In-House vs. Outsourced Software Development – What are the pros and cons?

In-House vs. Outsourced Software Development – What are the pros and cons?

Remember that theatrical scene with Hamlet holding the skull and asking the question – to be, or not to be?

This classic question with a sense of uncertainty behind it can easily be applied to our today’s topic. Just to paraphrase – to outsource, or not to outsource?

When it comes to a dilemma of having in-house developers or outsourcing IT resources, the answer is never black or white. There are always pros and cons on both sides.

We’re bringing you here a shortlist of both – the main pros and cons of in-house vs. outsourced software development.

Go through all listed arguments and decide which side works better for you.

5 main pros for outsourcing software development

  1. Fast approach to high-quality resources

The hiring process takes time. A specialized vendor can provide you with a high-quality software development team much faster.

In-House vs. Outsourced Software Development – What are the pros and cons?
Outsourced software development vendor can provide you with a fast approach to highly skilled developers.
  1. Flexibility

Outsourcing enables you to hire a professional for a limited time, according to the requirements of your project or specific business operations. Freelancers and specialized vendors are flexible to “jump in” in accordance with your project schedule and needs.

  1. Scalability

Every project is specific and needs a team composed according to the specific requirements. By outsourcing, you can scale up the team of professionals specialized exactly for that specific project.

  1. Short term commitment

While you need an expert in a field for a specific project, you probably don’t need him or her permanently. Outsourcing IT experts on a project basis enables you to get the best only when you need it the most.

  1. Reduced costs

Top level professional that can’t be productive all the time costs a lot of money. Outsourcing can get you a high level of productivity at reduced costs. For example, studies show that with outsourcing the savings on overhead costs can be up to 60%.

5 main cons for outsourcing IT resources

  1. Quality control

It is much easier to control the level of quality produced when you can physically approach and speak to your software engineers than to put the vital phases of your project in the hands of someone you’ve never seen, and then hope for the best.

  1. Collaboration

Software development is a collaborative process. Hiring freelancers from a different cultural background can be a huge challenge for mutual understanding of specific requirements. Possible problems appear also from the language barriers, which might hinder a fluent collaboration.

  1. Logistical challenges

Working with a developer from a different time zone is challenging for both sides, especially when it comes to picking the time for a conference call or meeting the deadlines which are adapted to one time zone, but not to another.

  1. Commitment to the project

Although it sounds great to have a freelancer developer available only when you need him or her, this developer very likely won’t just sit still and wait for your call. He/she will work on other projects as well. Independent software development companies also work with more clients at a time. This might mean that your project won’t receive 100% of their commitment.

  1. Security and confidentiality

Companies face security and confidentiality risks even in-house. These risks definitely grow when the sensitive project requirements and details are shared with outsourced resources.


5 main pros for having in-house software development

  1. Long-term product development

If you’re developing a product or a solution which will require a long-term commitment, then it’s better to build the team of developers in-house. They can be fully committed to this product, know it inside out, and easily and quickly make changes or fixes when needed.

  1. Aligned interests

If a company is thriving, all employees have aligned interests and share the same vision. It means that they will give their best to meet the company’s goals. Such a commitment is hardly possible with freelancers who are not fully involved in your business.

In-house developers will typically have a more aligned interest with their employer.
  1. Companys culture fit

It’s important to collaborate with people who fit your company’s culture. Having in-house developers who are nothing more than capable to do the job, but who get along with you and your team is usually more productive than trying to work with the best specialists who are a poor culture fit.

  1. Shorter turnaround time

Developing a product in-house enables you to monitor all the steps in the process. If something goes wrong, you can spot it immediately. Turnaround time in fixing the problem is shorter than it would be in the case of outsourcing.

  1. Alignment with the companys standards

Control over the company’s coding standards is crucial for the future life of the product. With the in-house software development you can decide what’s best for the future maintenance processes of the product.


5 main cons for hiring in-house developers

  1. Time-consuming process

It takes time to find the right developers and negotiate with them to join your team. And even then there is a possibility that they won’t be able to join right away. If the clock for your project is ticking, you need the right persons now, which you can get with an outsourced freelancer or specialized vendor.

  1. Technical expertise

Unless your company has a large IT department or an unlimited budget to hire a wide range of IT professionals, most probably you won’t be able to cover all your specific needs with dedicated experts.

  1. Limited funds to hire a talent

Hiring a talent costs a lot of money. Do you really need an expert in a certain field on a full-time basis? Will he or she pay out in the future, after your project is finished?

  1. Side costs

Annual salaries, benefit packages, overhead costs – it all comes with a full-time in-house team.

  1. Overload of in-house IT resources

If the project for which you need developers is not the core business of the company, such a project could be a huge burden on your IT resources. And an overload usually results in unsatisfied employees and non-optimal product.


Trends in outsourcing


According to Deloitte’s 2016 Global Outsourcing Survey, outsourcing is expected to grow, particularly in Finance, HR and IT.


The same survey reveals that the primary reasons for outsourcing are cost cutting (59%), focusing on core business (57%) and solving capacity issues (47%).


One of the survey’s key findings points that outsourcing is becoming more important in enabling mergers and acquisitions deals.


Did you know that Skype, Github, MYSQL and Slack were built with outsourced development?


Which side your scale outweighs in the dilemma: in-house or outsourcing? Leave a comment below.