In-house Software Development vs. Outsourcing

When you need a software product, the first thought that should come to your mind is quality. In an extremely competitive market, where a mistake can cost you money or even a company, you can’t afford hiccups. The choice for a great software product development is simple – in-house software development or IT outsourcing. Both have pros and cons; both require a different approach. Which one is best for you?

In a perfect world, there is a perfect solution. In reality, everything comes at a price, everything is faulty. It can also have a learning curve, meaning you can spend months to learn something only to discover the limitations of this specific solution. In-house software development and IT outsourcing of dedicated software teams both have interesting aspects. Only one of them comes on top.

In-house software development

There are few pros of this approach, but none of them seems good when faced with shortcomings.

Pros:

• You have control over the workflow, communications, quality. People are on-site (in COVID times, the remote work is more often a standard). There is an opportunity to monitor everything, talk to each other face-to-face or at the video conferences, explain business goals, challenges, possible bottlenecks. Everything under “one roof”.
• You can limit the risk of a data leak. Since everything is developed in a safe environment, everybody knows everybody, and everything is quite safe. Both the code, the business goals and strategy are easily manageable.
• Same language, and business culture. There’s no need to explain anything; there’s no need to cut through the bias. Even in a multicultural team, the cooperation is easy since everybody can meet face-to-face and speak about even the most complex technical problems over coffee.
• Keeping talents on board. Talents are hard to come by; a shortage of quality software developers can be seen worldwide. You can see it in Germany, Sweden, the United Kingdom, Canada and US – everywhere. Canada is experiencing a serious problem, similar to American ‘Silicon Valley Brain Drain’. By keeping talented programmers on board, you make sure that your software project can be completed without interruptions.
• Limitation of the data leak – true, to some degree. If you choose poorly and outsource to a country that has no standards or has questionable standards at best, the risk could be serious. There are, however, areas where IT outsourcing services are very safe and follow the highest standards. A good example is the European Union, which holds the highest standards of data security (General Data Protection Regulation, known as GDPR in short).

Cons:

The problem with that approach is simple – it works only in theory.

• The control over the project is illusive. It’s directly tight to the nature of your projects, and skill level you have in-house. Monitoring the advancements on your project shouldn’t depend on the environment it’s made in. It’s more about mindset and management skills. Today, in a world of periodical office visits, teleconferences, daily programmers’ meetings, and weekly reports for clients, keeping tabs on a project is not difficult at all. The geographical distance makes no difference, since everything or almost everything – the commits, communications, and paperwork, can be done online.
• Having in-house talents is great, but are they really versatile? Being versatile in a modern software development environment is a natural thing. A software developer should not only be a skilled programmer but also someone who can advise on functionalities. Someone who mastered more than one or two technologies. Poles are a good example. C# or .NET developers from Poland have the multitasking ability. They write clean code and serve the client. Almost anyone can write quality code, following software development patterns, and with appropriately placed comments. Not everyone can go beyond those professional standards to serve the client and deliver results. At CSHARK we have built a team of over 150+ regular and senior .NET developers. They are engaged, skilled, and very communicative. Our clients like to work with them.

Software development outsourcing

A custom software development company can make or break your software product. Programmers can be found anywhere, but only some of them can help you scale your business. Software development is not only about doing a project; it’s also a tool for business scaling. A part of a wider toolset.

Scaling is about:

• Introduction of new processes
• Improvement of old processes
• Digital transformation (both on a hardware and software level)
• New ways of doing business, connecting with customers, etc.

If we accept this approach (and we should), then software development companies suddenly become more than mere code delivery guys. They are a natural partner for helping the company grow through software. When you think about it, the software is everywhere. It drives everything, from computers to beacons in a factory, from shipping tracking software to freeway monitoring. There is a slim chance any company can handle the workload on top of their normal expertise. That’s where software product development services come in.

Pros:

• You save a lot of money. Outsourcing equals no extensive labor costs; you only pay the sum put in the contract. There are established locations full of high-quality software developers. Like Poland, regularly ranking at the top of worldwide software development rankings.
• You save on infrastructure and technology. Amortization of all the money spent on servers, licenses, software and additional security (especially when it comes to break-ins, data leaks and privacy issues) is now the risk of your vendor. A software development partner has to take care of all of that. You are freed from that.
• You get an analysis of the project. The best companies offer more than quality projects. An analysis of your project at the beginning of the cooperation is a good practice. You will know what should be made or fixed.
• You get experts. As I mentioned before, you probably don’t have a wide variety of experts in your company. And that’s normal; nobody can afford nor need a long bench of highly skilled programmers all the time. A software development company is a good choice – no matter the project, no matter the technology, there is someone who can help you. Nearshore programmers work for a company that focuses on core technologies, treating others as an important filling. It also has the ability to hire new talents to new projects, if needed swiftly. That way a good vendor can easily handle any project – its HR operations are efficient.
• You simplify project management. With the best product development services, you get not only skilled developers but also a Testers, Project Manager, Delivery Manager, Scrum Master, and the whole enchilada. You don’t have to think about the details. How it works is up to your partner.
• You have a short time-to-market. When you need to develop a prototype, you have no time to waste. You can do it yourself, but that requires in-house expertise and it’s costly. A time-to-market is essential for any company, especially for startups (or scale-up companies). Usually, they have a limited amount of money and they need immediate results. Outsourcing a prototype to an external company gives you an advantage over the competition. Work on a vertical slice – to capture the imagination of future customers and test your assumptions, work with a software development outsourcing company on this type of prototype. This product will have every major functionality implemented – in a demo version. Very simple, just a proof for an idea. You need someone trusted for that.
• You improve in-house efficiency. If you have programmers, they can focus on less involving tasks and cooperate with external outsourcing team. You can allocate your people’s time and their resources where they are actually needed and let the nearshore partner do the heavy lifting.

Cons:

• Quality control can suffer. When you shift the trust towards the software development company, the shift of quality control is natural. If you don’t find the right software development partner, the worse state of your code is almost inevitable. Unless you find someone that understands the value of methodical testing. Realized through Agile Testing, for example.
• Value can be lost in translation. A cultural fit is an important part of doing business. If your software partner can’t understand your business goals, he can’t help you. If you decide on outsourcing, be sure that you and the company you like are a match. The future of your project depends on the process you take to choose the right software development company.
• The risk of losing the IP. It’s important to choose your software development partner wisely; not every country and company shares the mentality of signing up the non-disclosure agreement (NDA). Not every country is a part of the system, where the intellectual property law is upheld and executed. The European Union is a good example – countries that are in it are bound by the rules, you’re covered. According to the IBM’s ‘Cost of a Data Breach 2019’ report, the average total cost of a data breach is 3.92 million dollars across all industries, with healthcare being the most expensive, having 6.45 million losses. The average side of a data breach is 25,575 records. If you choose the wrong software development partner company, you risk losing money and trust.

Summary

In-house software development is OK but it doesn’t beat software outsourcing. The pros are way too clear and far-reaching for you to ignore. Ask yourself about the value – how important it is, and how much can you spend to get it? With IT outsourcing, you get a lower price and high standards.