It will certainly be a thought process you will go through again and again as you ponder whether to utilise in-house or outsourced software development. There are pros and cons to both and your individual circumstances will clearly define your exacting requirements. Here we will define those pros and cons so you can make an informed decision on what you will do for your business.
In-House Development
Utilising and building an in-house team may appear the most strategically sound direction for your business to go. Your staff will be under your direct control and working towards the same long-term goals. However, it is not without challenges and can leave you exposed.
Advantages of In-House App Development
- A Bourgeois Interest in Your Organisations Goals. Having an in-house team will ensure you are all collaboratively working to the same goals with the same drive to achieve them.
- Company Standards Adhered to. You will have no doubt detailed in your business plan a strict set of company standards to adhere to legal and commercial aspects. In-house you are assured your staff will follow the standards. Coding standards will also be aligned and you are in total control of the convention used and the future maintenance requirements.
- Cultural Alignment. Building rapport and a positive culture in your workplace is far easier with in-house staff. You can undertake team building activities or target annual reporting with behaviours. By having control over your culture you will have a team who can all work together.
- Long Term Collaboration. By having your own software development team you can assure your project success by having the same people work it from the start. They will know the product inside out and understand how to fix things quickly.
- Expeditious Reaction. An immediate reaction to any requests or issues will be possible with in-house teams. They will only be focussed on your software.
What are the Disadvantages?
- Recruitment Costs. It can be very expensive to recruit staff through a recruitment agency, typically 5-10% of the annual salary. Even taking recruitment into your own hands will be expensive to advertise the openings in the right places, it can range from £250-£999 to place an advert on a well known jobs board.
- Set-up Costs. Procuring hardware and software for your start-up will be your biggest expenditure. To keep up with competitors you will need to provide all of the equipment and licenses for your software engineers to operate.
- Operating Costs. Once you have taken the fiscal hit of procuring your equipment, you then have to pay to run and maintain it!
- Set-up Time. To set your software team up will take a lot of time, lead times for equipment and running recruitment campaigns can take several weeks or even months.
- Availability of IT Expertise. It is highly unlikely you will be able to recruit highly experienced and specialised experts from the outset, they will be on the higher end of the salary scale and may not want to leave current employers for a start-up.
Outsourced Software Development
An outsourced team provides many benefits to your start up. Many large, global businesses started out in a garage outsourcing their embryonic ideas to build up. Whilst there are some risks to outsourcing, they are typically outweighed by the pros.
Outsourcing Advantages
- Reduced Costs. By utilising an outsourced team you will only pay for the services you require and they are defined from the start in your contract.
- Defined Contracting Periods. By clearly defining how long you require the services you are able to forecast costs.
- Scalability. An outsource team will be able to undertake many different tasks and services for you. This enables you to expand your business far quicker by exploiting new technologies or opportunities as they emerge.
- Access to Expertise. By definition, an outsource team will only employ experts in their field. You are able to access this expertise through your contract and get advice on improving efficiency and cost-cutting.
- Adaptability and Resilience. In the same sense as scalability, your outsourced team are able to adapt to your changing requirements by bringing in staff from other departments of their organisation to work on your project. Giving you a flexibility not afforded in-house.
Outsourcing Disadvantages
- Conflicting Priorities. You will almost certainly not be the only client the outsourcer has, so there may be conflicting priorities depending on who shouts the loudest or who pays more. This can affect your business as you may not get the instant response you require.
- IPR Risks. Giving your data, sensitive information and trust to an outsourcer can be risky. It only takes one breach for you to have your business at risk from competitors or hackers.
- Logistical and Geographical Issues. Your development team may be located on the other side of the world which clearly may not be compatible when arranging conferences, meetings or visits.
- Control of Quality and Process. You will not have control of the quality and processes used in your software development until the product is delivered to you. Then you may find a bit of rework to align to your goals and standards.
- Cultural and Organisational Differences. With the ability to work round the globe it is possible to use an outsourcer from almost anywhere. Whilst a brilliant opportunity it can brings problems if you do not research the cultural and organisational differences. This can be simple things like shorter working weeks of extended religious holidays but in extreme cases can be illegal activity or discrimination.
The Bottom Line
In-house may give you control but it can be costly and very time consuming. It can be done but only with a lot of financial backing and patience from customers.
Outsourcing has grown over 2 decades and continues to do so. The pros are clear to see, the cons, whilst they need to be acknowledged can be managed by careful planning.
