It was 1989 – the corporate revolution had picked up pace and industries were beginning to taste the initial success. Large enterprises were gaining worldwide recognition while small businesses were slowly seeping into the national markets.
This was the period when mailrooms were a critical part of any organization as they acted as a key component of any communication – within the organization as well as with third parties. And, people working in the mailroom were given utmost importance because they were responsible for maintaining every single piece of paperwork that passes through any employee’s desk.
This was when Peter Drucker, an Austrian-American management consultant, educator, and author, penned down an article – “Sell the Mailroom” – in which he argued that organizations don’t necessarily need an in-house mailroom to run their operations. Sounds strange, right?
While this article was heavily criticized by experts, it did have a certain merit. Instead of hiring people to manage the mailrooms, companies could simply outsource this task to third parties. Not only this would have resulted in effective cost-cutting, but also allowed businesses to reduce the headcount – without compromising productivity. Still, the article managed to become the centerpiece of many debates and was never appreciated by many individuals.
Fast forward to three decades and this debate is still a hot topic in the market. Today, instead of mailroom tasks, business owners are struggling to decide whether it’s suitable to hire remote developers for IT-related tasks – mainly software development. While some businesses have relished the benefits of partnering with an outsourcing partner, others have had unsatisfactory experiences that have turned them against the whole concept of “outsourcing”.
As a result, companies often struggle to decide whether an outsourcing partner could benefit their business model or not. If you are struggling with the same decision, continue reading. In this guide, we are going to compare the pros and cons of both in-house and outsourced development and what factors you should consider to make the right decision.
In-House Development – Is It a Reliable Option in 2022?
In layman’s terms, in-house development refers to the process of hiring a team of designers, developers, QA experts on a monthly payroll. In this case, the team usually operates from your own office. One of the major reasons why businesses choose in-house development is higher reliability. As opposed to an outsourcing partner, the in-house development team works under your supervision all the time.
It’s relatively easier to communicate with the team and ensure that everything is going as planned. However, hiring an in-house development team has its fair share of disadvantages. For instance, finding local talent that could understand your vision and meet the desired objectives is not a cakewalk.
In many cases, it takes months to hire an entire team, which can delay your final product deployment. Not to mention, managing a team of in-house designers, developers, and QA experts is expensive. Apart from the monthly salaries, you’ll also have to manage other expenses such as office rent, taxes, and miscellaneous charges as daily running costs.
Now, if you run a large enterprise, you can easily manage these expenses. But, for startups and small businesses, bearing such hefty expenses can take a toll on their pocket. That’s why such businesses often stay away from executing in-house development.
Pros and Cons of In-House Development
- When you hire an in-house development team, they only focus on your project. Since they don’t have to handle multiple clients, an in-house team can easily deliver full productivity and avoid unexpected blunders.
- An in-house team usually sits in the safe office premises. This ensures effective communication between different teams and allows everyone to work in synergy.
- As a business owner, you have complete control over an in-house development team and you can make them undergo dedicated training programs to understand the business objectives and how to implement different development technologies to achieve them.
- The on-site presence of an in-house development team also ensures immediate response to unexpected bugs and roadblocks.
- Hiring local talent is never an easy process. It can take several weeks to find the right members for the team. And, when you have to interview hundreds of candidates, you are less likely to devote your focus to core business objectives.
- Managing an in-house development team is more expensive than joining hands with an outsourcing team. You have to pay monthly salaries, rents, equipment charges, and other costs to ensure smooth operations. When put together, these small expenses can easily turn into a hefty amount and startups/small businesses may not have the required financial assets to bear them.
- The development landscape is evolving every day. New technologies get introduced every month and it’s always necessary to stay on top of them to build digital solutions that stay in compliance with the current market standards. Now, when you have an in-house development team, it’ll be your responsibility to familiarize everyone with the latest technologies and if required, pay for their training sessions too.
Who Could Benefit from In-House Development
So, who should consider hiring an in-house development team? The answer is pretty simple – large enterprises with enough budget to hire and manage in-house talent. If you have the required funds to manage an in-house team for several months, you can look for a local development team. But, if you have a limited budget and don’t want to go through the hassle of interviewing several candidates, you may want to consider hiring an outsourcing partner.
Outsourcing Software Development Overseas
Now, let’s jump to the other side of the table! Working with an outsourcing partner means hiring a third-party organization to manage the entire development process. Usually, businesses prefer hiring an overseas development company – because their development rates are comparatively lower than native development agencies.
Outsourcing software development to a different company brings forth a multitude of advantages. As opposed to in-house development, hiring an outsourcing partner is less expensive. Since you don’t have to pay for any running costs or unnecessary miscellaneous expenses, the overall cost to work with an outsourcing development partner is pocket-friendly.
According to a Statista report, the revenue of the IT outsourcing industry is projected to show an annual growth rate (CAGR) of 8.80% and touch the $551,956.3m benchmark by 2026. These numbers are a clear indication that the IT outsourcing market is growing as many businesses are understanding the potential benefits of outsourcing software development to third parties.
Why Some Companies are Against Outsourcing
Despite its endless benefits, many companies do not want to get involved with an outsourcing partner whatsoever. The truth is many business owners have had bad experiences while working with an overseas development team.
This generally happens because not every overseas development company has the required expertise to turn your idea into a working digital solution. They either follow conventional development practices or aren’t familiar with the latest development trends. As a result, they fail to deliver the expected results. Of course, if you are planning to hire an outsourcing partner, you should stay away from such organizations. Not only will they waste your time and money, but also put your brand security at risk.
Fortunately, not all outsourcing partners are a waste of money either. If you scrutinize the web properly and do your due diligence, you can also find a reliable development company to work as your outsourcing partner. Of course, the hunt wouldn’t be easy and you might have to work with an outside consultant to find a team that could turn your ideas into reality.
Pros and Cons of Outsourcing Software Development
Like an in-house development team, outsourcing software development to a third party also has its own advantages and disadvantages. Before signing up with a third-party outsourcing development firm, it would be better to evaluate these merits & demerits. If anything, it’ll help you decide if an outsourcing partner is suitable for your business model or not.
- First and foremost, an outsourcing partner won’t burn a hole in your pocket. In fact, 70% of the businesses choose to outsource for cost reduction. You can outsource the development task to a third-party organization in a different country. Such development firms have comparatively lower development rates and can deliver the same (in some cases, “better”) productivity than local developers.
- When you hire an outsourcing partner, you don’t have to go through the tedious process of interviewing each candidate individually. These companies already follow a time-tested approach to interview and hire the right talent. All you have to do is share your business requirements and the team will start implementing the best practices to build a working digital solution.
- When you are looking for an outsourcing agency, you are not limited to your local developers only. You can search for an outsourcing partner across countries and hire experts who have the potential to turn your idea into reality.
- Fast time-to-market is another advantage of working with an outsourcing development company. Offshore companies usually follow time-tested development practices and have years of experience working round the clock. They are well-familiar with practices that result in timely deliveries.
- Unlike an in-house development team, you don’t have full control over an outsourcing partner. Due to different time zones, it’s always challenging to communicate with the outsourcing team and get instant feedback. Although some companies do offer round-the-clock support and can respond to your queries right away.
- In some cases, outsourcing companies manage multiple client projects simultaneously. If that’s the case, they might not devote their 100% focus on your project, resulting in compromised productivity.
When Should You Hire an Outsourcing Partner
So, which companies should join hands with an outsourcing partner? If you own a startup or a small business and don’t have millions of dollars to spend on your business’ technical transformation, it would be beneficial to look for outsourcing development companies. But, be extra careful while scrutinizing the web as the market is stacked with unreliable development firms that do not have any idea how to devise a customer-centric digital solution. Hiring a consultant beforehand might make your job easier as they are experienced in interviewing technical partners.
In-House vs Outsourcing Software Development – Final Words
Both in-house development and hiring an outsourcing technical partner have their own set of advantages and demerits. If you want to make the right decision, you have to first evaluate your business goals and then, decide who would be able to meet them while ensuring the utmost quality. Of course, if you are planning to cut down development costs and expect fast time-to-market, an outsourcing partner will be the right choice for your business.
For more than 12 years, we have been working as an outsourcing partner with global ventures. We have a team of dedicated developers who specialize in modern-day technologies and implement practices that could bring your idea to life and put your brand on the digital landscape. Here are some of the advantages of hiring RV Technologies as your development partner:
- Dedicated teams working on your project only. Even though we work with multiple partners, RV Technologies assign individual teams to each project to deliver 100% quality. In any case, our experts do not work on more than one project and devote their complete focus to build a custom digital solution for your brand.
- We understand that each business doesn’t have millions of dollars to spend on web or mobile app development. That’s why we offer flexible engagement models. Based on your business goals, you can decide the right engagement model and get your digital solution at a pocket-friendly price.
- Our team also offers complete post-deployment support to make any changes to the code so that it can deliver a bug-free user experience to your end customers.