In house development vs outsourcing - how to decide?

Let's define the main difference between In house development and outsourcing.

In-house software development involves using the skills of your internal team to create your software. IT Outsourcing involves working with a third-party provider with specialist skills to develop your project quickly and efficiently.

Let's compare these two approaches in web application development:

Time to recruit

On average, it takes around 30-60 business days to recruit an in-house developer, and you have to take on recruitment-related expenses. 

It takes about 1-2 weeks to find an outsourcing software development company (depends on requirements and engagement of your project). The biggest expense here is related to your time.

Cost of development

The average European developer’s salary oscillates around €70K (annually). In the United States, according to Glassdoor, it’s around $90-$120K.

Additional costs increase this number by almos 2.5 times. Of course, these costs can pay off in time (especially while software will be the core of your business).

The average rate of a WEB developer of an outsourcing IT company is $40-70 per hour (in Europe & the USA, the rate depends on the country). Any additional costs are minimal.

Expertise & availability

The number of developers working locally is limited. The level of experience is highly dependent on the person. Your location is also the key here.

Outsourcing grants access to a global pool of talents. Companies are more likely to have extensive experience with various projects, which will definitely affect the development time and quality of the web application. Outsourcing providers with experience and talents will offer higher rates.

Flexibility of scaling

Hiring and firing php engineers is definitely not an easy task, and it consumes a lot of time. Some skills are almost impossible to find locally. Also, it can be hard to find developers eager to join short-term projects. Because experienced developers are interested in stable and long-term projects, developers have a very negative attitude towards regular job changes.

Outsourcing to a software and web development company resembles an on-demand service – you can adjust the contract freely. The flexibility of scaling is one of the biggest advantages of outsourcing.

Speed of development

The speed of building things in-house is limited by the number of people on board and time to recruit. 

Temporary teams can be quickly set up with outsourcing service, which might translate into faster development. 

Communication

Face-to-face communication is smoother and easier, but more prone to de-focusing and unnecessary chit-chat. In-house development ensures better language and cultural fit.

Online communication creates more friction and is less natural but limits distractions. 

Management

Onboarding in-house employees requires an introduction and training. It takes time and effort but is very rewarding. You need a manager to manage the team. With an in-house team, there will be no time zone differences.

Outsourcing teams have experience in getting onboard quickly, are self-organized and independent. Finding an engaged partner may take some time.

Security

Both solutions require Intellectual Property protection measures.

Software houses are usually more anxious about neglecting security than single developers.

Building an in house team might distract you from the core business

You need to choose between investing 100% of your time and effort into the core business activities and spending a part of those resources on building and managing a WEB development team. 

If WEB application developmet is a core of your business, time and money investment may pay off. Otherwise, consider that carefully.