Outsourced vs. In-House Software Development: Finding the Right Solution for Your Needs

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Outsourced vs. In-House Software Development: Finding the Right Solution for Your Needs

While pre-built, mass-produced software exists, it is often insufficient for business needs. Custom software delivers the specific functionality, security, and other benefits needed. Increasingly, outsourced software development is the best path forward.

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Without the right tools, no business can succeed. Today, those tools are increasingly digital in nature – software does everything from informing your marketing decisions to helping ensure that you can provide outstanding customer support. In many cases, the software can be purchased “out of the box,” so to speak – developed for a broad range of companies to use and benefit from. Microsoft Office and Google Suite are two good examples of this type of software.

However, pre-built software is not always the right choice. Sometimes, there is simply nothing extant that offers the functionality and features needed. In other cases, you might require more control over a process than what is afforded by mass-produced software, or you could need a greater security for proprietary information. Whatever the case, custom software is the answer.

The challenge comes in developing software. Do you go the in-house route, or do you choose an outsourced software development company? The situation is quite murky, and finding the right solution for your needs will require a better understanding of both in-house development and outsourced software development services.

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In-House Outsourcing: What It Is and What You Should Know

In-house processes are the standard way you go about handling things like accounting, payroll, etc. The chances are good that you hold some IT processes in-house, too, whether that’s provisioning workstations, dealing with server maintenance, or something else. In-house software development is no different and is simply:

The process of developing software using your existing IT resources, including human capital.

From that, we can already glimpse some potential problems with this route, but we will delve deeper before we talk about those. 

The Benefits of In-House Development

In-house software development brings with it some pretty substantial benefits, including the following:

  • Control: You have complete and total control over all aspects of the project, from ideation and design through rollout and maintenance. This is why some companies choose to go the in-house route, simply because of their projects’ sensitive nature and/or the information contained in or accessed by the software. 
  • Team: Going the in-house route also allows you to build your development team. Again, that puts you in the driver’s seat and gives you complete control over who you hire, the skills you seek out, the expertise you require in a candidate, and more.
  • Communication: In-house software development means fast, accurate contact (in most instances). Also, because the developers are part of your organization, they better grasp your culture, internal processes, the nature of the project’s audience, and other nuances.

Those are some pretty significant benefits. However, they are often more than offset by the drawbacks, challenges, and limitations of in-house software development.

The Drawbacks and Complications of In-House Development

  • Time and Cost: when you go the in-house software development route, you control the entire team’s vetting and hiring. That can take a lot of time and effort, and there’s no guarantee that you’ll even find high-quality candidates in your area with the required skills, knowledge, and experience.
  • Ongoing Costs: Hiring a team of software developers is no small commitment, not just because of the cost of hiring and onboarding but the ongoing costs such a team will represent. You have to consider their hourly rate or salary; the benefits offered, the cost of taxes, and much more. You may also be on the hook for the costs of professional continuing education (CE) to maintain certifications or licensure.
  • Flexibility: Many software development professionals specialize in a particular area or range of areas. That may be fine for your current project – desirable, even. However, what happens down the road when you have a project that requires a different area of knowledge? You can choose to invest in retraining, go through the vetting and hiring process again, or hire an outside team to help.

As you can see, there are some considerable benefits to going the in-house software development route. However, there are also major drawbacks, and for many organizations, those are dealbreakers. 

The Case for Outsourced Software Development: Critical Considerations in Your Decision

Now we come to the second option: outsourced software development. Again, this is relatively self-explanatory and involves finding a trusted third party to handle your software development needs, similar to outsourcing other business processes. Like going the in-house route, there are pros and cons to understand here before deciding one way or the other.

Advantages of Choosing an Outsourced Software Provider

While in-house development offers some compelling arguments, the benefits found going the outsourced software development route are often even more significant and include the following:

  • Lower Costs: With an outsourced software developer, you can control your costs in profound ways. You eliminate the costs of vetting and hiring, you cut out the costs of bringing new employees aboard, and you avoid the prospect of paying for continuing education. In fact, when you go the nearshoring route, you can leverage the lower cost of living in areas like Latin America to get access to top 5% talent at lower rates than you would pay for the same professionals in the US.
  • Scalability: When you hire an in-house software development team, the result is pretty inflexible. However, when you go the outsourced route, you get incredible flexibility that allows you to scale up or down as your needs change. Need simple staff augmentation? No problem. Want to outsource an entire project? That’s possible, too. Need a permanent team to act as your full-time IT department? The right partner will make that happen.
  • Talent Pool: As we discussed above, finding talent can be challenging in its own right. With the right outsourced software development company, you can gain access to a much deeper talent pool than would otherwise be possible. This helps ensure that you get the best talent for your project, rather than settling for a close second and then attempting to upskill your in-house team members.
  • Improved Efficiency: When you need software developed, time and efficiency are critical constraints. Working with an outsource software developer ensures that you get the efficiency you need. It also prevents you from wasting valuable resources in the process. 

The benefits of outsourced software development are undoubtedly considerable. However, there are a few disadvantages to discuss.

Outsourced Development Disadvantages

While there are many things to recommend going the outsourced software development route, a few disadvantages must also be considered.

  • Communication Considerations: When you outsource your software development needs, communication should be a major consideration. The farther afield you look, the more difficulties you’ll encounter. Language barriers, cultural differences, time zone issues, and more will rear their heads, complicating the situation. However, there are also problems with looking closer to home for an outsource partner, namely the price you’ll pay for comparable talent. 
  • Security Considerations: Most software development projects require that you share at least some sensitive information with the development company. That can cause security concerns if the company is not compliant with industry rules, government regulations, and data security best practices. Nondisclosure agreements, cybersecurity protocols, and even physical barriers must be discussed with any outsourcing partner before signing a contract.

In a head-to-head comparison, outsourcing software development is the better choice for many organizations. However, you must choose the right outsourcing model to enjoy the full range of benefits and avoid any disadvantages.

Choosing the Right Outsourcing Option

You will find three outsourcing models in use today – onshoring, nearshoring, and offshoring. While they share some similarities, they are far from interchangeable. 

  • Onshoring: The most expensive of the three options, onshoring involves outsourcing your software development needs to a company in your country. This method can also be the most limiting in terms of access to talent.
  • Nearshoring: This method connects you with providers in nearby geographic areas, such as Latin America. It is more affordable and more flexible than onshoring, and it connects you with a deeper talent pool, as well.
  • Offshoring: With this model, you would outsource to a provider in a country located very far away, such as India. While it is the most affordable, it also comes with the most significant risk of miscommunication and challenges due to time zone and cultural differences.

While all three outsourcing models offer value, nearshoring is generally the better choice for organizations seeking to minimize costs while ensuring they have access to top 5% talent

Why Work with Softrizon?

At Softrizon, we leverage the deep talent pools of Latin America to connect you with software development professionals capable of handling virtually any project. Whether you’re interested in limited staff augmentation, a one-off project, or outsourcing all your IT needs, we can help. We follow a nearshoring model that minimizes communication challenges and completely eliminates language barriers and cultural differences. The result? A scalable solution that perfectly fits your needs and project requirements. Contact us today to schedule a consultation

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