In-House vs Outsourcing Software Development For Startups

TechRound Team

6 months ago

—TechRound does not recommend or endorse any services or products. All articles are purely informational—

The never-ending battle between in-house vs outsourcing development has a very long history. Over time, both approaches to development have proven their strengths and shown their constraints. As a startup owner, you should carefully evaluate the advantages and disadvantages of both in-house and outsourcing to find the best one for your project.

Lemberg Solutions knows your struggle and to ease your burden of choice, they have outlined all in-house and outsourcing pros and cons and defined cases where these approaches would fit better.

Factors To Consider Before Deciding On In-House vs Outsourced Software Development

Before starting to compare in-house vs outsourcing software development, consider these main factors that have a crucial influence on your choice:

Project Requirements

All projects start with requirements. You need them to understand your project’s complexity and how much resources you need to implement it. The more complex your project, the more investments and hours for implementation you need.

Based on this information, you can understand what expertise you lack, how many people you need and how best to hire them: build your own team or outsource.

Budget

Depending on the maturity of your startup, you may have different available funds to invest in the development. This factor is among the crucial ones as it defines the trajectory of your project. If you operate with a limited amount of money, you must consider a more cost-efficient approach such as outsourcing to avoid budget draining.

Timeline

In most cases, software development for startups is time-sensitive. To achieve success with your product and satisfy your investors, you need to launch your product on the market, outpacing your competitors.

Outsourcing proves to be the fastest way to get your product to market. However, do not rush the development process as such an approach can lead to many issues with your product. Strive for the balance between speed and quality for the best results.

Overview Of In-House Development Vs Outsourcing

In-house and outsourcing development both come with various advantages and disadvantages. For some companies there will be reasons to keep things in-house, whereas for other companies it is more suitable to outsource development to an agency or an external partner.

In-House Development: Pros and Cons

In-house development means implementing the project with the resources within your company. there are various advantages and disadvantages to using and opting for in-house development options:

Pros:

An in-house dev team clearly knows and understands the company’s internal processes, so you have full control over their work
You can directly communicate with the in-house team members as you work within the same location
An in-house development team can respond in a timely manner to unexpected product’s malfunction and provide quick fixes

Cons:

In-house development limits your choice to a certain geographic location, giving you a very small pool of talent to work with. If for the project you require a very narrow expertise, this can turn into a problem as you simply won’t be able to find the right professional within your city
In-house development demands a great deal of investment. In addition to a fixed salary, you’ll need to cover onboarding costs, sick leave, insurance, and other social benefits for each team member you hire
There is always a risk that the critical team player can resign without notice. This can disrupt the core development processes and endanger the project’s success. You will have to go beyond the budget to find and onboard a new professional with the same level of expertise

Outsourced Development: Pros and Cons

Outsourced software development is known as a process of hiring experts outside of your company to develop the product completely or support your in-house team with related tasks.

Pros:

Software development outsourcing gives you access to all existing global talent with diverse expertise in any technology you need
The IT outsourcing market offers top experts with varying rates, making outsourcing much cheaper than in-house development. For example, some of the top IT companies in Ukraine may be able to provide the flexibility to work with first-class specialists at more affordable prices
Outsourced development makes it easy to scale your team as you want. In case you need more people for product implementation, you can increase the number of people and decrease, when you no longer need their help

Cons:

If you want to work with an outsourced team, you need to invest a lot of your time to plan your communication to overcome communication barriers or time zone differences
When you outsource your project to an external vendor, security risks significantly increase. That’s why you must thoroughly research your future vendor to protect your intellectual property. We also recommend signing an NDA to ensure all privacy policies are followed in your project

In-House Vs Outsourcing: Main Differences

Factor	In-house	Outsourcing
Cost-effectiveness	Higher expenses	Lower expenses
Talent availability	Restricted to your location	Vast access to different experts across the globe
Time of development	Slower, as depends on how quickly you will hire and onboard the experts	Rapid development, as outsourcing team can start with the development right away
Scalability	Limited	High
Communication	Better direct communication as team located within one space	Requires careful approach to set the communication because of different time zones and distances
Security	Highly secure	May pose security risks if you choose unreliable vendor

When To Consider In-House Development

You may look towards in-house software development for various reasons, including:

You are not restricted by budget and can afford permanent members on board
You work in an industry with strict regulations and requires a higher level of security
You want complete control over your team and seamless communication not disrupted by time zones or language barriers

When To Consider Outsourced Development

Outsourcing may be a right choice for your startup, if:

Your project requires specific expertise that you cannot find in the local talent pool
Your startup has a limited budget
You need to launch your product quickly without compromising the quality

Which Is Preferable For Startups?

There is no universal answer for the question of what to choose; in-house software development vs outsourcing.

One approach can suit better for certain types of startup and miserably fail for another. Moreover, you’re not limited to in-house and outsourcing, you can even combine the two approaches, taking advantage of both for more efficient development. The most crucial thing, here, is you need to understand the specifics of your startup before making the decision, given your budget deadline and project’s requirements.