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Know About the Pros and Cons of Outsourcing vs In-House Development
Many companies outsource their projects to external third parties. It is one of those trends that is rising quite fast in the global software industry. The Asian pacific region is vastly targeted to outsource different types of software projects. Some people think why companies need to do this when they have got internal teams setup in the office. This starts the never-ending debate of in-house development vs outsourcing of software projects. It is really important to understand the circumstances why outsourcing is preferred over in-house development. Those who have technical knowledge understand why it is done despite having internal teams in the office.
Nowadays, outsourcing has become common not only for software projects, but for other activities as well. This includes different types of projects including product marketing, cloud computing, cybersecurity and more others. Generally, companies outsource their projects due to having lack of resources in the internal teams. This marks the first need of project outsourcing or the demand of hiring external teams. It forces the project stakeholders to find those personals that are worthy enough to handle the project and deliver quality results according to it.
In this article, we will also be discussing the difference between in-house development vs outsourcing of software projects. Being a business stakeholder, you must need to know which strategy to choose for your software projects. This article will clear some of your concepts as it will also define cost comparison of in-house development vs outsourcing, so that you can pick the right strategy of project management. Let’s first understand the basics about software outsourcing services, as why it is needed to complete specific projects.
What is Software Outsourcing?
Software outsourcing is a process in which companies hire external teams to manage any specific project or task. This is usually done when internal teams are already busy in some other projects. Sometimes, lack of quality in the internal teams also forces companies to look for third-party resources. All of this is done to ensure quality in the product as per the required software development standards. No digital agency can diminish its image by creating a project that meets below average quality. They must need to offer desired results in the projects, either by working with the internal teams or by outsourcing projects to any external resource.
The process of outsourcing any project to third-party teams is also not easy. You have to look into multiple factors while selecting any team for the job. This includes clear analysis of their experience, market reviews, expertise and more other working factors. Once you are satisfied with all the benefits offered by them, you can easily make the choice of project outsourcing.
Nowadays, you can find many online platforms to hire external teams from the industry. This trend is rising very quickly, and these online sites are making their function more easy. They are not just helpful for the clients, but also for the freelancers who are ready to take the outsourcing job. This way, IT vendor management has become simplified as everyone can be easily connected with each other without having much difficulties in communication.
Software Outsourcing Advantages
Software outsourcing brings many benefits for the companies that are looking for quality project execution. It becomes very important for those businesses that are short of internal resources. Let’s discuss some of its major software outsourcing benefits in detail below.
Ensures Quality
Talking about the major outsourcing advantages, the biggest reason why many companies turn towards outsourcing is the demand of quality. They usually face lack of working excellence in their internal teams which forces them to take the outsourcing option. They cannot risk anything in the quality of projects, as all of their sales and client engagement depends on it. If anything is not done properly, then all of their reputation and goals would go into vain. This is something nobody requires, hence they choose outsourcing to cover all their basis.
Quick Turnaround Time
Software outsourcing also ensures to complete projects within the given timeframe. When companies hire external teams, they make sure to agree on some points mutually. This firstly includes quick turnaround time of the given tasks. It is one of the major outsourcing benefits that carries high importance for businesses. They want to get their tasks done on time, so that they can deliver them to the clients without any delays. The outsourcing teams ensure to complete the tasks on time, precisely with the required results.
Wide Talent Access
As a company, you can get various advantages of outsourcing development projects. It helps you to connect with a wide pool of market talent that is capable of taking on all types of projects. This allows them to pick expert developers and designers to do the required job. It doesn’t matter how complicated the task is, outsourcing help companies to find the best talent that can handle it effectively. It gives them a peace of mind, allowing their internal teams to concentrate on other important tasks as well.
Scalability
Using a good software outsourcing strategy also provides scalability to the companies. They can prolong their partnership with the outsourcing teams on the basis of quality work. Furthermore, they can also scale the requirements of the project if they are satisfied with its current progress. Generally, companies look to hire those third-party resources that are reliable in work. This helps them to exercise the scalability option and form a partnership that can stay intact for years.
Disadvantages of Outsourcing Development
While discussing advantages, it is also important to know some disadvantages of outsourcing development as well. Though they are not big, but still pose some sort of outsourcing challenges for the relevant companies. Let’s take a quick look at them below.
- Outsourcing projects require effective communication. If it finds any lacking, then major flaws could arise during the development.
- Software outsourcing risks can become bigger if your remote teams fail to understand the core requirements of the project. So, try to take everyone onboard before starting the execution.
- Being a stakeholder, you should at least know some technicalities and risks of outsourcing development projects. If you don’t have this knowledge, then project monitoring could become difficult for you.
What is In-House Development?
As the name suggest, in-house development refers to the process in which all the tasks are managed internally. The software teams working at the office are responsible to complete all the tasks given to them. Generally, it is the priority of every company to initially rely on their internal teams. No brand or agency wants to hire any external team at the first place due to a variety of reasons. This includes factors like extra budget, dependency, remote task allocation and more others. It is the major reason why advantages of in-house development over outsourcing are a bit high and software companies precisely know about it.
The in-house teams are generally given the core task of software projects. They are advised to complete them at the first place without asking for any external help. If somehow, they get into any difficulty, then external teams are hired to assist them in particular tasks. This is the basic model of every software agency that allows them to hire outsourcing teams only on priority basis.
The in-house teams are also dedicated to complete certain projects that are confidential in few terms. These type of projects are not allotted to third-party resources because of some legitimate concerns. This makes in-house teams the only option for them. If they lack quality, then additional hiring is also made to enhance their overall quality. This is precisely done to deal with the projects internally, so that everything can be managed efficiently.
In-House Development Benefits
In-House development is very beneficial for the software companies. Basically, everyone relies on their in-house teams at the first place. They do not want to take the business process outsourcing option unless their internal resources are short on time. For starters who do not know, there are many advantages of in-house development over outsourcing in which some are defined below.
Ease of Communication
In-house development brings various benefits such as ease of communication between the developers. It is a highly important thing that allows developers to continuously talk with each other about the project status. They work better on the projects by staying connected internally, as it provides them a great way of building mutual relationship. The task allocation and management also become easier, allowing team leaders to communicate everything about software quality assurance and other jobs efficiently.
Instant Support
Getting instant support on various issues is also one of the best in-house development benefits you could get as a business. It allows the teams to immediately look into those issues that emerge on run time. This is quite common during the project development, and in-house support is certainly the best answer for it. From QA testing to security testing, instant support helps you to take care of various issues that needs urgent resolution.
Cultural Alignment
In-house software development is also preferred due to cultural alignment. People working within the team know about the culture of the company. They know what type of process is used to develop any software within the premises of the office. This lets them know about their role in development, as what type of things they need to take care of. It builds acknowledgement within the team that enhances a positive culture internally.
Task Allocation
It is also quite easier to allocate tasks when the project is being handled internally. Team leads exactly know which task should be allotted to the junior or senior developer based on their current expertise. It helps to save time by assigning task to the right person. Generally, companies use advanced task management tools to assign internal jobs to everyone. It makes monitoring of different tasks quite simpler. This technique cannot be used in software outsourcing, as the remote teams work on their own priorities.
Disadvantages of In-House Development
In-house development is usually preferred by many tech organizations, but it has some disadvantages too. As a business owner, you have to understand in-house development challenges as well, because it helps you to prepare for every situation effectively. Let’s discuss some common disadvantages and challenges of in-house development below.
- In-house development requires proper setup of internal software developers. This could increase your operational cost dramatically.
- In-house development often limits your talent pool. It can bring a direct impact on the quality of work if skilled resources are not hired regularly.
- Startups cannot afford in-house development, as it is too costly for them. That is why they usually go for outsourcing to save some part of their budget.
What is the Difference Between In-House Development and Outsourcing?
There are many differences between in-house development vs outsourcing of software projects. Being a project manager, you need to know about them to efficiently manage everything. Many times, people do not know about these differences, yet they try to outsource certain projects that should not be handled externally. If you also do not know about these differences, take a look at the key points defined below.
In-house development helps to communicate regularly with the development teams, whereas outsourcing does not provide you the same leverage. This often creates a gap between the stakeholder and outsourcing partners, leading to committing crucial mistakes in the project.
The cost of in-house development is relatively low, whereas outsourcing can often be costly.
This mostly happens due to the rising rates of freelancers in the market. They demand heavy rates based on the timeline and complexity of the project. So, always make sure to look into your budget if you are trying to outsource any project.
In-house development allows you to employ bigger teams at particular tasks, whereas outsourcing doesn’t offer you that luxury. That is mainly because outsourcing is a bit costly and businesses cannot afford to have bigger external teams at work.
Cost Comparison of In-House Development vs Outsourcing
Conducting a proper cost comparison of in-house development vs outsourcing helps you to select the right model for your project. Let’s take a look at them one by one below.
Outsourcing Costs
If you are planning to outsource your projects to any third party, then you should know about outsourcing costs. It helps you to decide how much budget will be required to outsource any project. Generally, outsourcing cost is less than the in-house development cost. However, it can become bigger if the project is more technical and scalable.
To outsource projects, you normally have to allot 5K to 10K for the overall development. It is a general quote which can precisely vary depending upon the complexity and timeline of any project.
In-House Development Costs
The cost of in-house development is generally a bit high from the outsourcing model. It is therefore advised that startups and small businesses should not go for in-house development at their initial stages. The in-house development however offers better advantages as compared to outsourcing, which is why its cost often looks considerable to businesses.
Generally, the cost of in-house development starts from $10K to $15K. This figure is scalable and obviously depends on the technical requirements, as well as timeline defined for the project.
Frequently Asked Questions
| What is software outsourcing? Software outsourcing is a method in which companies allot projects to third-party teams. This is usually done when companies do not have internal teams or they are limited on budget to hire internal developers. |
| What is in-house development? In-house development refers to the method in which companies handle all of their projects internally. From development to QA and delivery, everything is done by the internal teams in this process. |
| How can businesses decide which is the best approach – in-house development or outsourcing? The answer to this question really depends on the project requirements and management circumstances surrounding it. If the company does not have an internal team that can manage a project, then outsourcing is said to be the best option. |
| What are the benefits of in-house development for businesses? In-house development offers many benefits to the companies. It is always thought to be the first option before opting for software outsourcing. It allows developers to communicate better and offer immediate support to their given projects. |
| What are the drawbacks of in-house development? In-house development also has some serious disadvantages. Firstly, it is not suitable for those companies that are low on budget. Secondly, in-house development often limits your talent pool which directly brings effect on the quality of development. |
| What are the advantages of outsourcing development? Software outsourcing has its own benefits and advantages. It comes very handy for those businesses that require an external hand to complete technical projects. Furthermore, it can be crucial for those agencies that do not have sufficient internal resources to handle software projects. |
| What are the disadvantages of outsourcing development? Software outsourcing has some disadvantages that should be understood before opting for the model. It often breaks the communication and increases the risk of project failures in case work status is not discussed regularly between the teams. |
| How does in-house development compare to outsourcing in terms of cost? In-house development is more costly as compared to software outsourcing. Generally, in-house development requires a budget of more than $10K, whereas outsourcing deals are done on project basis starting from $5K to $6K normally. |
| What are the risks associated with outsourcing development? Outsourcing development involves some risks, hence you should keep a proper eye on them before starting the project. It involves communication risks, as well as challenges of finding the right outsourcing teams that can manage projects professionally. |
| What are the differences between in-house development and outsourcing development? There are many differences between in-house and outsourcing development. In-house requires complete setup of internal teams. On the other hand, outsourcing model deals completely with the third party teams that are hired on project basis. |
Final Words
That concludes our entire article in which we have discussed differences between in-house development vs outsourcing of software projects. Both of these practices are commonly used by the agencies to develop software products. However, selecting one of them depends on a few circumstances. You cannot just blindly go for software outsourcing every time unless you have a strong reason. Similarly, in-house development cannot be forced if your internal teams are short on time or have a lack of quality.
This article has discussed some key points that will help you to pick strategy between in-house development vs outsourcing of software projects. Meanwhile, if you are looking for quality outsourcing services that can manage your software development tasks, contact us today. We offer dedicated teams to assist businesses in the development of software applications as per the given requirements.
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