Jul 36 min read

Employing a Developer In-house VS Using an External Software Development Company

In today’s era of cut-throat online competition, businesses often face the decision of whether to pursue in-house software development or outsource their development project to external vendors. The quarrel over in-house vs outsourcing has been prevalent for a long time because most people either do not know the benefits of choosing an external software development company or do not have the right connections to find one. Do you also want to know the difference in outcomes between in-house and outsourcing? Then you are at the right place. In this blog, we will discuss the difference between employing a developer in-house and using an external software development company. We will weigh the pros and cons of both sides, and you can decide which will be better for you. But before we go into that, let’s learn about each.

What is In-house Software Development?

When a company or business uses its internal workforce to develop software without the help of external entities, whether consultants or staff augmentation, that process is known as In-house Software Development; it is a traditional style of software development that has been in use for a long period of time. It is mostly done by employees who are hired for specific positions in the company on a long-term basis, with almost three out of four companies going for internal software development due to their lack of resources to outsource or their inability to find anyone reliable.

However, with the changing times day by day and the many new policies, the cost of employing internal employees is seemingly higher than external ones. Now that we have learned about In-house software development let’s move on to Outsourced software development.

What is Outsourced Software Development?

When a company or business opts for an external source of development by employing a third party (software development and solutions company) to develop software for them or their client within a predetermined deadline, that process is known as Outsourced Software Development. Although outsourcing work has been in use for decades, outsourced software development gained traction in recent years, with people opting for work from home and freelancing, but the reliability factor played a huge role, where service-providing companies came out on top.

One of the main reasons that people started relying on outsourcing was its cost-effectiveness and ability to finish work within the deadline, which is why one out of four companies outsourced software development. But is that all the difference between in-house software development and outsourced software development? Definitely not. So, let’s dive deeper into it and learn the difference between them.

Difference between In-house and Outsourced Software Development

Now that we have learned about them, let’s explore their differences and learn how outsourced software development has the upper hand in every factor.

1.Expertise: The level of expertise each of them has has a huge impact on the project's outcome; therefore, let’s discuss it one by one.

In-house software development: You can have high expertise in-house only if you have hired them for a long period of time or have paid huge compensation to hire them. However, the fact that you need to invest a lot of money for that hinders the process a lot, and the ROI (Return on Investment) takes a lot of time to be profitable.
Outsourced Software Development: When you outsource your software development, the level of expertise that you get will always be higher, as the people working for you will be highly skilled professionals, as you can rarely see newbies working for service providers.

2. Cost: In a business, everything depends on cost; whether you outsource or hire someone, the main goal is to earn more than the cost invested. So, which one is better here? Let’s discuss.

In-house software development: The cost in in-house software development is certainly higher than outsourcing because the initial investment is higher here. When a small business employs an employee, they have to pay them regular salaries, train them, provide resources, etc. and by the time they can earn their money back, the investment piles up to a lot, which causes losses.
Outsourced Software Development: Unlike In-house, the cost of employing outsourced software development is highly efficient because it does not come with any other type of support cost, such as office space, system, training, etc. The money you need to pay is for the specified amount of work only. Another factor that makes it efficient is the need to pay only when needed.

3. Time To Market: The length of time taken from the building of a product to the time when it’s available for sale in the market is known as Time To Market(TTM). The TTM differs in both cases and we will discuss the reason behind it.

In-house Software Development: The TTM in this case is higher than the latter as the time taken to prepare an in-house team for the project is longer. There can be various reasons behind it, like improving the technical abilities, guiding the employees, and, in some cases, even hiring a new employee. All these factors take up a lot of time, which delays the actual development process.
Outsourced Software Development: When you employ an outsourcing company the TTM can be according to your wish or deadline. Because the outsourced service providers already have pre-established systems and streamlined work processes, which helps them complete the development faster and efficiently.

4. Control: When the project is being executed, your control over it matters a lot, you need to have the authority over every piece of information about the project. Let’s discuss the difference that occurs here.

In-house Software Development: In the in-house development, the control normally seems superior but the difference is the inclusion of seniority. When the people working on the project are seniors, there can be some friction between the overseer and one working.
Outsourced Software Development: Unlike in-house, when outsourcing, you have absolute control over the flow of the project, you have all the rights to change the course. Because the major factor here is money, they are being paid to work according to your wishes and cannot do anything without your permission.

5. Scalability: Every business desires to scale its level, whether it is by the number of products/services they are selling or developing on their premises or through outsourcing. To know which one turns out better here, keep reading.

In-house Software Development: If a business wants to scale its in-house software development, the only factor that comes into play is investment. Just like hiring, when scaling, you need to invest a lot of money into your business, which is not as feasible as it seems because there will not always be ample funds available.
Outsourced Software Development: Here, the case is different; you can easily scale the number of people you want to work on your project or for your company, as the amount needed for it is just a fraction of the investment needed in scaling an in-house team.

6. Time-Saving: When people say time is money, they are not totally wrong, especially regarding business. Because the more time you have, the more you can work and make your business more profitable. To find out which of the two does it better, keep reading.

In-house Software Development: We cannot judge the speed of an in-house team, but when they work on a deadline, it is more difficult to push them to be quicker, and it also takes a lot of time to hire new employees for a project.
Outsourced Software Development: In outsourcing, not only is the hiring process faster, but the project completion is also faster. This is all because of the significant gap in the level of expertise both teams have.

7. Licences and Tools: Normally, during the development of a software project, a lot of resources are needed, which, in this case, are referred to as tools and licences. So, let’s know the difference between licences and tools in in-house and outsourced software development.

In-house Software Development: As you know, the money needed to buy or subscribe to these tools is huge. For a small business, to have all of them is not impossible, but neither is possible, which creates a problem throughout the process.
Outsourced Software Development: In contrast to in-house software development, outsourced development companies are equipped with all the licences and tools that can be useful at any point in time.

Conclusion

The world is growing at an incredible pace, and to be a part of this world, we need to match its speed, efficiency, and techniques. If you want to grow your business without the need to invest a huge sum of money or you need to opt for outsourcing your software development. Because this is the future, it will not only save you money and other resources but also save you time and labour. What are you waiting for? This is your opportunity to outsource development teams and make impeccable software solutions despite being a small business. Are you not able to find the right company? Are they exceeding your budget limits? Do you feel you deserve something better? Your search ends here with Syngis Software Development! Our expert developers have extensive experience developing high-quality and flawless softwares within your deadline. Equipped with all the resources required to make impeccable software, the team at Syngis Software Development will exceed your expectations and build you something you deserve. Do not wait any longer; contact us now.