Updated On May 15, 2024

By SaraNextGen

In-House vs Outsourcing Software Development

The increasing shift towards outsourcing Software Development has proved that it is the best way to manage a part of business activity in which the particular business doesn’t have a forte.

• During the growth phase, every business faces the dilemma of whether to Outsourcing Development their IT services or doing it on their own. The answer mostly depends on which option is more efficient. Both approaches have their pros and cons, therefore we’ll discuss them in detail in the latter part of the article. But, first, let’s know the basic difference between in-house development and outsourcing software development.

• The In-house IT team are the group of IT professionals that you hire yourself and that become one of your employees. You probably have heard the phrase “if you wanna do it right, do it yourself”. So if you live by this as a motto for your company, the in-house software development model will suit your needs. With this model, you will be hunting for software development specialists, interviewing them, and being responsible for the recruitment as well as development.

• With the outsourcing model, where you will be outsourcing the software development process and IT maintenance services, you will search for the right managed IT service provider that can provide you with a dedicated team of developers. Depending on your requirements, you can hire just a couple of developers and manage the project on your own, or you can outsource the entire process of software development. I recommend that you go with entire project outsourcing if you don’t have a dedicated project manager in-house.

• Let’s talk about both the approaches in detail.

• In-House Software Development

• As mentioned earlier, the in-house software development is a great option for the companies who want complete control over the development lifecycle. There are several benefits of this model and because of this, companies like Paypal, Amazon, and Salesforce build their IT infrastructure on their own. 

• Pros of In-house Software Development Complete Control

• If you keep the development team in-house, you will have complete control over all the development phases. This becomes very important for businesses who greatly prioritise flexibility and frequent changes over cost in their software development.

• Direct Access to the Employees

• With the in-house software development model, you will know every ability or inability of your team members. This helps you assign them appropriate tasks based on their expertise. You’ll know the issues right when they occur and can resolve it quickly to avoid delays in the development timeframe. You can ask your in-house team to dedicate their time to work on the urgent tasks or bug fixes.

• Ability to Work Immediately

• Of course, recruiting and streamlining the in-house team will be a time-consuming process. But, once you’ve done it, your team can immediately jump on your projects. Access to in-house talent is seen by some investors as very favourable for a competitive advantage.

• Understanding of the Project

• The in-house team will be working alongside you and will have better insight into the project. They’ll be involved with the project from the start, therefore it will be easy for them to manage it post-deployment.

• Thus, the in-house software development model suits companies that are ready to invest heavily in the talent recruitment and management process. The in-house development model is mostly adopted by large corporations as they have a heavy amount of funds to invest in. However, even companies like Google and Adobe outsource some part of their software development due to the comparatively much smaller cost of software development outsourcing. 

• Cons of In-House Software Development

• No matter how fabulous the idea of in-house software development looks, the reality is far different. It isn’t always feasible for companies to hire  IT professionals in-house for a one-time software project. These projects often will require less effort to manage once the software is launched, which means your expensive in-house software team will no longer have much work to do. 

• Sometimes, the companies management don’t have the expertise to manage IT projects, and don’t want to conduct recruitment for higher management. In such situations, the in-house development becomes a less practical approach. In fact, this is why around 64% of the companies across the world are outsourcing the software development process.

• High expenses

• Having a development team in-house is an expensive process. It would require a significant amount of investment in the recruitment process. You will also need to buy or rent out an office space to set up the workstations. After the project development is complete, you will still have to provide new work for the IT employees. This need can result in companies constantly being indulged in identifying and implementing new projects, even when initiating a new project is not suitable.

• Time

• Hunting for the right talent isn’t easy. You’ll be looking to hire decently qualified IT specialists who are willing to come to your company. This is very hard to find because it is likely that these qualified individuals will already be working with a company. So, to encourage them to join your company, you either will have to offer a higher salary, an interesting project or some other attractive benefit. But, whatever it is, it will cost you time and money. Looking for suitable talent, ensuring  selected new talent are on the same page as the company, and building a team culture all takes time and attention. Whilst all this is happening, your project will remain paused. In current times, almost every innovation needs fast implementation and therefore it will be a gamble for your business if speed of launch is of high-importance.