Hiring Showdown: In-House Versus Outsourced Developers

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outsourcing vs in house

At the beginning of any new project, companies undoubtedly have to face the question of how to translate their goals and ideas into a reality, as well as who will be the workforce behind that process. When it comes to a software development project specifically, businesses must decide whether to hire software developers to work as part of their in-house team or choose to work with a third-party outsourcing company.

It’s hard to recommend one approach for any and every software development project, as they each have their own requirements and factors to consider. However, both in-house development teams and outsourced teams (such as those from BairesDev) have their own pros and cons for companies of all verticals, sizes, and experience levels.

So, which is the best choice: in-house or outsourced developers?

The Pros and Cons of Hiring an In-House Development Team

In-house development is when companies hire developers to work directly for them to work on projects. This method of hiring employees can work well for software development when these projects are a part of the company’s core functions or services.

The benefits of choosing to hire an in-house development team include:

  • Direct Access to Employees – With an in-house team, leaders and team members know the abilities and strengths of everyone on the team, and can then assign or distribute tasks accordingly. If there is an issue, the team will know how it happened, who was responsible, and how to quickly resolve it internally. In-house teams can always prioritize urgent tasks or fixes as their hired company is the top priority.
  • Personal Involvement – An in-house development team has a sense of engagement and belonging to a company and its goals or beliefs. In-house teams tend to find their work to be rewarding not only for themselves but for the sake of the team. This means more job satisfaction as well as productive, passionate employees. Engaged employees proactively look for ways to improve the projects and company.
  • Cultural Fit – Developers that work as permanent, in-house members of the team pay more attention to the specific needs of the company. They also more easily integrate with the company’s culture as they are working within it every day.
  • Face-to-Face Communication – In-house development teams have the same working hours and normally work in the same office, making the communication process easy and clear.

In-house development teams also come with their own set of challenges and cons as well:

  • High Cost – To put it simply, in-house employees are expensive. They require a regular salary, health insurance, benefits, vacation time, sick time, as well as the infrastructure necessary to get their job done, such as hardware, software, and other development tools. If business slows down or there’s a reduction in the number of software projects, in-house employees still require their regular paycheck. If a company needs to hire a new team member, this means even more costs associated with recruitment and training.
  • Staff Turnover – Software developers have a tendency to change jobs more frequently than other positions due to the high demand for talent and enticing offers from other companies. As a result, companies that choose to hire in-house devs find themselves facing the challenge of needing to hire frequently. This can cause a loss of time and subsequent revenue.
  • Lack of Talent and Versatility – With a massive IT skills shortage going on in the world right now, directly hiring tech talent is very challenging. It may take much longer than anticipated and cost much more as well due to this incredibly competitive market. This also means that if a project requires a niche skill set or technology that the current in-house team lacks, the company must hire additional employees or pay for training for current employees.

The Advantages and Disadvantages of Outsourcing Development

Outsourcing software development is the practice of hiring a third-party company to handle software development and related services. Outsourcing is an effective way to hire developers while also keeping budgets, timeframes, and agility as top priorities.

The benefits of hiring an outsourced software development team include:

  • Cost-Effective – Compared to hiring in-house employees, outsourcing is a much more cost-conscious way to accomplish software development goals without breaking the bank. Instead of paying many different salaries, benefits, and such, companies must only pay a simple monthly or hourly (depending on the contract) fee. The hiring company doesn’t have to worry about paying for recruiting, training, or maintaining employees. This leads to significant savings over time.
  • Scalability – With an outsourcing provider, companies are able to add more outsourced employees to their team when they are on a tight deadline or have a lot of work to get done. On the flip side, if business slows down or costs need to be cut, the hiring company is also able to scale the team down.
  • Faster Time-to-Market – Outsourced software development teams are professionals at what they do. They work like a well-oiled machine to get projects done in a timely manner, thus lowering development costs and getting things on the market or launched faster.
  • Niche or Specialized Talent – As mentioned above, there is a skills shortage in the world of IT, making it difficult for organizations to find the necessary niche abilities or experts that projects sometimes require. Outsourcing provides companies with a wide variety of skill sets and expertise within their own talent pool. This also means more access to a wider variety of technologies to choose from for projects.

There are only two main issues that may arise when working with an outsourced dev team:

  • Communication Issues – Outsourcing teams obviously work outside of the hiring company’s office. This means that communication (typically) occurs via email, instant message, video meetings, and so on. Sometimes things get lost in translation via these technologies or because of the inability to speak in person to explain things. If working with an offshore or nearshore partner, time zones and/or language barriers may also make communication a bit challenging.
  • Possible Security Risk – Security isn’t a problem when working with a reputable and respected outsourcing provider. However, some companies fear that their software projects or ideas will be stolen. This is easily prevented with a nondisclosure agreement in a project contract that guarantees the hiring company the protection of their rights and project ideas.

Both in-house and outsourced teams come with their own sets of advantages and disadvantages. While every project and company is different, organizations should take the time to fully consider both options before beginning a development project to see what would be the most beneficial choice.

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