Which Is Better for Software Development? Outsourcing or In-House?

When you decide to develop software or mobile applications for your business, you will face the question: "Should I outsource or keep it in-house?" This is what business schools call a “make vs. buy decision,” and it is something all businesses struggle with.

So what are the factors that determine which decision makes the most sense for your business?

You should OUTSOURCE your software development when...

1. Your software development team is overworked

Software development is the process of defining, conceiving, specifying, designing, programming, documenting, testing, bug fixing, and much more. It requires a high level of focus and dedication to succeed.

Do you have the resources and experience in each field? Are those resources primarily dedicated to keeping your business running, i.e., “putting out fires?” If so, it may be unrealistic to expect them to carve out time to develop a new product.

2. You don’t have the resources yet, but plan to recruit/hire them

Many executives choose this option because they feel that they’d have more control over a product if it were developed in-house. However, if you’re considering this option, have you factored in all the costs and time involved in finding talented resources? Do you have the ability to screen qualified engineers from unqualified ones?  Do you have the budget to recruit top talent from the FAANG (Facebook, Apple, Amazon, Netflix, Google) companies, which pay top dollar?

Many executives underestimate the difficulty in recruiting, managing, and retaining top talent.

3. You don’t have as much control over your team as you wish you did

Maybe you’ve already developed part of your product in-house. However, it didn’t turn out exactly as you’d planned. Or perhaps you planned to complete a project in six months, but it actually took 12.

This happens all the time. Oftentimes, medium to large-sized businesses find themselves locked into routines and habits that do a good job of maintaining their core product. Yet they are inefficient at innovating.

You should keep your development IN-HOUSE when...

1. You have the necessary resources available

If you: a) have team members with the following skills: product definition, project management, user experience design, user interface design, coding, testing, documenting, and systems architecture, and b) those team members have the necessary bandwidth (i.e., they’re not fully deployed on another project), then you are certainly well-positioned to develop in-house.

2. Your resources perform well as a team

Sometimes the most talented people in the world can’t work together. Chemistry is important. Has your team worked together on other projects before? Were those projects successful? Do they get more productive over time?  Are your employees happy, stimulated, and/or satisfied?

If the answer to these questions is yes, then consider developing in-house.

3. You have a culture of technological growth

The advantage of working with an outsourcer is that they live and die by technology. They’ve dedicated their lives and careers to building new things that, to use the cliche, “make the world a better place.” The successful ones are always at the forefront of what’s new in the tech world.

Is that the case in your business? The tech landscape is continuously evolving, and it can be challenging to stay up to date. Is your team ahead of the curve? Do they love technology so much that they dedicate their free time to it?

If so, then you have the right resources to develop in-house.

Conclusion

Running a successful business involves countless make-vs-buy decisions. What should you outsource and what should you do internally? The rule of thumb should be to focus your in-house resources on what your strengths are and outsource everything else.

So next time you are considering a new software project, ask yourself that one question: Is your team the best choice to build it? If not, then you should be looking for an outsourcer who is.

Let us know when you make the decision.

CodeStringers