In-house vs. Outsourcing for Software Development

Nov 23, 2021

What is the tradeoff between in-house vs. outsourcing for software development? Is it better to outsource onshore or offshore? Here’s what to consider.

Software development walks a notoriously fine line between profitability and bloat. It’s crucial to keep the project on track and under budget. Unfortunately, that puts many businesses in a bind. Either they save money by outsourcing the development halfway around the world to a country with night-and-day differences (literally), or they pay higher labor costs by hiring an onshore team. If they truly want tight control of the product, they’ll need to recruit in-house developers, which cost even more.  

 What is the tradeoff between in-house vs. outsourcing for software development? And is it better to outsource onshore or offshore? These decisions must be made before your product can be built. Here’s what to consider.


Does Your Product Have a Set Scope? 

 If your product is relatively well-defined right out of the gate, it’s easier to outsource, whether onshore or offshore. A software development agency will want a clear scope of work. Because they quote you based on the deliverables you request at the start, don’t expect them to accommodate lots of changes or additional features. 

 That’s why many businesses prefer to develop in-house. When it’s your own team doing the work, it’s easier to keep everyone accountable — and on track. 

 If you still find it cost-prohibitive to recruit, train, and compensate an in-house development team, another option is to find a product development team in another country. The overall labor rate tends to be lower, and depending on how your offshore team is structured, you can make a more flexible arrangement to accommodate shifting project needs.

 How Soon Do You Need Your Minimum Viable Product? 

 Obviously, the sooner you can get your software product to market, the better. Software development agencies will give you a timeline, although this may not suit your schedule. That’s because they have other projects on their docket. If you’re on an accelerated timeline, hiring in-house guarantees you’ll have a dedicated team for the project. 

Outsourcing — especially to an offshore company — also takes longer because communication is delayed. If the developers coding your products are halfway around the world, you may wait a full business day or more for a revision request to be made. Those time zone differences add up! 

That said, in-house development initially takes more time, as you’ll need to recruit, interview, and onboard staffers before they can even start. If they need training, that further extends the timeline. So, it depends somewhat on how many  

How Important are Language and Cultural Elements to Your Product?  

 We’ve all seen software platforms and apps with badly written UX copy, strange navigation, or directional flow that doesn’t jive with our expectations. These are all symptoms of offshore outsourcing, although any outsourcing instantly increases the risk of poorly branded products.  

 These corrections take time to make and can delay your product launch. Many business leaders have eagerly reviewed their custom app coded by Eastern developers — only to discover grammar errors and UX design flaws that are glaringly obvious to Westerners. A tight review process can avoid these issues, but as mentioned, it’s more difficult to maintain open lines of communication when your developers are halfway around the globe. 

The Solution: Nearshore Staff Augmentation 

 To take advantage of outsourcing’s advantages while preserving the benefits of in-house development, consider nearshore staff augmentation. This is the practice of booking skilled developers in a neighboring country, which saves you money while promoting greater collaboration. 

 A nearshore team shares your time zone (or one close to you) and is less likely to introduce major linguistic or cultural barriers into the process. The key word here is staff augmentation: rather than booking an agency with limited time for your project, you are actually expanding your workforce to include qualified developers who are geographically closer to your in-house team. 

 This combination of affordability, quicker timelines, and easier project management can help you get your SaaS product to market sooner.  

The Takeaway 

 A tight project deadline is best handled by outsourcing to an agency, although a shifting scope often requires in-house team, while a tight budget calls for offshore staffing. Get the best benefits of all three with nearshore outsourcing, a hybrid solution that streamlines your software development process while saving valuable time and money.  

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