Outsourcing vs in-house software development
By: Anna Choma
In order to expand, today’s businesses need to make important decisions regarding their operational and strategic agility and technology plays a big part in ensuring they can act competitively. One of these decisions may be choosing whether to start software development in-house or look for an outsourcing partner. We have compiled for you a comparison of both ways in terms of such areas as organizational culture, talent pool, confidentiality, communication, risk control and projects’ price.
Organisational culture
In house development
Communication styles can heavily affect how our relationships function and how cooperation develops. Considering company values while developing projects allows maintaining employees engagement which has a positive contribution to company financial effectiveness.
Outsourcing
Developing projects with the outsourcing partner might bring a risk of cultural changes. However choosing partners whose culture, as well as work ethics, are very similar to yours allows you to experience far less, if any, uncomfortable situations and misunderstandings.
Talent pool
In house development
The decision to develop the product in-house is usually proceeded by looking for specialists, preferably ones who not only feel comfortable in programming, but also are on top of their fields. However, hiring specialists for the in-house team often isn’t cheap or quick, especially when you need a myriad of different skills in your project.
Outsourcing
Bearing in mind the increasing IT talent shortage and constantly growing IT recruitment and employment costs, outsourcing allows you to simultaneously decrease expenses, save time and bring years of experience to the project right away.
Confidentiality
In house development
There is some information that should never leave the proverbial four walls of the company. The disclosure of sensitive information can lead to a loss not only financial stability but also partner trust and loyalty.
Outsourcing
It is crucial to protect the confidential information of your organisation, especially when choosing an IT partner for software development. In order to introduce appropriate information security measures, you need a well-drafted, proven and reliable Non-Disclosure Agreement (NDA). Thanks to an NDA, you can be sure the other party is treating your business information in strict confidentiality, as you have introduced appropriate legal measures that grant protection.
Communication
In house development
Your own employees will have worked for you for a while now which means they understand the strategy and the wider context of your business. Additionally, the vision and the development usually take place within the same office, so the reaction time is not only faster when something goes wrong, but the process is also under constant upkeep.
Outsourcing
Sometimes when vision and the development take place within the same office, it might limit the ability to think outside the box. When establishing a partnership with the outsourcing provider plan releases, milestones and phases. Development teams use various metrics such as velocity/capacity in order to track and plan progress accordingly. Also, using historic data allows for more precise planning that fits the business needs.
Control
In house development
Since your in-house team develops the product, you can regularly check if it fits your needs and control its functionalities. You can choose the technology and methodology, eliminating the need of looking for a partner who ticks all your boxes.
Outsourcing
Contracts are extremely important in IT outsourcing as they give both parties a sense of control over their partnership and also… Well-defined contracts in themselves act as means of minimising risks of outsourcing during the further stages of the outsourcing lifecycle – project implementation, its monitoring, and closure, or handover to another supplier.
Project’s Price
In house development
Development of a product is similar to building a house. You never know what may come up or what may go wrong. Software development may also be full of surprises – extra costs can occur or completing the project can take longer than expected.
Outsourcing
When your project is being developed with the outsourcing partner you can share the price risk with him. Choosing the right type of contract, e.g. fixed price, frequent communication and being committed to the project are the very things that can work against any fears and finish the project in a budget.
