Software Development Outsourcing or In-house development: Pros and Cons

We are a U.S.-based software company which specializes in mobile and web app development and provides its services for over seven years already. Having a sufficient experience and expertise in the IT industry, we would like to share our professional opinion on software development outsourcing practice providing an insight into the two sides of the same coin.

What is Outsourcing?

Many people have some misunderstanding of the term “outsourcing” confusing it with a subterm “outsourcing oversea.” Let’s make it clear and define the real meaning of this notion. Outsourcing is a practice of businesses to order other companies to perform tasks and provide services or products, for example, application development services. To put it simply, if you are searching for a vendor to perform some task for your company, you are outsourcing particular services instead of doing it in-house. Usually, companies prefer to outsource some type of services when it helps to save on overheads and labor costs. In the case of the software development, outsourcing has become the most frequently used option. Software development outsourcing lets customer-company to focus on their core product or service and reach higher efficiency and productivity at the same time.
  • Onshore

  • Offshore

  • In-house development

  • Benefits of in-house software development

  • Disadvantages of maintaining in-house software developers

Onshore

Onshore outsourcing, which is sometimes called a domestic outsourcing, refers to the looking for a service provider outside the company but nationwide. So when a representative of some American company is looking for the application development firm within the USA he or she will be outsourcing the vendor onshore. Onshore outsourcing helps to avoid challenges caused by cultural aspect, the difference in time zones, and language divide. But usually, it isn’t as cost-effective as offshore outsourcing.

Offshore

Offshore outsourcing refers to exporting the task accomplishment to the company from the another country that is why it is usually called overseas outsourcing. Usually, companies prefer to hire offshore app development companies from the world areas with lower labor costs and tax savings. For example, U.S. companies pretty often outsource Indian software programmers expecting lower rates. Unfortunately, such experience can result in disappointed expectations, waste of money and time due to the poor quality of the delivered software solution.

In-house development

In-house software development, unlike onshore outsourcing, implies conducting an operation and perform a task within the company using company’s own resources including assets and employees. Companies resort to in-house task performance after analyzing the costs and associated risks. For instance, if your company is a web service provider and you daily need IT specialist to maintain the website, update it and integrate additional functionality there are high chances that in-house development team will be much more efficient than outsourced one. Depending on the size and the core activity of your business, its needs in software specialists, app developers, and web programmers will vary requiring either outsourced specialists or in-house employees.

Benefits of in-house software development

Besides the departments responsible for the primary business activity related to the core company activity, its service or product, firms can maintain other in-house departments if it is profitable.

- In-house services maintenance can make a firm more flexible in its performance;

- It also has another functional benefit helping company to raise the level of control over the operations and task accomplishments;

- This option has fewer security risks as all the corporate data doesn’t leave the company.

- Finally, in-house employees will always see how your business work and hence they will obtain the better understanding of it.

Disadvantages of maintaining in-house software developers

Software development, whether it is a mobile application or web systems, requires collective work of multiple specialists in different IT aspects from business analysis and idea verification, to design, coding and QA testing. As far as technologies keep advancing in functionality and design criteria, these IT experts should keep up with the time attending different programming training, conferences, and meetings, otherwise, you risk to get an obsolete application which doesn’t meet your business needs and customers’ expectations. Here are some challenges you should consider before recruiting in-house programmers:

- First of all, you should consider in-house software development only if you will regularly need this service in long term prospects, otherwise, it will cost much more with all the expenses you are going to bear comparing to the outsourcing. The in-house programming department will be costly considering the overhead cost related to a working space, salaries, benefits, regular training, and hiring a person to put in charge of this department.

- Secondly, if you prioritize quick time-to-market strategy this option won’t be suitable as it requires a lot of time on recruiting new staff, teaming them up, and getting them acquainted with the company work and needs.

- Finally, the other side of the full control over the development is an ability to estimate the results and the quality of the software product. And here you have two options, either you have enough qualification in IT sphere that lets you check the code and conduct QA testing, or you hire a highly-paid specialist responsible for the quality assurance.

If you are planning to create an independent direction of the business based on information technologies, which will need continuous technical support, then in-house development will be a better choice. But if you need to bring to life a short-term project which doesn’t need daily maintenance, in-house development will be unreasonable expenses.

Why outsource software development?

Outsourcing software development means that the company you hire takes all worries about staff recruitment and training and quality control. The demand for the software development is high, and that is why the variety of companies that offer first-class services making software creation outsourcing the most cost-effective, quick and reliable way to get the job done.
  • Cost-effectiveness

  • Short-term commitment

  • Focus on the primary company activity

  • Quick time to market

Cost-effectiveness

Comparing the cost of outsourcing and in-house software development in long-term prospects, the second option has a considerable advantage as you need to pay only for the work done without investing in the equipment, recruitment, training and other associated expenses. Offshore outsourcing can even significantly reduce the project budget due to the lower labor cost. But preferring overseas outsourcing, make sure you are ready to bear the risks of poor code quality and carefully select the partner company.

Short-term commitment

If your company needs someone with a particular skillset for a temporary work, outsourcing is a perfect option which lets bring an expert on a project basis and not bearing the expenses associated with a long-term commitment. In the case, when your company needs one specialist for one job done and then requires someone with a different skillset to accomplish another task, short-term commitment becomes an obvious advantage of outsourcing professional IT experts.

Focus on the primary company activity

When you outsource the application development services, you don’t need to dive into new project forgetting about company core activity. It is enough to talk with a professional project manager from the outsourced company to describe him your needs and requirements. Since the time all the specifications of the application are determined and papers are signed you just get the results. You don’t need to worry about the development process but estimate the results and provide the feedback on the working program. All the other worries the outsourced company takes for itself reducing your workload.

Quick time to market

When you outsource software company, you hire a teamed up group of professionals who cover all aspects of the application development process with their combined expertise. People who have experience of collaborative work and obtain mutual understanding will work faster reducing the program time to market. Outsourcing doesn’t require time for recruiting and training of each member of a team needed for a qualitative app creation. Software companies collect specialists of all directions in software development so hiring a company you get business analysts, designers, programmers, and testers.
Globalization and technological progress made software design outsourcing available and beneficial for many companies worldwide and let them gain a competitive advantage by optimizing the efficiency, cutting the costs, and receiving a high-quality application. This practice has proven to be a wise solution to keep up with the fast-moving technological world and focus on the core competencies of your company.

What you should remember about outsourcing software development

Control and Security

Outsourcing implies the involvement of the third party to into the business activity. The performance of the third party which you chose to partner with usually outlined within a contract where you specify the task, requirements, budget, and deadlines. Pretty often such involvement may be risky as there is no direct control of the outsourced company. You should be very clear in the specifications outlined in the contract including the company's data security. And hire a team with a project manager who will always be in touch with you, and this will make the development process much faster and enhance the control over the situation.

Quality Assurance

One of the major difficulties the customer company faces outsourcing development services is a quality control. Having no expertise in programming, it is impossible to judge code quality. You risk to buy a pig in a poke. To prevent the waste of money and efforts you can hire some local specialists as a consultant to deal with the coding standards. Also, looking for a software company bring to notice if it has QA department which keeps an eye on the quality of their software solution.

Cultural gap

Even being compatriots it is difficult to achieve the mutual understanding when it comes to software development. Outsourcing offshore can cause cultural issues connected with the differences in a set of mind, attitude to the time, and simple misunderstanding. Besides, there are different time zones which make the communication process more complicated. Of course, modern means of communication and transportation smoother this problem. And if you outsource from the same country, onshore, you also don’t even face this challenge.

Outsource our company!

Our primary motto is to work collaboratively with our clients so that we could provide them with software solutions that bring their businesses additional value.
  • Our team implements agile methods and philosophy ensuring transparent, responsive, and flexible app development process.
  • Outsourcing our company you hire a dedicated team of programmers who realize the project ideas in accordance with the requirements and help you achieve desirable business objectives.
  • We have experience of work on a range of exciting software projects for our customers from different industry sectors and different countries gaining priceless expertise.
  • Our team has built a reliable app development process model which ensures that wherever is our customer, we will deliver a software solution which exceeds any expectations within the budget and on time.
If outsourcing makes perfect sense for your business, get in touch with our software company and share the app idea.