Outsourcing vs. In-house Software Development: An Overview

By | September 8, 2020

Can’t decide whether outsourcing your software needs is better or having an in-house team develop it? Let me share some facts.

Being in the development industry for over 30 years now, I have the experience of working with clients who partly and completely outsourced their development projects to us. In this article, we’ll discuss the advantages and disadvantages of developing software in-house and outsourcing.

What is meant by outsourcing software development?

This is an arrangement wherein a specialized vendor is contracted to develop software, which cannot be built using in-house capabilities.

With a shift of almost all operations to technology under challenging times like this, companies are outsourcing their processes and systems to quickly adapt and resume working. According to Business Wire, the global IT outsourcing market was valued 333.7 billion dollars in 2019 and is expected to grow up to 400 billion dollars by 2025.

Top companies like Google, Alibaba, Slack, Skype, GitHub outsource parts of their development to global vendors and have emerged as leaders in their industry.

Advantages of outsourcing

  • Access to global talent and top skills: When you decide to outsource, you can find and work with limitless talent across the globe. You have countless vendor options to choose from and get the work done with great efficiency and attractive investment.
  • Faster project delivery: Vendors work hourly or on a project basis. They use the most appropriate talent for different parts of the work and thus deliver a nicely done software quite fast.
  • No hassle of hiring and management: It goes without saying that outsourcing saves big bucks that go into hiring and maintaining employees. You get the expertise you require without having to involve your internal team who can now focus on other urgent activities.

Disadvantages of outsourcing

  • The risk of transparency: When working with external partners, your organizational information is exposed which introduces the risk of data breach and fraud. You need to cover this with a strong agreement and a non-disclosure agreement (NDA).
  • Communication gap: Vendors work at their own time and pace. There may be language and culture mismatch when dealing with some developers.
    If you are dealing with new vendors, they need time to understand your working style and company culture. This can be avoided when you have 1-2 regular vendors who have already synchronised with you. This saves a lot of time in communication and needs explanation.
  • Quality control: With outsourcing, you might lose control over the project unless you appoint a person to manage the project progress, delivery, user-acceptance testing, and quality control.

What is in-house software development?

You can get the required software developed using your in-house team(s). Example: If you are an IT company, most of the times you will invest in hiring software engineers and specialists to develop your own flagship system.

Companies like Amazon and PayPal hire 100s of thousands of engineers all over the world to deliver high-quality products and experience.

Advantages of in-house software development

  • Complete visibility of the project: With an internal team working on the project, you get total visibility of the development process. You get a day-on-day progress report and can provide quick assistance in case of roadblocks.
  • Easy communication with the team: When you’re all working in the same time-zone, at the same location, the process of communication becomes smooth. With full-time team availability, the discussions around the project become effortless.
  • Company values: The in-house team is familiar with company culture and values which gets reflected in their work.

Disadvantages of in-house software development

  • The high cost of hiring: To build a good in-house team, you need to invest time and energy in finding the best talent that fits in your organization. You also need to manage their salaries, perks, insurance, taxes, and other overhead costs. This is a pretty big challenge when the project is of 1-2 years only.
  • Employee churn: This is a classic problem for every organization where employees can leave for better prospects or even being simply dissatisfied with some aspect. You will need to hire new people and train them for the project.
  • Lack of expertise: Developing software requires expertise in multiple areas like technical platforms, content, UI/UX, and many more areas. Unless the volume of work is quite high and recurring, it becomes a challenge to hire so many people for 1 or a few projects.

What is the right thing to do?

Now, this is one question that has no right answer. You need to assess the organizational requirements and finalize the scope of work. If your internal team has the bandwidth and expertise to build the system in-house, then you should not worry about finding vendors. However, you should consider the option of outsourcing if you lack the required expertise inhouse.

At eBizIndia, we develop web-based software and websites for various companies in UK, USA, and India. These websites are helping them generate leads for their business, make online sales at high efficiency and ROI. The software helps our clients to manage the business operations.

Our clients include small, mid, and large corporations and have consistently improved their business performance with our help. We also have web maintenance services for keeping websites highly optimised for SEO, speed and security.

Our team of skilled engineers understand your specific needs and create systems that let you focus on your core business.

To know more about our work, visit https://www.ebizindia.com/services/software-case-studies/