In-House vs Outsourcing Software Development: What’s Best for Your Business?

Quick summary:

Choosing whether to go for in-house or outsourcing software development can be a difficult decision. Both have their own pros and cons depending on the business needs, budget, and project complexity. Read this blog to compare and decide the relevant option for your business.

Do you know that over 300,000 jobs in the US are outsourced every year? After the pandemic, most businesses and software development services in the USA; have started outsourcing to save money and work productively. Talking about the US market, 60% of businesses there in the US, outsource at least one department.

Statista Researchsays that the IT outsourcing market is going to generate up to $541.10 billion in revenue in 2024. Plus it is expected to grow by 8.48% till 2029. 

But do you know what's better for your business? If the answer is no, then you should read this article whole to decide whether to choose an in-house team or outsource your projects. 

What is In-House Software Development?

The logical meaning of in-house software development is inside the house. Here you create your own development team. That includes designers, developers, managers, coders, testers and more. It is majorly the same as a normal hiring process where you hire employees for the company and they all work in a team. 

Advantages of In-House Software Development

Obviously, when you have a creative team sitting in your office, it has multiple benefits. 

• Full Control and Accessibility:

  When you have full control over your project and easy access to the docs and resources, success is guaranteed. When you work with an in-house team, you don't face developer unavailability issues. You can always discuss with the team if there is any urgent change in the workflow.

• Better Communication:

  You can easily communicate with the internal team and other departments to share updates about the project. In case of any issues, the team can quickly come up together and solve the issue.

• Security:

  Peace of mind is very important and that only comes when your office credentials and tools are in the right hands. So, when you choose to work with an in-house team, you have that surety that office data will not go outside the premises.

• Tailored Solutions:

  With the use of different departments and creative minds, it helps get creative ideas and custom solutions to make the project work more better.

Challenges of In-House Software Development

• Expensive:

  An in-house team is only a good fit if you have a continuous flow of projects and have a budget to invest in training, salaries, infrastructure costs, and other employee perks.

• Might Lack Some Expertise:

  You never know what technical need comes in between the ongoing project. Hence for certain projects, you might need to hire extra specialists for complex needs. 

• Resource Allocation:

  Resource allocation and using every tool and technology with collaboration gets hectic as some tools and technologies come with suitable bandwidth and limits. 

Let's Read Use Cases to Get More Ideas:

Google Search Engine Development:

Google heavily relies on in-house teams because they handle the data all over the world. Whether it's algorithm updates or core components, everything is done in-house to protect intellectual property and security.

AWS:

AWS is one of the important services of Amazon. Hence they prefer developing web services and other stuff in-house. Obviously, it's a matter of Amazon’s reputation, and can’t rely on outsiders.

What is Outsourcing Software Development?

Outsourcing is a process where you hire an external team from different regions or countries to fulfill a specific skill gap. It is useful to maintain the productivity of the office and reduce the internal workload.

In short, here someone from outside the team completes your development projects or particular tasks. It also involves signing some lawful and standard rules agreement that both parties need to follow.

So, now you might have got idea about what reliable outsourcing software development is. Let's move towards its advantages and challenges. 

Benefits of Outsourcing Software Development

Outsourcing is 100% an affordable option because you don't need to spend on hiring, training, maintenance, and other office infrastructure and resources stuff. 

• Access to Expertise:

Let me explain this with an example, suppose you have an app developer in your in-house team. he/she might not be an all-rounder in Android as well as iOS app development. So, despite of lack of some expertise and skills, you are bound to pay a full salary. But in outsourcing, you are free to hire the specific skills expert and pay for only the service you want.

• Faster Time to Market: 

In-house teams are always occupied with other work so, if you outsource the work, there are more chances to launch the product earlier in the market.

• Scalability:

You can add and remove members in your outsourcing team with the changing complex needs of the project.

• Cost-Effective:

Outsourcing is 100% an affordable software development costs option because it reduces expenses related to hiring, training, maintenance, and other office infrastructure and resources stuff.

• Focus on Core Business:

Once you give the outsourcing team the project, they will work independently on the project. Hence you don't need to worry and can focus on the core tasks.

Challenges of Outsourcing

As a coin has two sides, outsourcing too has some negative points, they are:

• Communication Barriers:

  Outsourcing teams are located in any part of the world, so you may face time zones, language differences, or cultural misunderstandings during work.

• Less Control:

  Your project is handled by an outside team and they work from different places. hence you have less control.

• Security Concerns:

  If you are working with a new outsourcing partner, then even first time, you need to take risks by giving your data and other project credentials.

• Quality Assurance:

  Sometimes, working with remote teams might conflict with the work quality and your expectations, if the outsourcing team is not disciplined.

Use Cases with examples:

Slack:

We all have been using Slack for remote communication. This is one of the popular tools among remote workers and freelancers. 

Do you know, during its initial stage, slack outsourced its design part to the famous Canadian design company Metalab? This was the best decision they made at the starting phase because it helped them achieve an attractive user interface and design. And hence gained popularity at the beginning of the launch.

WhatsApp:

WhatsApp is the go-to tool if we want to chat, or video call. Very few people know that WhatsApp outsourced their iOS development part to a Russian outsourcing team. And its before when it partnered with Facebook. 

Do you know how WhatsApp perfectly maintains its update? They have a small yet powerful in-house team that actively works on core functions and expands according to user feedback.

Key Considerations for Choosing In-House vs Outsourcing

Go through this table to decide on in-house vs outsourcing software development:

Why is the Future Hybrid?

With time, technologies evolved and so the working models also evolved. Slowly, organizations moved to a hybrid approach instead of sticking to any one approach. Let's understand what is a hybrid approach.

So, What Exactly Is a Hybrid Approach?

In a simple statement, a hybrid approach is a combination of outsourcing and an in-house team. Here both the teams are assigned suitable roles and responsibilities and work towards the common goal.

The hybrid method is flexible and effective because you can control in-house teams and important work while maintaining a balance between outsourcing teams.

Advantages of the Hybrid Approach:

• Flexibility and Adaptability:

  You can always adapt flexibility to the changing project needs. You can flexibly scale particular tools, and team members if things do not work out as per your plan.

• Cost-Efficient:

  You can smartly assign the non-technical activities to the outsourcing team and give important and technical responsibilities to the in-house team. Because it needs continuous checking and involvement.

• Enhanced Control:

  You can keep important and personal information up to the in-house team while outsourcing the less-sensitive part to outside teams.

The best part is that industries nowadays can provide customers with customized solutions. The reliable software development company and employee both can flexibly work on the same project by maintaining privacy as well as mutual respect.

Currently, the latest trends in a hybrid environment have led to the increasing use of AI-driven tools, cloud integrations, and more. Also, by using cloud integrations, it got easier to share and access files and resources while working in a remote environment. 

AI-powered tools like GitHub, co-pilot, slack, etc have helped to work more quickly due to automation, real-time insights, and easy coordination.

Other than this, businesses prefer nearshoring, which means working with countries that have minimal time differences. This actually makes work and communication easier due to minor time and cultural differences.

Use Cases:

Big companies like Apple and Tesla also use hybrid working models. Let's take the example of Apple.

What Apple does is all core software development is handled in-house, but they outsource tasks like component manufacturing and some software testing to external vendors globally.

This strategy helps to protect intellectual property while using third-party expertise for specialized tasks.

Maneksoft’s Hybrid Approach

At Maneksoft, we follow various approaches to fit unique business needs. Especially we love the hybrid approach because it combines both outsourcing and in-house characteristics. Plus our team works more productively when we have desired control and flexibility. 

With the constantly growing technical world, our team can fulfill any industry-specific project. Maneksoft's in-house team is highly trained and knowledgeable to use a wide range of technologies and tools to grow and adapt to the growing user needs.

Whether you seek mobile, web, or any software development, we can be your trusted choice for digital marketing, IT staff augmentation, or any technical development requirements.

When you hire hybrid app developer from us, you can blindly trust about data security and intellectual property. Plus we don't leave you after project delivery, our team offers continuous post-launch support to make sure you have a nice experience with us.

Which Decision-Making Model is Right for You?

So, you might be thinking, which one should you choose, whether in-house or outsourcing model? Well, the first thing is to do a detailed business evaluation and consider the checklist below.

• Scale and Complexity of the Project

If your project needs continuous involvement of team members from different departments, integrations, and collaboration, in-house is a better choice.

Otherwise, outsourcing and hybrid model works best when handling small to medium projects and the team members are capable of executing projects with expertise and deciding on themselves.

• Timeline for Development and Launch

If you have an urgent project requirement and need to deliver to a client urgently, then outsourcing is best. Because in outsourcing, you can easily access the pre-established team of experts and get your job done. 

While for in-house, you need to check the availability and bandwidth of senior experts. Also, there are multiple ongoing projects so this might cause some delay in case of training other members of the team and getting familiar with new technologies and tools.

• Budget

As compared to in-house and hybrid models, outsourcing is always the affordable option because you only pay per project or specific work. But in an in-house and hybrid model, you pay employees a monthly salary, regardless of whether the project is done or not. 

Also, the in-house approach includes providing the office space, wifi connection, and other resources required.

• Project Control and Accessibility

Go for outsourcing if you trust the outsourcing team or if you have worked with them previously. 

If the project needs team involvement, decision-making, approval, etc, then in-house is a suitable choice. 

The hybrid model is a free playground for both external teams and internal teams. Here they can collaborate and implement useful strategies to meet the project needs in the best way.

• Security, Privacy Concerns, or Intellectual Property

Though outsourcing is an affordable option but it might expose you to security risks if you share the important credentials of the project. If you work with a reputed outsourcing partner, the project can go well without any problem.

Overall, in-house is the safest and most effective option to handle long-term projects safely and maintain control over the project.

Conclusion

The main aim of every business is to earn more money. If we see, practically, outsourcing helps to earn more money. But things vary from business to business. In the end, you know your business from inside and out. Consider the above factors and all the pros and cons to compare and select the best hiring model for your organization. 

At Maneksoft, we offer flexible hiring models, Check our official website to learn more about our dedicated and fixed pricing models. Or simply write to us at [email protected] if you want to hire hybrid app developer.