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Outsourcing vs. In-house Development: Finding Best Way to Build Software

Gone are those times when companies were relying on their internal resources only in various technical tasks implementation. As the world faced globalization, and collaboration & sharing values started to grow, more and more companies moved to outsourcing. What made companies resort to extra help from the outside? Some companies were lacking human resources possessing special knowledge and skills to work on a project, other crews were in need for additional resources with specific knowledge, and the rest were trying to make the development process cheaper and faster.

Today people tend to delegate their tasks to outsourcing companies in many spheres of life & business including accounting, telemarketing, etc. Software development outsourcing has become a very convenient way to subcontract massive and / or urgent issues to companies with ready-to-start staff.  There are thousands of software outsourcing companies located all over the globe, so the hiring companies do have plenty of choices.

Why some companies are doubtful about outsourcing

Reduced costs and availability of the resources are the major advantages of outsourcing. So, why do some companies never outsource? Here are some ideas why some companies give up on the idea of subcontracting their IT development tasks:

  1. Some companies simply have negative outsourcing experience from the past. After delegating the specified responsibility to another crew and receiving negative effect from it, it’s most likely that the company will never resort to outsourcing again, believing that all outsourcing companies share the same working strategy and business approach;
  2. Some companies want to have 100% control over the project and don’t want to let other people from other companies, countries and even continents into the important details. This in most cases concerns the development of innovative products and systems when the non-disclosure means much;
  3. Some companies are afraid of hidden costs outsourcing may bring. These companies are sure that there is no such thing as a free lunch, so they are often put off by unbelievable advantages willing to find the pitfalls;
  4. Some companies are just fully satisfied with their in-house development team. The team is implementing its tasks on time and introduces good work, so there is no need to look for extra help from the outside.

Outsourcing vs. In-house development

So, taking into consideration the profound global experience and feedback from numerous companies that were lucky to obtain qualified help from a 3rd party company, we’d like to provide you with a brief comparison of outsourcing and in-house development pros and cons.

Pros of outsourcing

Improved financial planning, that lets you know the exact cost of the functions and services of the company;

  • Reduced operational and recruitment costs. The necessity to hire individuals is excluded, so besides money-saving there is the advantage of time-saving;
  • Proven expertise. As a rule, the tasks are subcontracted to the vendors who narrowly specialize in a given area or field. The outsourcing company has more options to choose from, starting from the level of experience and finishing with other professional characteristics;
  • Expansion availability. Software outsourcing helps companies expand their activities in the market, enter new market areas through taking the point of production or service delivery closer to their end-users.

Cons of outsourcing

  • Language and cultural barriers. In most cases, companies outsource to companies located in other countries. Still, this disadvantage is not that serious, because the use of the global communication language (English) is well-spread;
  • No ability to meet face to face. Being located on different continents makes regular meetings a hard, though not impossible, task.

The advantages and disadvantages of in-house development are precisely the opposite of the advantages and disadvantages of outsourcing development. Everything (and what is more important – everyone) is at hand because all the developers are located in the same office, so they are able to communicate with no cultural or language boundaries. Sometimes there is a lack of mutual understanding between an outsourcing company and vendor, and as a result, the product developed (or its parts) do not look like what the customer described in the beginning. Finally, in-house development is not necessarily cheaper. Taking into consideration all the taxes issues, in-house development doesn’t guarantee lower costs.

Which strategy is better to build software

There is no right answer to the question above because it all depends on some factors people and companies back on while making such decisions. You’d better choose outsourcing in case of:

  • The insufficient level of proficiency of the on-site developer. Sometimes experts in technology / language are lacking, so the company can resort to outsourcing the task to some other company which has enough experts with the skill set required;
  • The lack of time left before the planned product delivery date. In cases when there is no time which can be spent on the search for an applicable candidate and his integration into the team;
  • The high importance of rapid sharing and collaboration on the project.
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