While larger companies generally have the budgets to build a software development team and continuously expand upon it through training and new hires, the average company doesn’t have the same luxury. With that said, IT outsourcing is a growing industry and there are plenty of pros and cons.
Here are five reasons a company might use outsourcing instead of in-house software development:
- Directly accessible talent pool. Expand your talent pool with direct access to a global source of talented developers.
- Simplified hiring process. Skip the hiring and onboarding process by working with experienced specialists.
- Two-way scalability. Add to your team as needed and release developers as they finish their duties.
- Done-for-you management. Free up your time for other company aspects.
- The power to augment. Augment your team's existing expertise with outsourced developers.
In this article, we'll explore the various challenges and benefits of outsourcing development, as well as what you should do to ensure that your project is secure and protected.
Table of Contents
- What Is In-house Software Development?
- Why Do Companies Outsource Software Development?
- Disadvantages of Outsourcing
What Is In-House Software Development?
In-house software development can be alluring, as it means you have full control over your development project. Since you control who you hire, who’s working on what, and how tasks are delegated amongst your team, in-house software development lets you optimize your workflow and make the most of the skills and knowledge of each developer at your company.
The obvious downside of in-house software development is that it’s complex and costly. If you don't already have a well-balanced team of full-time or part-time developers at your disposal, you’re going to have to assemble one that has the skills necessary to execute your upcoming project. Unless you have ongoing software needs and an effectively monetized company, in-house development is rarely cost-effective.
Fortunately, with modern tools, you could reduce your development spending altogether by choosing a no-code solution. Even if you lack an in-house software development team, you can still build your ETL pipeline with no outsourcing at all using CDC and reverse ETL platforms.
Why Do Companies Outsource Software Development?
Whether it’s product, web, or app development, companies always want to achieve the highest quality end product while reducing time-to-market. Ultimately, working faster without compromising quality means working efficiently, and the most efficient team members are those who specialize in the specific coding language or functionality you’re working with at any given time.
The thing about hiring specialists is that it’s very expensive to build out an in-house development team when you’re trying to fill so many roles. That’s why most companies that have an in-house team end up hiring master generalists who can take on as many roles in the development process as possible, although they may not be the most efficient for any given task. This trade-off is one of the biggest cons of in-house development, and one of the key reasons why business owners often opt for software development outsourcing.
Direct Access to Talented Developers
Without a doubt, outsourcing services give you access to a larger talent pool and allow you to afford the best developer for the job every time since you only need to hire them for a short period of time. You can easily build a powerful team of outsourced developers long enough to complete your project without the high cost associated with a long-term hire.
When you’re able to stretch your budget through outsourcing to hire a more experienced development team, you’ll see that it pays off in countless ways, such as faster project completion. Since the developers are experts at exactly what you need done, they will help you achieve the highest quality end product in less time, which reduces risks and helps you get to market (and monetization) sooner.
Simplified Hiring Process
Whether your company faces budget constraints that make expanding an in-house team impossible, there is a lot to be said about the hiring process. It’s time-consuming, costly, and often comes with many weeks of interviewing and negotiating. Even once you’ve chosen a developer to join your team, you’ll still have to train them in your company's methods, which represents a huge up-front investment that could be completely wasted if they decide to leave your company or you learn they aren’t the right fit.
When outsourcing to expert developers, you don’t have to worry too much about the long-term fit with your company’s culture. While you’ll still need to do some vetting to make sure they mesh well with whoever they’ll be working with, everyone involved knows that it’s a short-term, goal-oriented collaboration. Generally, developers that take on freelance and contract roles are flexible and know how to fit into a variety of team dynamics effectively so they can get the job done.
When you hire an in-house developer, they generally expect to be on the payroll for the long haul. So, while you can lay off developers if your budget shrinks, it’s a big commitment to bring software engineers onto your own team. Plus, with the initial investment in hiring and training, you’ll lose money if you let people go too soon.
The sheer flexibility of outsourcing is unmatched. You can definitely work with a freelance developer in the long term if that’s what you need, you just have to discuss their availability up-front. However, if you only need a developer for a few weeks or even a single task, outsourcing is the only cost-effective way to check that box.
With two-way scalability, outsourcing development provides you with the utmost control over your team’s budget and workload. If you’re on a time crunch, bring on another developer and get things moving. If you’re looking to work on a leaner budget, put a developer on the back burner until their expertise is needed again.
Outsourcing allows you to fulfill each development need by treating it like a puzzle that you can break down into pieces, some of which require affordable entry-level developers and others that benefit from specialists. Completed projects are proof that outsourcing works, and it helps you stretch your budget and complete complex projects faster than with a team of generalists.
Outsourcing your development projects affords your company expanded flexibility, and there are several ways you can execute it. Many companies will choose to assign an in-house employee as the project manager, which gives you full control over who you hire and how you delegate tasks. However, if you don’t have the time or expertise to manage a project yourself, fully managed outsourcing solutions exist.
Instead of outsourcing to individuals — which might seem like a daunting task, especially if you don’t know the skill set required to execute your project — you can hire an outsourced team through an outsourcing company. Building a relationship with this kind of outsourcing partner is a great way to have a “turnkey” process for executing your development projects.
You may find a software development company that has an in-house team or a company that understands the scope of your project and can hire on your behalf. In either case, the value they bring to the table is rooted in their development expertise, something you may not have at your disposal. As a result of their experience, they can design a workflow, choose a methodology, and identify key roles that will help the process go smoothly.
The Power to Augment
In the instance that you already have some development expertise in-house (even if they don’t wear the title of “developer” or “engineer”), you will likely find outsourcing to be even more powerful as it has the ability to augment your team’s existing knowledge and help you make the most of everyone’s skills.
For example, if you already have a developer or two, you can work with them to understand what advanced tasks make the most sense to outsource to a specialist or what basic tasks make the most sense to outsource to an entry-level freelancer. On the other hand, if you have someone on your team who is prepared to manage your development project and understands the methodology, workflows, and expertise necessary to complete it, you can skip an outsourcing partner altogether and manage things yourself.
With an in-house project manager, you’ll retain that control and insight you desire while confidently bringing in the specialists necessary to get the job done. For instance, maybe you have an IT team that’s standing by to help with security protocols, database connections, and setting up automated resource allocation. These experts need a liaison (i.e., your PM) to help them interface with your outsourced developers so things get done on time.
This flexibility and ability to augment, scale, and expand is one of the most attractive perks of outsourcing there is. Plus, the more you can leverage any in-house talent, the more you can lower the cost of your project, giving you a unique opportunity to increase your output.
Disadvantages of Outsourcing
When comparing in-house development vs. outsourcing, it’s not reasonable to pretend like having your own team of developers doesn’t come with its perks. After all, outsourcing to a dozen different experts can feel daunting, especially if you don’t have a lot of expertise when it comes to hiring, onboarding, or managing developers.
If you’re on the fence about outsourcing or you’re curious about what you might be missing out on by choosing to outsource, take a few minutes to consider these disadvantages and what you can do to help minimize them.
Development is a necessary activity for most companies, but if you're so quick to think about outsourcing, it could be a sign of misdirected focus. There's no doubt that today's advanced tools allow for development to be minimized — and even avoided altogether — so long as you know where to find them.
According to Gartner, about 70% of new applications will leverage no-code or low-code solutions by 2025, so why not jump on the bandwagon? For example, if you're considering outsourcing development for your extract, transform, load (ETL) pipeline, you could avoid the cost altogether by choosing a no- or low-code development solution like Integrate.io.
While it won't always be possible to avoid development, looking first to minimize the need for developers can help you cut costs and speed up time to market.
No Face-to-Face Communication
If your in-house team is accustomed to showing up at your office space, holding meetings, and interacting on a regular basis, it’s easy for your outsourced team to feel completely disjointed from the rest of your company.
Since there is no face-to-face communication with an outsourced development team, you might feel a lack of control or connection throughout the project. This is generally something you can work around by setting standards for how and how often a developer should update your team on their progress. Monitoring tools can also provide insight into how your team is spending their time. However, for some companies, nothing can replace the face-to-face communication that is only possible when you bring a developer in-house.
The best way to get around the lack of face-to-face communication with your outsourced team is to hold regular meetings. While you’ll need to pay an outsourced individual for any time they spend in these meetings, a weekly (or daily, if necessary) check-in that gives you 30-60 minutes to ask questions and share information can help you keep everyone in the loop.
Heightened Language Barriers
While it’s entirely possible that you end up hiring an in-house developer whose first language is not English, language barriers pose a more significant issue when outsourcing. This is for a few reasons, but first and foremost because companies often outsource overseas to booming markets like Ukraine. This gives you access to talented developers at a much lower cost, but it can make communication difficult.
What’s more, even if you’re hiring someone who speaks rather fluent English, miscommunications can still occur when you’re not talking face-to-face. When communication boils down to text messages and emails, it’s easy for things to be lost in translation or simply left out altogether. However, setting clear communication standards can help you avoid these issues.
In addition to a meeting, encourage everyone on your team to use a low-barrier communication channel. Ideally, you’ll choose one where everyone can collaborate rather than allowing communication to be forgotten and lost across different channels (i.e., email, text, etc.). Slack is often chosen as the go-to communication tool since you can create multiple groups. For instance, you can have one chat area for everyone to interact, another for a certain segment of your development team, and then everyone can private message you as well.
Different Time Zones
Whether you’re hiring overseas or just across the country, another downside to consider when outsourcing your development services is the fact that just about everyone will be in a different time zone.
For instance, if you live on the east coast (Eastern Time) and you have a developer on the west coast (Pacific Time), you’re automatically going to be three hours ahead of them. This means your team’s standard 8 am meeting is happening at 5 am their time, and they might not be willing or able to attend. As a result, you’ll end up having to work around your developer’s schedule to some degree.
The different time zones become even more cumbersome to deal with when you have multiple developers spread across the country. For instance, syncing up a developer who’s on Pacific Time with your team on Eastern Time and another developer on Hawaii Time can turn into a headache quickly. It might mean that your team needs to hold separate meetings for various developers, but it can cause collaboration issues between your developers, too.
While freelance developers are somewhat accustomed to working around timezone differences and finding ways to collaborate anyway, you can simplify the work of your team by figuring out how you’re going to sync everyone up in advance. Once you have that information, you can confirm when meetings and cohorts work best for everyone before hiring (or in the early stages of collaboration).
Lastly, one of the biggest worries any company should have when outsourcing development is the associated security risks. While you can vet an outsourced developer just as much as someone you’d be hiring full-time, the lack of an employment contract often leaves a company feeling as if they and their systems are vulnerable — and that could be true.
When outsourcing to a developer, you must always check their reputation and be mindful of potential problems. The advantages of outsourcing are rarely outweighed by security risks alone, but you should always take steps to protect yourself no matter how many times you’ve worked with a given developer in the past or how much you trust them.
One of the easiest things you can do to mitigate security risks is to get your developers to sign a contract before exchanging any information. One of the documents you might have them sign is an NDA or "Non-Disclosure Agreement.” This is a legally binding document that forbids them from sharing any confidential information. This is often used to protect proprietary ideas, but it also protects login information and credentials, which makes them legally liable if they were to leak sensitive information or fail to properly protect it while working on your project.
If you have a particularly sensitive project, like maybe you’re in the healthcare or defense space, you would want to consult with a legal expert to ensure you have all of your bases covered. In fact, it’s worthwhile to consult with one anyway, even if you think you have a relatively straightforward project, just to ensure that you get the protection, control, and ownership you’re looking for.
Additional Risks Associated with Outsourcing
Of course, outsourcing your development to a vendor is associated with risks. Depending on your needs, you’ll want to weigh the potential risks and benefits of outsourcing your software development.
Some of those risks are:
- Vendors need time to learn about your specific business needs. Outsourced vendors have existing workflows and processes to streamline your project, but be sure they're willing to learn about your particular use case. Vendors should care about your specific goals and needs and provide a tailored experience even before the project starts. If you get the sense that the vendor is interested in your particular business needs, it's a good sign they'll prioritize your success throughout the entirety of the project.
- Resources may be dedicated to other projects simultaneously. Frequently, an outsourcing partner has resources assigned to your project who are working on other projects at the same time. You may start to question whether your project is a priority or if you’ll get the focus needed. Be sure to ask your vendors if they will assign dedicated teams to your project so you’re aware.
- The day-to-day work will be less under your control. Even though you'll be involved regularly, you'll lose most of your visibility and control over the project. This does not mean that the project quality will suffer. It only means that you won't see what happens behind the scenes. To qualm concerns, arrange for frequent contact with your assigned project leads and have ready access to them.
Alternatively, you can choose a vendor, like Integrate.io, that will provide you with the benefits of outsourcing a solution while allowing you complete control over your data integration.
Simplify Development with Integrate.io
The benefits of outsourcing are plentiful, but what if your company could minimize development altogether and just jump straight into its next project?