IT outsourcing teams enables you to choose the best specialists at an affordable price. Unlike in-house development, outsourcing does not demand regular monthly payments. You can negotiate the price of the project and agree on payment dates. What is good, you do not need to spend money on equipment and working space since these people work outside your company.
• Ultimate Scalability
  Your in-house developers can be busy with several projects at once. So their efforts and skills can be dispersed which is not good for the end result. On the contrary, a vendor you have hired gathers a team that can be scaled up and down depending on the needs and the stage of the project.
• Great Efficiency
  Today’s IT outsourcing market gives you access to enormous stock of various technical specialists. Thus, you are able to find experts specializing in IoT, Apps development, e-Learning, BlockChain, FinTech, etc. The more areas the developers can cover, the more effective their work will be. Their previous experience will help design multifaceted solutions and breathe new life into the business.
• Diverse perspective
  As soon as you hire an external team of engineers, they can give you an impartial and fresh look on your business and product. Moreover, they can provide deep expertise on the ground of their previous projects. Another plus is that they are likely to be in touch with some experts who can jump start the project as an emergency arises.

The cons of outsourcing software development

It is practically impossible to find a solution that will be perfect in every respect. Outsourcing may appear to pose some risks one should be aware of before opting for this mode of work.

• Limited control
  When analyzing in-house development vs outsourcing in terms of control the first seems to win the battle since you can oversee all the steps and actions taken by your permanent workers. In case of outsourcing, you will not be able to administer their daily work. You charge a project manager with this responsibility. However, there are project management tools that enable you to see how the developers work and how much time they spend on the project.
• Disrupted Communication
  Those who prefer traditional approaches to software development often refuse to outsource on the ground they cannot reach an offshore vendor at their usual working hours. All these nuances can be easily removed as outsourcing teams, which work in the Eastern Hemisphere, have already elaborated specific modes of work with the client across the ocean.
• Security Risks
  You should always remember that no one is safe in a digital world. In addition, some communication failures and lack of control can undermine a company’s security. To be on the safe side, it is highly recommended to sign a non-disclosure agreement and take some technical measures to prevent information leak.

Hopefully, having considered in-house vs outsourcing pros and cons you can come up with a firm decision to choose the first or the second. In case you still have some doubts, there is another option of combining the two.

Mixed model that brings together in-house software development and outsourcing

This approach is known as hybrid software development. Within this model, you can bring together the advantages of both in-house and outsourced development. For example, your permanent employees can be a better choice at the very start of the project. As you progress to the next stages, you can get the utmost of outsourced specialists.

You can also practice in-staffing, that is accepting an independent external worker or a member of the outsourcing team for the time necessary for project completion. This way you are able to have face-to-face talks to discuss the details of product development. Furthermore, it is an option for those employers who like to control everything on their own.

As for the cost, hybrid approach is definitely cheaper than in-house development, but at the same time, it is costlier if compared with outsourcing. Anyway, the combination of two modes allows for creating an excellent environment for deep analysis, thorough planning, resource allocation and task delegation.

Why outsource your software development to HebronSoft?

At HebronSoft we do our best to leverage our IT skills and expertise to help businesses operating within various industries. HebronSoft team is ready to provide you with end-to-end outsourced product development services.

With extensive experience in software development and a range of successful software projects we will help you translate your ideas and needs into actionable technology solutions.

For example, if you operate in the financial sphere, we can help build a sustainable and proven Blockchain-based infrastructure. Just have a look at our recent case study to see how our specialists have succeeded in delivering a well-developed, reliable and sustainable blockchain-driven platform for online mobile banking.

HebronSoft can definitely meet your expectations ensuring Prototyping, PoC, and MVP and Production cycles and services to solve the most difficult challenges across digital and service strategy, user experience, and product life cycle.

Feel free to contact us today, so that tomorrow you can benefit from the pitch-perfect software development solution.This approach is known as a hybrid software development. Within this model, you can bring together the advantages of both in-house and outsourced development. For example, your permanent employees can be a better choice at the very start of the project. As you progress to the next stages, you can get the utmost of outsourced specialists.

You can also practice in-staffing, that is accepting an independent external worker or a member of the outsourcing team for the time necessary for project completion. This way you are able to have face-to-face talks to discuss the details of product development. Furthermore, it is an option for those employers who like to control everything on their own.

As for the cost, hybrid approach is definitely cheaper than in-house development, but at the same time, it is costlier if compared with outsourcing. Anyway, the combination of two modes allows for creating an excellent environment for deep analysis, thorough planning, resource allocation and task delegation.

Written by Kostiantyn Polosukhin

https://hebronsoft.com/blog/author/kostiantyn-polosukhin/