What To Choose For Your Startup: Outsource Or In-House Software Development?

One of the most common dilemmas in software development is deciding whether to outsource or keep development in-house. 

Most companies have either outsourced development at some point or are considering doing so. And there are good reasons for that! 

Many benefits come with outsourcing, but in-house development has its perks too. So, before you jump on the outsourcing bandwagon, make sure you fully understand the benefits and challenges of both options. 

In this article, we will share the pros and cons of both to help you make the best choice for your company. 

Outsourcing software development

Outsourcing means delegating the development process to a third party, such as a freelancer or a service provider such as Emphasoft.

There are many benefits of outsourcing. Here are the main ones:

• Shortcut to hiring high-quality developers. Hiring for your team takes time. From headhunting to onboarding, you might look at a 1-2 month time frame. And it gets worse if you need niche expertise. Outsourcing might only take a few days and require much less paperwork.
• Short-term commitment. Outsourcing is perfect for when your software development process is short and you won’t need the extra staff once it’s over. Scaling up or down is a problem with an in-house team because you will be hiring and letting people go constantly. That’s not effective and definitely not good for the morale of the team.
• Lower overall costs. Besides hiring, you will be saving on office space, coffee, and electric bills. 
• Flexibility. Have an urgent idea? Want to postpone development for later? An outsourced software development company will accommodate themselves to your needs.
• You’re not limited by your geography with outsourcing. Hire anywhere in the world and enjoy the best talent no matter where they are based.
• You can outsource lower priority things, keeping your in-house staff focused on key business initiatives.
• You reduce the time to market by skipping long hiring and training processes.

With all the great benefits that outsourcing provides, you might think it is the perfect choice for anyone. And while yes, many profitable startups and established businesses praise outsourcing, there are downsides to it too:

• Quality monitoring and management can be difficult because you have no full control over the outsourced team and can’t manage them as closely as your own team. That might lead to lower quality delierables, especially if you didn’t pay close attention to the application development company you’ve signed up with.
• Collaboration difficulties. If you and your outsourced colleagues don’t share the language, culture, or time zones, you can run into communication issues that can negatively affect the software development process.
• Commitment issues. Although not universally true, outsourced specialists can be less committed to the project than the employees who work for the company.
• Security and confidentiality risk. You can sign NDAs but the data can still be leaked or lost. However, this can also be a risk with in-house talent.  
• Lack of control can lead to dissatisfactory end results and pushed deadlines.

In general, a lot can go wrong, especially when you outsource with someone for the first time. However, you will avoid most of those risks by partnering with a trusted company, such as Emphasoft, that has proven experience and a good reputation on the market.

In-house software development 

In-house development is a more traditional route that implies you have an internal team that is hired by your company.

The benefits of in-house development:

 Good for long-term development because people are committed and motivated to do their best job when they’re a part of the permanent team.

• The shared goals and interests of the in-house team make the workflow easier. Employees are not working on other projects on the side or looking to start something new soon. Plus, it is much harder for a freelancer to understand the business as well as a full-time team member does.
• Cultural fit is guaranteed by control over hiring, ensuring the same ethics and values across the team. 
• Better risk management because you can spot and fix issues quicker. With outsourcing, you might get the updates later when the problem has already become more pressing.
• Quality control is easier in-house because the alignment with coding standards is guaranteed. 

In-house development is not immune to challenges, so here are the main downsides you might face: 

• Hiring and onboarding are long and time-consuming, especially if you need experienced or niche specialists who are also recruited by hundreds of other companies. 
• You will be missing out on technical expertise because hiring top specialists across all development fields is unattainable unless you’re part of the FAANG group. In all other cases, your hiring budget limits will mean you’ll have to compromise.
• You will endure many additional costs associated with perks, taxes, medical insurance, office spaces, etc.
• Delays and low involvement with side projects. If your internal IT staff is asked to work on non-core requests, they are more than likely to either do less than perfect or push the deadlines beyond reason, arguing that they have too much Tier 1 stuff to work on.
• It’s (kind of) your duty to upgrade your team’s skills. IT is a very dynamic field and it takes constant learning to stay on top of trends. Having already invested heavily in the team, you will be interested in keeping your staff highly skilled. That might mean you’ll have to cover their education costs and conference tickets.

In general, the in-house route requires big (often upfront) investments and represents a huge management overhead in the longer term. The team takes forever to come together and then you’re always at risk of losing your key members. It can work great for some companies, but you need to make sure you can sustain this model before you commit. 

Choosing between outsourcing and in-house software development

Now that we’ve talked about both options and you understand each of them better, it is really up to you and your individual situation to decide what’s best.

To help with the decision-making, ask yourself the following questions:

• What problem am I solving? 
• How critical is it for the business?
• How does this problem compare to other business needs?
• Does it require unique skills and knowledge?
• How long do I estimate the project will last?
• What is my budget?
• How fast does the product/service need to be released?

By the way, you don’t have to choose just one or the other. You can always have the best of both worlds and combine an in-house team with outsourced specialists or have an outsourced team hired for particular projects, like web development, within your business. 

And if you decide to give outsourcing a try, the Emphasoft team is ready to become your trusted partner. With more than 170 employees that share different expertise and over 135 projects delivered within the last 2 years, we really know what we’re doing. We offer software development services and IT consulting, including MVP consulting for startups.

Reach out to us today, and we will start working on your project within 3 days.