In-house development vs outsourcing: An ultimate guide for business

The coronavirus pandemic has shaken up not only the medical sector and the global community. It has had an incredible impact on international business, forcing companies to act in new ways. Those rules and concepts that had reigned in the business world until the fall of 2019 have been erased. Now firms, C-level executives, and Heads of IT are facing new challenges that require a fresh approach to solving them.

One of the most significant issues of the last couple of years is in-house development vs outsourcing. The massive digitalization couldn't have passed without a trace in the world, so more and more players on the market are thinking about hiring remote employees or collaborating with third-party partners.

In-house development vs outsourcing: Why the confrontation started

Meet Jim from New York, who has been working for a large American company. His firm is in the healthcare industry and has been around for over ten years. Jim is just a little over 40 years old, and he has been a CTO (Chief Technical Officer) for the last four years. He had a very successful experience working with the in-house development team before COVID-19.

Due to the government's strict restrictions, however, he had to think about other cooperation models with programmers, such as outsourcing. We have prepared this detailed guide to making it easier for Jim to understand the issue and make the right decision.

Link: Planned changes to IT staffing

In this ultimate guide, Jim and other people can find out who will win in the battle of in-house development vs outsourcing and for what reasons. We think it will be an exciting journey for him and other readers of the The Frontend Company blog.

What is in-house development? Its main pros and cons

Most likely, it is already clear from the name, that in-house development (insourcing) is the process when the specialists of your company do the software development. In other words, you hire a team of programmers who come together in the office on weekdays and create the source code for your product. During such cooperation, your company does not need to engage subcontractors and independently copes with the set tasks.

In-house development vs outsourcing: Pros of insourcing

Link: What do managers say about recruitment

In-house development vs outsourcing: Cons of insourcing

In-house development vs outsourcing: Infographic with statistics based on data from Talent.com

In-house development vs outsourcing: Companies that choose insourcing

What is outsourcing? Its main pros and cons

Outsourcing is a model of cooperation using outside resources (talented programmers). A firm that has chosen to grow its project engages specialists with the necessary skill sets from outside the company. Some may hire experts for outsourcing to work remotely in their country (onshore), in nearby countries (nearshore), or on another continent (offshore). The outsourcing company may also take over some business processes or build the application/service architecture from scratch.

In-house development vs outsourcing: Pros of outsourcing

Note: You should know that you should not choose a team based only on an hourly rate or a fixed price, despite the cost savings.

Link: Average developer hourly rate

Link: Most companies are satisfied with outsourcers

In-house development vs outsourcing: Cons of outsourcing

In-house development vs outsourcing: Companies that choose outsourcing

How to work with an outsourcing company for the first time?

Check the mentality in a country where you want to outsource your project: To avoid cultural misunderstandings between you and the programmer recruited, pay attention to the closeness of your cultures. For example, a European way of doing business is much closer to the U.S. than a Southeast Asian or Chinese way of working. Pick countries with which you have a lot in common and similar roots.

Find out which tech stack specialists are the best in a particular country: Before making a partnership, look at the top tech universities in your partner country. What type of technology do universities specialize in? What kind of technology do they teach in technical schools? Also, read the statistics about programmers beforehand.

Take a look at the company's portfolio and the reviews of other clients: Always ask for testimonials and case studies to understand the skills and capabilities of the firm. If the team has done challenging projects or worked on products from your industry - earlier, it is a good sign. Feedback from other partners of the outsourcing company can help evaluate the strengths and weaknesses of the chosen team.

Get to know the team and do a detailed technical interview: Prepare various questions and do a lengthy Q&A session to relieve any doubts about the coders' skills. During the process, assess not only hard skills, but also the devs' interest in the project and their curiosity. Rock stars in programming are deeply interested in the details of a product, its mission, and its goals.

Check out the English level: It is an important point because of its impact on communication directly. Give priority to outsourcing companies whose attention is paid to the developers' English. This way, you will not have a problem describing the task to the specialist, getting their opinion about certain modifications, or getting ideas for the product's improvement.

Find out how the company's management is organized and how the developer's work is controlled: You cannot supervise the development process yourself. For this reason, always be sure to ask your third-party partner what software it uses for this purpose. If the work is uncontrolled, that is not a good thing. A responsible firm usually has a software program that provides time tracking, planning tasks for a week or longer.

Request an estimate of the project and discuss possible difficulties in the working process: The product estimate service is usually free. Ask the company you like to calculate roughly how much their work will cost and why. The more detailed the documents, the more questions you get, the better. It lets you know about possible difficulties at an early stage.

How to avoid risks when moving from in-house development to outsourcing? Pt.1

How to avoid risks when moving from in-house development to outsourcing? Pt.2

After the arguments described above, the question of in-house development vs outsourcing was no longer as pressing for Jim. The experience of other people and our guide allowed him to take the first step and find his perfect outsourcing partner. Do you want not to have any worries about the things that used to annoy you before?

TFC is already helping many of its clients to solve various development-related challenges. Our clients include TraceSafe, Shopify, Leafworks, and more. For years, we've been assisting companies to extend their teams with skilled developers. The programmers of The Frontend Company help to keep the projects growing, provide support to our clients' products, and are deeply involved in the idea generation process.

Thanks to our experience in the outsourcing market, we have built a successful system, which will undoubtedly allow you to use outsourcing opportunities effectively. When you work with a qualified team, choosing in-house development vs outsourcing is no longer a problem.

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