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Software Development: Outsource vs Insource

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12.11.2018

Best software outsourcing companies

Is software development outsourcing a better choice, or shall I have an in-house team? This is a question that all business developers ask themselves when starting a new project. Let’s examine the advantages and drawbacks of outsource and insource software development services to understand which one can best work for you.

Benefits of software development outsourcing

Talent Pool

You have probably faced the challenge of finding talents for your new IT project in short time. Gathering an in-house team poses some limitations to the number of candidates, while outsourcing gives boundless opportunity to explore talents all over the world. You may browse professionals with different skills and find a qualified specialist – from PHP developers to Angular and JavaScript. Consider the efforts you will spend on hiring an external team or member, and compare it with the efficiency of outsourcing model.

Cost Efficient

Hiring an in-house developer includes not only his base salary but also employment taxes, paid vacations, trainings, necessary equipment, etc. Especially if you are going to hire for a project, there will come a time when you simply will not need their help right at the moment, but you will have to pay their salary for full time job.

If you hire an in-house developer, he/she will first have to get involved in your company processes with some time-consuming trainings to integrate into your project. You will have to equip them with necessary technical stuff, laptop, desk, internet, phone, room and other important stuff. With outsourcing model you will get rid of this headache, as the developer will have his/her own equipment. They will be enough skilled and trained to work directly with clients.

Easy Scale up

Your project may need different number of IT specialists on different stages of development, so being flexible is of high priority. When you cooperate with an outsourcing company you work with a talent pool from which you may choose the specialist based on the need of skills at the very moment.

Time Consuming

Time is money, everybody knows it. Finding, interviewing and onboarding the right people is a real challenge and time-consuming process. According to Glassdoor’s job hiring study, hiring a coder in the USA takes around 35 days and it tends to increase. Instead, you may use your time on your core business processes and networking. Every single day of delay is increasing the risk to be left behind by your competitors. This is a well-known fact, especially in the IT business.

Outsourcing companies retain and oversee your team. They prepare the needed materials, get the job done all by themselves. You will just have to assign tasks to them and get the reports at the end of the day or week.

Developers’ personal development

In in-house teams, you have to take care of the personal development and career growth of the developers. If you want to be competitive in the software market, they have to be up-to-date. Caring about your in-house team’s development will cost you a bunch of money and time. In the end, they may always quit, so you will have to start all the process again.

If you hire an outsourcing company, they will deal with all of the investments in courses, conferences, workshops, books, etc. Outsourcing companies make sure the team learns perpetually about new technologies and uses them in practice. Your business can save up to 20% of total development costs when working with a digital team remotely.

Days off

In in-source teams very often you’ll face a situation when one member of the team is sick, the other is on maternity leave, and the third is on vacation. You may think that your business is going to collapse. But wait a minute. Here comes the help of outsourcing companies. In cases like this, you may quickly scale up your team and prioritize the processes accordingly. Outsourcing companies have the expertise and skills to fill the gap in your team.

Not only developers

If your project is not so small, it usually requires not only developers but also QA specialists, project managers, UI/UX designers, etc. Hiring all these people requires money and time. While if you decide to collaborate with an outsourcing company you may cooperate with team augmentation model and the needed team of experts with minimum costs. QA will test and detect all your bugs, PM will coordinate the process with developers, while UX designers will provide you with prototypes.

Compare software development outsourcing and insourcing

Consider Wide Before Outsourcing

Let’s say you found a perfect outsourced team for the same amount of money you’d spend on an in-house developer. Sounds like a dream, however outsourcing has its pitfalls as well. In fact, software outsourcing risks are lower, though in any case you need to consider wide before choosing outsourcing over in-house development.

Cheapest is not always cost efficient. If you want a quality solution in short time by a professional developer or dev team, looking for cheapest options is not quite the right decision. With minimum costs you will probably get junior specialists or students who may use your project as a possibility to learn how to code. You need to find a balance between cost and quality. Better, spend some more money but get a quality result in the desired timeframe. Armenian developers are usually mid-priced – a good example of this: they are well educated and practiced offering the best cost for the highest delivered quality, not too cheap and not overpriced.

Look for transparency. To get the desired results, the development process should always be transparent. Most of the software outsourcing companies use project management tools, such as Jira, Freedcamp, Trello, Planbox or Toggl. These tools allow you to track how the developers work, how much time they spend on each project, estimate the tasks, make daily reports, and the like. With these transparent processes, you become more involved in the development, hence as part of the dev team you can set priorities and make changes which will not affect the development process.

Reputation is important. Before signing a contract, make sure you have checked the outsourcing company background and past projects. Look for review websites, read customer feedback and make decision based on the balance of its reputation and your expectation. Just ask the company for a portfolio. They would gladly share their case studies and experience with you.

Reasonable estimation. An outsourcing company may seem a dream team for you, especially when you see their perfectly low development cost estimate. However, if your project is underestimated you will end up with unexpected additional costs, running out of budget. To avoid this, check twice if the estimation is fair and accurate with no pricing games and tricks.

Conclusion

Choosing which model is best for you is very individual. It depends on your project needs and expectations. Both software development outsourcing and insourcing have their advantages and pitfalls. Most companies go with a mixture of these two approaches by performing core operations in house and outsourcing certain projects to external team of developers. Anyway, there is no doubt that IT has become a very essential part of running a business to success, and refusing the benefits of having quality solution in quite a short time with software outsourcing approach leaves businesses at risk of losing or sharing customers with competitors.

At CodeRiders, we have developed a hybrid model of outsourcing based on your project requirements. It is fully customizable with your needs if you do not want to proceed with standard engagement models like Project Based, Time and Material or Staff Augmentation. Let us discuss on your outsourcing needs at our company and give you a valuable solution to cover any business issue.

Check our Portfolio, explore our solutions and services, and contact us!

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