Are you at a point where you need additional assistance for your business to thrive?
And are you struggling to answer the question ”Is it better to choose an in-house development team over an outsourcing one or otherwise?” when the phenomenon of hiring external companies to outsource some of the IT needs has been a hot trend since 1989 and now is trending globally after more than three decades? This is an absolutely tricky question to answer.
Well, this article will give you an overview about outsourcing and in-house development. We will cover:
1. In-house Development
- Pros vs Cons
- When to use
2. Outsourcing Development
- Pros vs Cons
- When to use
to help you make an informed decision on what suits your business.
When referring to this term, it means a company can locally hire and use its own employees to develop and deliver a project, making it an “in-house” operation. You can build your own team from scratch. If your company’s core business is IT, it may be reasonable to hire in-house.
Now, let’s see what advantages and disadvantages insourcing could have.
Going through the process of recruiting, training, onboarding and ongoing training with your team members from the beginning allows you to pick up employees who align with your company’s culture and core values. The chances are that you can build a high-spirited team and reasonably easy to manage.
This is an obvious benefit when working with an in-house team. Instead of having back-to-back virtual meetings via Zoom or Google Meet, your team will have face-to-face access which helps you to speed up your discussions and quickly finalize projects’ requirements. Team members can simultaneously receive immediate support or advice if needed since they work under one roof. In other words, when your team’s deploy a new product and some flaws crept up, you can make the most of direct communication to seek investigations and fixes without delay.
You can build up a strong foundation for your team due to the fact that you go through the process with your employees from scratch. Additionally, ongoing training can continuously equip your developers with up-to-date skills and knowledge about recent changes of the industry. You can simultaneously bolster their available expertise and provide them with new skills needed.
Insourcing is a double-edged sword. It’s true that you can have full control over the process and can build up a highly-skilled team. But in the end, all comes at a cost. According to sba.gov, a full-time employee, on average, costs about 125% to 140% of their salary. So if his salary is $35,000, you actually pay him an amount of approximately $43,000 to $49,000, depending on certain variables. And you have to pay your in-house employees for hours they spend at work, whether they are working on your projects or doing other things.
Expenses for facilities, equipment, operation, etc is also your responsibility to cover.
Tech talents are now in a higher demand compared to the past few decades, and will be inevitably increasing in the future. This is compounded by the internally limited pool of talents. As a result, to retain talents for your company, you will have a tough time fencing off other competitors who have poaching attempts. Otherwise, it will have negative effects on both your team, your company and the projects that you are working on since the lack of stability of specialists.
Your employees can’t be good at everything. Even after a hiring process, when you have the best candidates for your company, it is unlikely you will encounter some flaws or take on some projects that might be far outside of your team’s expertise.
Which is the practice of hiring an external team in other countries to deliver your entire IT projects or specific tasks. So what are some advantages and disadvantages this approach could offer?
You will find the advantages of outsourcing when you’re operating in a country where the IT labor costs are high. You can obviously hire developers in another country where their expertise is at the same or even higher level, with considerably lower salaries. Other expenses, such as for insurance, sick leaves, recruitment, etc can be eliminated. An outsourced team enables you to combine strong technological potential with reasonable rates and minimal operating costs.
When hiring externally, you have access to highly-skilled tech talents all around the globe since the Internet has enabled us to live in a global village to a certain extent. As a result, you will have no trouble finding and choosing between a variety of established developers to do specialized work for you. Offshore centers will provide a large number of pre-screened talents who suit your expectations and help you deliver your IT projects.
As mentioned before, many projects require diverse skill sets and it can cause burnout if you ask for too much. No one can master all trades. Hence, it is more viable for your company to collaborate with some external IT firms that boast developers specializing in different skills needed for your projects. At the same time, an outsourced team can help to reduce your in-house team members’ workload when they have too many tasks to handle. It would be more manageable to outsource than asking your team to pick up the slack.
If you outsource to an IT company that is a thousand mile far away from your country, it will be hard to set up meetings due to time zone difference, not to mention language barrier which could make it even more difficult for the outsourced team to understand your concerns and requirements. In an attempt to tackle the problem, English has been used as an effective tool to bridge the gap between parties.
It is crucial for you to carefully research your partner before you sign any contract. All the non-disclosure agreements or privacy policies are needed to be thoroughly discussed which guarantees that profit and authorities go to both parties.
Operation and management are carried out by virtual meetings via online platforms or communication conducted via Email or Slack sometimes cannot facilitate your full control over experts’ process. What you need to do is just keep your expectations in and encourage collaborative work to make sure that there are no hiccups along the way.
It is fairly obvious why outsourcing is so popular in this digital day and age: it is a cost-saving solution which can yield even better results in a short period of time. There is an unlimited pool of talents for you to outsource any of your projects, despite the physical distance. Still, there are some hard things to replace when you have your own in-house team.
Again, it’s all up to you to decide whether in-house or outsourcing development would suit your business. Just be mindful of the benefits and limitations each approach has with it.
And if you want to choose outsourcing while maintaining your conventional in-house team to double the power of your business, just keep in mind: