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Software Development - Offshore Outsourcing vs In-House Developers Team

Choosing Between Software Outsourcing Company vs In-House Developers Team

In the recent years, outsourcing has become an established trend and many organizations including many startups or enterprises are often stuck in a dilemma of choosing either outsourcing or forming own in-house team for their software development projects. Each approach has its own pros, and cons. Carefully evaluating all the influencing factors will help your businesses avoid the software development failures.

To help you make important businesses decision regarding outsourcing, we have outlined in this article the main aspects that will help make it clear for you to find out which option works best and is suitable for your business.

Let’s consider the following key points:

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Development Costs

It could be said that software development cost is the critical factor when it comes down to deciding whether to outsource or developing in-house. So, first and foremost, let’s carefully breakdown the costs of outsourcing vs in-house software development:

Outsourcing Cost vs Hiring Costs

Forming a team of full-time software developers can be quite expensive. Besides, due to shortage of skilled IT professionals, it will take a lot of time and resources to find the right candidates. Additionally, companies will need to incur other costs for the hiring process such as HR, as well as other costs such as personnel equipment, software tools cost as and training cost.

Selecting an offshore outsourcing company, on the contrary, is not exactly a difficult or challenging task. All that is required of you is to shortlist them, get proposals, finalize after going through discussion as well as checking reviews, ratings and then contracting.

Performance and Quality Standard

On an average, in the US, hiring an experienced software developer can cost you around $79,000 annually [1] - but, outsourcing to an offshore software company provide you access to all the needed software services at a much lower price. More importantly, the in-house developers’ salary expenses will incur even if their performance is not up to standard but with offshore IT company, they will provide you quality services as agreed based on contractual obligations. In addition, outsourcing project will only last for a certain duration. When the project is over, companies no longer has to pay for the development costs.

Project Scope and Requirement

Every software development project is different and has its own specific set of requirements. So, for each different project, you will need dedicated team of developers with the suitable skills and experience.

Outsourcing to offshore companies gives you the opportunity to tap into a large pool of IT talents that possess broad knowledge and specialties and able to work on a range of many software development projects with complex requirements. Working on various projects in many industries, the offshore team of developers have gained business insights with broad industry knowledge thus able to provide custom made software solutions meeting all of your business requirements. All you need to do is to look for a reliable outsourcing company to take advantage of the dedicated resources that makes development scalable.

Industry Knowledge

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As for in-house development team, you need to hire the right candidates who are committed to invest their time and passion into the project.  One advantage of being in the same company for a long enough time is that developers become industry experts, thus taking less time to implement new features and/or fixing the errors, and bugs of your software system. Outsourcing companies that do not necessarily have special knowledge of the specific industry your company operates in might take longer to carry out the same tasks. However, as mentioned above, it will take a lot of time and resources to attract and retain IT talents for any company.

Team and Project Management

From the beginning of a project to delivery, everything is carried out differently in outsource and in-house software development team.

With an in-house team, you know exactly about the skills and experience of each developers and thus can allocate tasks to the most suitable person. However, it is not entirely possible with outsourcing, you will have to rely on the outsourcing company and/or doing remote interview with developers (e.g. via phone, video conference etc.) to assess their skills and allocate tasks to them accordingly.

Furthermore, it is easier to manage and communicate with in-house developers, as well as collaborating between your own team thus removes all communication and cultural barriers. With offshore outsourcing, due to time-zone and geographical difference, it is a bit more difficult and may affect quality and effectiveness of communication as well as project management. However, by using the right tool for project management (e.g. JIRA, basecamp etc.), all these management and communications difficulties can be overcome quite easily.

Software Testing & QA (Quality Assurance) and Delivery

Testing/QA is crucial to any software development project, and outsourcing provides advantage in this regard. Usually, software development companies already have devoted and independent team of experienced testers and QA to test and evaluate the product throughout the development process. Following the rigorous procedures of software testing, the project will need to undergo various phases of testing including functional testing, usability testing, performance testing and more. 

Going with in-house direction, companies will have to hire additional experienced testers in addition to developers as required of the projects. Of course, neither in-house team nor outsourcing company can ensure the project will be completed 100% according to the requirements. However, if outsourcing Development Company fails to deliver the final products as expected, there will be a penalty and/or withholding of payment. Thus, with outsourcing, you only pay if there is results, unlike the in-house option where companies might still have to pay regardless of result.

Conclusion

As we know, both options provide benefits as well as disadvantages. However, choosing a reliable software outsourcing company can be a smart strategic business decision as such company could be an all in one IT solution provider. It will be a suitable option when your business needs to save costs, time and get all the tailored-made software services in one place. Software outsourcing companies are readily available at your need and would deliver quality results on-time according to set deadlines.

TP&P Technology, as a leading software outsourcing company in Vietnam, provide best-in-class software development solutions for many clients of all size. Contact us today at: info@tpptechnology.com to know more about our services.

References:

  1. https://www.glassdoor.com/Salaries/software-developer-salary-SRCH_KO0,18.htm