In-House Vs Outsourcing Software Development: Which is Better?

Home Custom Software Development In-House Vs Outsourcing Software Development: Which is Better?

When deciding to build software or application for a business, the first step is to determine how to organize the development process. This is where the confusion between in-house vs outsourcing software development takes its roots. 

It is no cakewalk to find professional tech personnel, especially with limited time and a shoestring budget. Consider this: Global outsourcing market reached $92.5 billion before the pandemic. The number says big, and that’s only before COVID-19. The figures have only skyrocketed since the world shut down and all went digital. 

That is why companies — big or small — are outsourcing software development services to reduce administrative expenses and the cost of product development. Besides, think of having access to a rich talent pool across the globe!

However, you can always opt for a local team of developers if you are looking for long-term cooperation. Hiring an in-house team of developers requires more time and money as it takes time to narrow down the right talent for your team, begin with training of selected professionals and follow the development process

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In-House Vs Outsourcing Software Development — Pros and Cons  

There is no right answer to choosing the best. It is only achievable with a collection of right decisions made to reach the goals in a limited time and money. To make your decision easier, here is a detailed overview of the pros and cons of outsourcing resources and building an in-house development team for your project. 

In-House Software Development — Overview

Insourcing, or in-house software development, means hiring experts locally for your company. Instead of resourcing externally, developers and experts are employed by you and are working on the assigned tasks with you. 

The way in-house development works is fairly simple. You choose the in-house development team to perform a specific task. Every team member is selected based on their particular skill sets working together to deliver on their goals. 

However, assembling an in-house team can be a long and exhausting process. But if you know what you are doing and play your cards right, you’ll ultimately have a loyal and accountable team for the tasks that come along in the future since they already work with you. 

Advantages of In-House Development

  1. Engagement and cultural fit 

A company’s success is driven by a high-spirited team that embodies the company’s core values. With in-house software development, you have the opportunity to hand-pick the team that aligns with your company goals. Working in-house, they are aware of the business needs and understand their accountability to reach a specific goal. They are engaged with business operations and are motivated to achieve the best results and deliver value. 

  1. Easy Communication

Being a dedicated team on board and working in a physical space, clear communication makes it easier for the team to ensure productivity and avoid errors. There is no need to bounce emails to get the points across the group. Direct conversation with the employees working on a common goal helps prevent misunderstandings and improves the efficiency of the team. 

  1. Quick changes and immediate support 

With an in-house team of software developers, it is easier to investigate bug fixes and efficiently cater to problems without delay.  

Drawbacks of In-House Development

  1. It is Costly 

The price of hiring an in-house team is a problem that may shift your preferences to outsourcing. It is expected that in-house development is much more expensive than cooperating with outsourced resources. One of the reasons is that the final price for hiring in-house talent comprises many hidden expenses like rent, taxes, software, hardware, and more. Not just that, there are also some additional costs like training employees, sick days, and other company benefits that make it a lot more than the original price. 

  1. Staff Turnover 

Software developers tend to switch quite often. It is possible due to the high demand for talent in the industry, other places may provide them with better working conditions. This is one common problem with in-house resourcing, and it can lose time. Finding a new resource for an ongoing project is time-consuming and can affect the project’s completion. 

  1. Lack of tech talent

With the high demand for IT specialists and software developers in the market, it is harder to find the right talent. Apart from having the required skills, it is also essential for them to fall into the planned budget — which can work as a challenge for many companies. 

Outsourcing Software Development — Overview

Outsourcing software development means that a company approaches external resources instead of the in-house structure to save costs. Usually, it is done through a contractual agreement with an outsourcing agency. It involved delegating the process, conveying the requirements to the professionals, and beginning with the process. 

Advantages of Outsourcing Software Development

  1. Low Cost 

There is an enormous web of accomplished outsourcing companies around the globe that offer resources at an affordable pricing range. You can enjoy working with the top talent and expertise without having to break the bank by hiring a team for your ongoing projects. 

  1. Flexibility

Outsourcing experts allow scaling a development for the ups and downs of your business and respond to any changing business requirement. You can scale up the members of your team according to your requirements of the development process or decrease their number as per the time of completion for your team. 

  1. A huge talent pool

With the world’s largest outsourcing companies at your access, you have a chance to hand-pick the best talent from around the globe. Unlike in-house hiring, which takes months, outsourcing the right talent is only a matter of a few days. Outsourcing gives you unlimited options — you can consider professionals with different skills and experience to work with you. 

  1. Faster project delivery

Outsourcing specialists means less time spent on recruiting. Besides, you can always adjust the time spent on a project by cooperating with an augmented development team for your project. As a result, you can deploy the product earlier in the market while decreasing the expenses for the development team. 

  1. Streamlined process

You can count on a well-established development process from the outsourced professionals as they have the experience of working on varied projects. All the processes are properly set up by professionals to meet your business goals. 

Disadvantages of Outsourcing Software Development

  1. Mutual understanding and openness to communication 

Locating from varied geographical locations and different companies, there are communication issues that may take a toll on the effectiveness and efficiency of the team. Language barriers and different time zones are common communication issues for an outsourced development team. However, to overcome this problem, vendors often schedule meeting for the team or use emails and messengers to stay connected. 

  1. Security 

As said above, outsourcing resources lack face-to-face communication. As a result, you don’t have control over the development process, and you risk data leakage. However, partnering with trusted vendors and signing the non-disclosure agreement can set clear rules and penalties for leaking data for the resources working on the project.

  1. One size does not fit all

While you can train your in-house team to understand your business goals, outsourcing does not give control over the experts’ processes leading to some hiccups down the road.  

How to Outsource and Not Fail

Having to outsource software developers requires time and preparation. Here are some ways you can make outsourcing work! 

Find the right outsourcing partner 

Make sure to choose a partner that meets your business requirements while having a history of delivering reliable projects on time. 

The best way to find the right development partner is through research. You can search on directories such as to see if the company has what it takes to become a reliable partner. Take a look at their experience in the industry, transparency, and scalability, to mention a few qualities of a reliable outsourcing service. 

Learn about outsourcing working models

The three standard models for outsourcing are time and material, fixed price, and monthly retainer model. 

Time and Material 

In this outsourcing engagement model, there is no pre-determined budget. You spend the total number of hours spent on the project and the material or tech stack used for development. 


With a self-explanatory name, you can tell the model works with a fixed price bidding for a particular model — no matter the time and resources used for the development process. 

Monthly Retainer model 

In this model, the client pays the cost for a fixed number of hours. This is best for businesses with ongoing projects and requires a dedicated team to meet their goals. 

You can also work with partners providing an extension of like minds to augment the expertise of your team. 

Read also: Staff augmentation vs. Outsourcing – What’s Working in 2022 

Communicate your Expectations

This cannot be stressed enough! Clear communication is the key to a successful development process. Since your development team will be working independently, it is crucial to ensure both your time and theirs are not wasted. 

Be sure to ask questions and make sure to answer the queries of your team. 

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In-House Vs Outsourcing Software Development — Final Thoughts 

There are numerous aspects to think about when it comes to making the right choice for your project. However, careful assessment of the resources and in-depth analysis of your business needs can make your decision the right one. 

Have a software project? Get in touch with Codup for software development services.

Maria Ilyas

A writer by profession, Maria Ilyas is an eCommerce and digital marketing enthusiast and is always digging into the latest marketing trends, best practices, and growth strategies.

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