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Never ending dilemma - to outsource or not to outsource?

In case you are thinking about creating your own website, mobile app or customized software for your business, you may be faced with the decision whether to utilize in-house or outsourced software development.

9. 3. 2020

Laura Gerendova

Chief Marketing Officer

Confused guy looking at soda automat

In case you are thinking about creating your own website, mobile app or customized software for your business, you may be faced with the decision whether to utilize in-house or outsourced software development. Whether you are a startup, small business or an experienced company, your top priorities are probably to build your software product fast, but at the same time keep the quality high.

Given that there is an acute shortage of talented and experienced developers, hiring your own developer or the whole team can be very challenging. Moreover, if you want him or her to fit into your company culture and your budget of course, it may be almost impossible. Reasons mentioned above are only a few of the many why the number of companies of all sizes, that have decided to outsource the software development, has risen sharply in recent years.

,,Almost 50% of European enterprises of all sizes use external suppliers for web development.“

When it comes to outsourcing, almost 50% of European enterprises of all sizes use external suppliers for web development. There are positions that companies mostly occupy internally, for example they have their own employees as a support for office software or for maintenance of ITC infrastructure. On the other hand, web development, development of business management software or support for web solutions are areas where outsourcing prevails.

ICT functions performed in enterprises, by function, large enterprises, EU-28, 2017 (% enterprises)
Source: Eurostat (online data code: isoc_ske_fct)

However, there is no clear answer to which path is the best for you. It depends on your requirements, time, budget, expectations and many other factors. Before you make a decision, let’s have a quick look at the advantages and disadvantages of these two options.

Building an In-house team

The greatest benefits of internal development include direct access to your employees and full control of the whole process. Considering that your own employees usually share the same office and have the same working hours, communication with them can be very easy. You can personally come to the developers and discuss your questions face-to-face. You also have a perfect overview of who is responsible for what, so you can address your questions exactly to a specific person. Moreover, your team is always available so in case you want to change the project's features or add a new one, they are here to do it immediately.

With the in-house team you have an ability to build company culture, which will assure strong project engagement and personal involvement of your employees. In the ideal case, they will be fully dedicated and focused on a single project. The whole coordination and guidance is in your hands, so you can enjoy full control over your team. It is important to mention that internal team brings expertise to your company’s profile. In the long-run, it can be a strong competitive advantage.

On the other hand, building and managing an internal team takes time. According to a Glassdoor report, the average hiring time in the tech industry, especially for experienced SW engineers, is about 30 days and there is a high probability that this number will increase in the next few years. The demand for IT professionals is steadily increasing and it is extremely difficult to find someone who has the required experience, fits into the corporate culture and also into your budget. On average, half of the european enterprises recruited or tried to recruit IT related vacancies with difficulties. The highest percentage of companies, which had hard-to-fill vacancies were Czech Republic, Austria, Malta, Luxembourg and Netherlands.

Moreover, what is often overlooked is the fact that managing a development team is hard, mainly because an experienced technical lead is required or if you want to do it by yourself, it keeps you distracted from your core business.

Calculation box

The great option is to do both, developing your app with the software agency and at the same time start hiring new employees to continue to work on the application after the software agency delivers its part.

Pros and cons of in-house software development

Outsourced team

In many cases, outsourcing seems to be the most effective way. Software houses can provide you with a dedicated team of skilled and experienced professionals, who will closely cooperate with your in-house teams. The moment you decide to outsource your development, you have access to a wide pool of IT professionals and possibilities to cooperate with many different software agencies all over the world.

One of the key benefits of working with a software house is timesaving. Cooperation with SW house allows you to reduce the time spent on recruitment process, training the new employee and setting the right effective cooperation in a team. Above mentioned aspects take time and require special attention in case you really want your team to be productive.

Developers in SW house already know what to do, they follow well set processes and probably they have already cooperated with each other for some time. Once the requirements for the project are set, the team can immediately start working.

Even though you read in many articles and many SW houses will claim that outsourcing saves costs, it may not always be the case. You don’t have additional expenses you would have with an in-house team, such as vacancies, skills endorsement expenses, workspace costs or cost for additional hardware and software. But remember one thing.

,,In case of cooperation with SW house, you are not only paying for development but for EXPERTISE as well.”

Software agencies can provide you with a team of highly experienced professionals. As a team, they have not only technical knowledge but general knowledge as well. Since they have already successfully implemented several projects, they can provide you with business consultancy and make your business unique and flexible. As a way to stay competitive, vendors must strive to keep their teams up-to-date with the latest software innovations. These are the reasons why outsourcing is not necessarily a cheaper alternative.

,,Specialists in a software house understand the importance of business value delivery.”

Choosing the right SW agency is crucial. When you work with a reputable SW house, the risk of late delivery or employee turnover is minimal. Specialists keep you updated on any changes, always ensuring that the development process is smooth and on-time. Development of a successful software product goes far beyond good code. Highly skilled vendors in a software house understand the importance of business value delivery and they are able to assemble a team, assign tasks effectively, enhance user experience, their decisions are always product-oriented, and they provide business consultancy to ensure that the product will be sustainable in long-term.

The most widely cited reason for IT outsourcing is freeing up company resources, to keep focused on core business and about 46% say outsourcing lets them access a wide pool of skilled people that aren't available in-house. Small businesses claim that their main reason to outsource SW development is to improve efficiency. They simply do not have access to necessary resources, that's why they are looking for expert assistance, which a reliable SW house can provide.

Pros and cons of outsourced software development

To outsource or not to outsource?

There are several aspects to consider when deciding between an internal and an external team. In case of internal development, you have direct access to your employees, you can build your company culture, and in the long run, it can be a huge advantage to have expertise in-house. But all of this takes a lot of time and effort, which can distract you from your core business.

On the other hand, SW houses provide you with expertise you lack. They can work effectively, deliver quality output and give you consultancy not only in SW development but in business generally. Plus, it saves you a lot of time, but it's important to choose the right relevant SW house.

Another option is to combine both approaches. You can start to cooperate with SW house and start building your own team at the same time, which will continue to work on your product later.

In the next article, we will discuss some basic steps you need to take and aspects you need to consider in the decision making process to help you determine whether you should outsource or not and to ensure your outsourcing arrangement brings the best results for your business. Stay tuned.


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