The tides are shifting in the work world. In 2021, statistics show that 36% of workers now participate in the “gig economy.” According to Aptude, 300,000 jobs are now outsourced annually.
Yet, even with the growing popularity of freelancing and outsourcing, leaders are still split on whether having an in-house team for projects is better. Some of the most successful companies, like Amazon and Paypal, depend on their in-house teams. Despite that, 66% of large companies including Google and Slack would say, “Outsource your project.”
So what will it be for your software project? Will you invest in a department to deliver your company’s products, or will you find a reputable team outside your walls?
To make your decision more informed, if not easier, this guide will outline the positives and negatives of both outsourcing and hiring an in-house team.
Pros of In-House Development
When companies decide on their next big project, their minds often automatically turn to employees they already have. It makes sense: being able to take advantage of the talent that’s already yours is easier and lowers costs. But what happens when that talent isn’t there?
In response, companies will turn towards a hiring process. They’ll want to build an in-house team that can tackle their projects within their walls. There are quite a few positive and negative aspects to this decision.
Building a Culture
Hiring an in-house team means being in full control of the culture. By culture, we mean how the team works together and how they fit into your company. Hiring freelancers and teams from other companies can be scary because you’re not quite sure of the way they work and how they’ll treat your project in comparison to others.
An in-house team often feels like the safer choice because you can be certain that your employees will be devoted to your company’s success. They’ll be participating full-time in the project and be more connected to how the project fits into your company’s long-term goals and values.
When many companies were forced to suddenly work remotely, some of the biggest complaints had to do with a loss of the social aspect of work and difficulties with communicating. Employees felt the loss of being able to stop people’s officers or look over a few feet to ask a quick question or bond with their coworkers.
Having an in-house team means being able to access these employees quickly and easily. They work within the building and devote their full workdays to your company. They can also more easily integrate themselves into the social environment, creating an easier flow of ideas.
Quickly Change Directions
When you outsource, you could be waiting for a meeting with the team to discuss issues or concerns. When you have an in-house team, they’re always there to speak with you about concerns and can immediately change directions. You’re in full control of their schedule.
Cons of Software Development In-House
Having a team completely at your disposal satisfies a lot of companies’ need for control over their projects. This full control, however, comes at a hefty price. It will be up to you to determine whether spending the time and money on an in-house team is worth both the risks and rewards.
It should be no surprise that hiring full-time employees is a much more expensive endeavor than paying for an outside service. Hiring employees is not only costly, to begin with, but also incurs long-term expenses.
You will need to pay recruiters and human resources employees to find, interview, and onboard new employees. You’ll also have to commit to paying the full salaries of all the employees you need. These new hires won’t just need salaries, but benefits as well.
You’ll have to offer PTO and retirement options, among other things. You’ll also have to pay for the extra overhead expenses for the space and energy each employee will take up in your office.
Time Spent Finding the Right Hires
While having an in-house team can expedite communication with your talent and help switch directions quicker, it takes time to build this team. If you were hoping to get your project started soon, then hiring an in-house team might not be for you. When you’re searching for the right hires, a lot of your resources will go towards not only finding good talent but making sure that employee fits your culture.
Accruing a good amount of applications for your roles and interviewing can take months. Once the employees are hired, you’ll have to wait for them to start the job and wait even longer for them to be trained and settled. Outsourcing the projects means starting almost immediately.
Risk of Losing Valuable Employees
It might not occur to you right away, but there’s an added risk with gaining a team devoted to your company. Spending time and money on full-time employees also means trusting them to stay loyal and keep their talents with the company. If one of your employees leaves the company, there is no one there to step up and replace them.
With outsourcing, you’re paying another company to handle its employees and turnover rates. It is their problem to assign talent to your project and replace talent if something happens. It will not cost you any more time and money to find new talent, hire, and train them.
Reasons to Outsource Development
Now that you’ve seen the big picture when it comes to hiring an in-house team, you should compare it to outsourcing software development. If you’re looking to begin your project immediately with the best talent and not worry about extensive costs, this option is for you.
As we discussed, outsourcing your project instead of hiring an in-house team means not having to worry about salaries, benefits, and overhead costs. Outsourcing means hiring another company to worry about their employees while you reap the benefits of their talent.
In addition, outsourcing means you can choose a company that offers the best plans for your budget. You can shop around to find an agency that offers reasonable prices for the project you need instead of hiring a team with perpetual expenses.
You’ll be able to pay money for the project and then stop paying once the project is completed. You won’t have an in-house team that continues to exist and cost you money.
If you ever need to switch from outsourcing to in-house, you can easily do so. Switching from in-house to outsourcing means laying off an entire team of people.
Easier to Find Talent
Software development is ramping up, and yet the amount of software engineers is insufficient. The accelerated demand combined with low supply means you’ll be fighting an uphill battle.
Even if you can attract a good pool of talent, it’s possible that you won’t be able to find an expert in the specialty you require. Your project might require expertise in specific software that no one in your area has mastered. The added issue is that if you are requiring your new talent to work in the office, you’ll have to require talent to move or only hire locals.
Outsourcing to an agency means sharing talent. These agencies have put together large teams of talent with all types of specialties, and these experts can work on multiple projects. This means that hiring someone to do a project doesn’t completely pull them out of availability for other projects.
The burden of finding the right talent will fall on the agency you hire rather than you, making it much easier to get the talent you require.
Having an in-house team might mean you have immediate access to them, but what happens when a change in your project means a change in your team? It is much more difficult to change the dynamics of your team to fit your project’s new needs when you depend on an in-house department.
Outsourcing means you can rely on an agency’s wide pool of talent and easily scale your project whenever you need. You won’t have to go through the process of hiring more employees. Instead, you’ll work with the agency to alter your project and price to fit your needs immediately.
They’ll be able to add a new team member right away or switch out team members if different expertise is required.
Get to the End Product Faster
By outsourcing, you are paying for a project, not an in-house team. You also aren’t spending any more time and effort outside of getting the project done. Not having to recruit employees or make adjustments to your team means your project will get done much faster.
If you need to speed up or slow down a project, the agency you hire will work with you and deliver immediate changes to your deadlines and team.
When you outsource development projects, you’re getting higher productivity, more efficiency, and assured quality at the same time as you’re enjoying lower costs.
Cons of Outsourcing Software Development
Outsourcing your project has a lot of benefits, but it’s good to be aware of some of the negatives. If in-house teams weren’t a good option, some of the biggest companies wouldn’t be using them. It’s important to understand that some companies choose in-house teams because it better suits their vision and needs.
Less Accessible Communication
A lot of leaders prefer an in-house team because they prefer immediate access to their teams. Having a team working in the same office means quicker communication with them. Hiring an agency means relying on a team that doesn’t work within your office.
There are also some other concerns you might have. The agency might work in a different time zone, for example, making it a bit harder to schedule meetings with them. You might also worry that they have too many other projects and meetings to schedule you in.
Thankfully, these agencies understand the concerns and difficulties you face. Because it is their livelihood, they will have solutions to these issues to address your every concern. They will have a set workflow and policies for communicating with them so that they can take care of you and your project promptly.
Especially for more sensitive projects, you might be concerned that outsourcing puts your intellectual property and security at risk. While in-house employees depend on the success of your company and face the consequences if they break your trust, agencies might have less accountability.
To address this, you must research agencies thoroughly and come to a mutual ground of trust. You won’t have full control over the development process or face-to-face communication. It is up to you to weigh the risks against the benefits.
To protect yourself, you should draw up an NDA to be signed at the beginning of the project. This ensures that the agency and its talent cannot lay claim to your intellectual property in any way.
In-House Team or Outsourcing Your Project?
Both options have their positives and negatives, so you’ll need to think about what your priorities are and take stock of your resources. You might be wondering if the size of your company matters, but in truth, it doesn’t. The size of your company does not matter as much as your workflow preferences and the complexity of your project.
A quarter of small businesses now outsource their projects so that they can increase their efficiency. Bringing on more employees can often be unattainable for smaller businesses, even when they need more talent to take over their growing workloads. Most larger companies choose to outsource, with the leading reason that it reduces costs.
Overall, if you don’t have the time or money to invest in building and maintaining an in-house team, outsourcing is for you.
Outsource Your Development Project
If you’ve decided that outsourcing is right for your company, Nizek builds quality tailor-made software with unique code. We partner with you to learn your vision and turn your ideas into reality. We even have an in-house quality assurance team that ensures perfection every step of the way.
Get software development with your end-user in mind. Start your project with Nizek by contacting us now!