You own a startup, you’ve got a cool out-of-the-box idea, and you want to develop a number one product that knocks competitors out of the race. Point-blank question: who will implement your idea? Is it time to start building an in-house team, or should you look at outsourcing providers instead?
Your choice will have long-term implications on your product’s success and the viability of your business. What’s more, both options have their advantages and downsides, which makes the decision even trickier.
In this article, we’ll run you through the main pros and cons of in-house and outsourced development, so you can make a more informed decision about what’s best for you.
Let’s get started.
Developing a product in-house
In-house development means exactly what it says: you hire professionals (developers, designers, project managers, etc.) to create a project team. These professionals become your employees, with all the legal consequences that employment entails.
There are four main requirements for hiring an effective in-house team:
- You need a vision of the number of people you require and their skill sets
- You have to find professionals whose expertise matches your requirements
- You have to onboard these professionals
- You need to pay them salaries and benefits, as well as cover other costs associated with their employment.
With all this done, you might get a fantastic, motivated, and productive team. But are you ready to bear the costs? Let’s discuss the brilliant pros and not-so-brilliant cons of in-house development that you’ll see cropping up over time.
Many companies, including market behemoths like Apple and Google, have in-house developers. Why? Let’s review the advantages of this option point by point.
Smoother management and communication
Companies often opt for in-house teams because managing people is much easier if you can communicate face-to-face. Tasks get done faster, issues can be solved on-site, and communication blips can be sorted out immediately.
A better culture fit
Keeping your startup’s philosophy, vision, and values consistent can be key to reaching your target market.
With an in-house team, you can train developers to work with these things in mind. They know the energy of your business and what you’re striving for, and if things go well, they’ll form a tightly-knit community that creates your product in synergy. Plus, in-house developers usually speak your native language, and you’ll have fewer problems with cultural differences.
Easier workload control
An in-house team gives you full control over your employees’ workload. It’s easy to monitor the amount of work they’re tasked with and adjust it when circumstances change. You also know in advance when an employee will finish the current task so you can assign the next one.
Smooth management and cultural synergy come with a price: simply speaking, your time and money.
Higher recruitment costs
Hiring in-house developers in the West is more expensive because salaries in the US and Western Europe are much higher than in Asia, for example. An average developer’s salary in the US is around $100,000 a year, while in India it’s almost three times lower. In addition, you have to spend your money on benefits packages, training, sick leave, and so on.
What’s more, large corporations are always eager to poach top-skilled pros, especially in developed markets. As a result, even if you’re a startup, you have to match industry standards and offer similar conditions to your in-house team. This can place a heavy burden on your finances.
Longer recruitment time
The tech sector is very dynamic, and fast time-to-market can sometimes be what makes your success. Yet hiring, onboarding, and training an in-house team is a lengthy process that can slow down product development. Plus, if you need to upscale, hiring additional in-house specialists can delay your product launch even further.
A more restricted talent pool
Skilled professionals are always in short supply, especially if your company isn’t located in cities like London or LA. Most of the time, you’re left with the limited options your local area offers. Hiring and relocating a foreigner for your in-house team is also possible, but the process is fraught with bureaucracy and visa issues.
The bottom line? While in-house teams can excel at communication and task performance, hiring and training them takes time and money. In the end, it may not be worth the effort, especially if you’re a startup and not an established company focusing on software development.
Outsourcing product development
Outsourcing means hiring an external company to perform a task. The global IT outsourcing market is growing at an explosive pace: it was valued at a rate of $342.9 billion in 2020 and is projected to reach $410.2 billion by 2027.
Usually, outsourcing is done based on a contract between you (the client) and an outsourcing agency. The developers don’t become your employees, and the agency takes responsibility for their hiring, onboarding, and management. In addition, many agencies offer a dedicated team model that allows developers to work full-time exclusively on your project.
Let’s talk a bit about the pros of this option.
In a nutshell, outsourcing is cheaper, more flexible, and gives you access to more expertise than hiring in-house. Let’s dive a little deeper into what that means.
Working with an outsourcing agency, especially abroad, is cheaper than hiring an in-house team for several reasons:
- You pay only for specific tasks: when the work’s done, you don’t have to pay anymore.
- There are qualified developers in countries with a lower cost of living. Generally, their rates are lower despite identical expertise.
- Finding a good agency is faster than hiring an entire in-house team, which saves you money from a time-is-money perspective.
It’s easy to upscale your team with an outsourcing agency. For example, at WebileApps, we divide a project into Team Units that consist of experts in design, development, and QA, and a project manager. A single team can deliver an end-to-end solution, but if your project needs more hands, you can easily add more team members. This flexibility ensures that your project’s goals are met on time.
A wider talent pool
With outsourcing, you can look for talent worldwide and find whole teams of reputable developers available for your business tasks. Even though your developers may be cheaper, this doesn’t mean lower quality if you find an agency with a solid portfolio and long-standing experience.
Expertise in meeting your startup’s needs
Professional outsourcing agencies have already worked with startups and know what they need. They’ll put together a team with all the experts necessary for developing a successful solution and avoiding your predecessors’ pitfalls.
With all this said, outsourcing naturally has its share of disadvantages. Let’s talk about them.
No working model is a silver bullet, and outsourcing is no exception. Security, time zones, and management may sometimes become challenges if you choose to outsource.
Less management control
When you outsource, you’re entrusting the management of product development to your outsourcing provider. This means you have less control, which can cause problems if your provider doesn’t give you regular updates and feedback.
Still, a reliable agency will manage and communicate effectively, meaning that “less control” is actually convenient and frees your hands for other tasks. At WebileApps, for example, we offer a fully managed, 5-step services process. All cycles of development — from discovery and design to post-production support — are coordinated with our clients through regular reports and open communication.
Time zone differences
Time zones can become a problem if your outsourcing agency is located on the opposite side of the globe. Still, an experienced outsourcing team will know how to address the challenges and organize work in a way that suits both parties.
Of course, you should always be careful with entrusting confidential data to third parties. This is why you’ll need to carefully select your outsourcing provider and sign an NDA.
In summary, lower prices, flexibility, and international talent can all end up costing you if you don’t choose your outsourcing partner wisely. Fortunately, professional partner companies like WebileApps know how to address all the challenges of overseas outsourcing.
Partnering up with WebileApps
Back to our point-blank question: who will implement your software idea?
As this article has shown, outsourcing is a better option in most cases, especially if you’re a startup owner. You just need to find a qualified technical partner that will both perform your tasks flawlessly and support you throughout the development journey.
That’s where we come in!
At WebileApps, we’ve been building high-quality, reliable software solutions for more than 13 years. We start from your idea, map the basic features, develop the design, create prototypes, and engineer a fully-functional app, all while focusing on service quality.
We have extensive experience with overseas companies, including startups. We know how to organize an effective development process and avoid common pitfalls when entering the market with a new product.
We’re also proud of our proprietary processes that guarantee end-to-end development and post-release support. Our Growth Acceleration Program (GAP) and Engineering Program (EP) have powered the successful creation of more than 150 apps from scratch.
Ready to develop your product with WebileApps? Reach out today!