In-House Development vs. Outsourcing: Overview of Pros and Cons

Gimena Aguerreberry
April 18, 2021

If you're considering custom software, you might find yourself wondering whether it's better to keep the development process all in-house or outsourced.

For most company owners, making this decision is easier said than done.

When hiring an in-house vs. outsourcing software development, there are many factors involved that make it difficult to determine which option is a better fit for your company's needs.

Don't worry! We're here to help. Look over this detailed overview to get a feel for the differences between building an in-house development team and fulfilling your software development needs through outsourcing companies.

We'll discuss the pros and cons of each model and how each strategy affects the development process.

In-House Development

An in-house model means building your software team. It lets you have a group of dedicated employees who are available to address any issues and who know your company's ins and outs.

Benefits of In-House Development

There are certainly a lot of benefits to using in-house staff. They include:

Face-to-Face Contact

Being able to communicate directly with your software technicians, especially if you are working in the same office with them, is a surefire way to increase your team's effectiveness. This ease of communication can help mitigate confusion and eliminate any misunderstandings hindering your team's progress.

Any improvements in your team's intercommunication and general efficiency will translate into a smoother product development process.

Real-Time Adjustments

Having immediate access to your in-house software developers gives you the advantage of being able to make sudden edits to your development plan. Your staff members can quickly adjust to the needs of a growing company.

When using an outsourced team, there may be a communication delay resulting from the time zone difference. Your developers may not be able to course-correct promptly.

Many software development companies prefer the convenience of having local technicians that can adjust to any short-term changes that may arise.

Adherence to Company Culture

Finally, curating your team of in-house tech professionals allows you to ensure that your employees adhere to your company's specific guidelines and branding.

When your staff members are a good cultural fit, they can produce results that fit with your company's general vibe. If you decide to outsource this labor, you won't have the same degree of control over branding that you would have with an in-house team.

Challenges Associated with In-House Development

Despite the benefits, you'll need to examine whether these outweigh the drawbacks and meet your company's specific project requirements. Every software development company faces challenges, and if software isn't your specialty, you may not feel equipped to handle these issues.

Shallow Talent Pool

Because of the increasingly high demand for software developers and other information technology specialists, it can sometimes be quite a challenge to find qualified developers with the right skill set in your local area.

While you might find some experienced technicians in your city, there's a significant chance that the talent pool for your area is mostly full of inexperienced workers looking for an entry-level position. These qualifications may not be suitable for your business's needs.

High Turnover

The above-average market demand for software developers provides plenty of opportunities for workers in this field to leave their current employers. Many can (and will) accept a higher paying or more convenient offer. It means that employing your software development team can mean dealing with a high degree of turnover.

Your managers may have to spend quite a bit of time recruiting and hiring new employees. Using an outsourcing company can eliminate this tedious responsibility.

Increased Cost of Labor

One of the most notable disadvantages of using in-house software development is the high cost of hiring employees. You'll have to account for extra costs for things like software, hardware, rent, taxes, employee training, benefits, and sick days. These costs often add up quickly.

Plus, if you only need to build a team for the short term until they finish your project, you might find that an in-house team is an unnecessary expense.

Deciding to outsource software development can help business owners to mitigate the extra costs associated with hiring in-house.

Outsourcing Software Development

An outsourced team is any third-party software development company that isn't part of your organization. It can include onshore, near-shore, and off-shore parties.

Whether you're considering a company outside your business or outside the country where you operate, it can be an efficient choice for several reasons.

Benefits of Outsourcing Software Development

While hiring in-house software developers has its unique perks, there are many more freedoms and advantages associated with outsourcing software development. Here are some of the most significant benefits of this approach.

An Abundance of Tech Professionals

When you're not limited to the geographical location of your business's headquarters, it opens up a much wider pool of prospective applicants. Outsourcing companies have access to a virtually unlimited number of experienced software developers with the necessary skill sets to produce high-quality results.

Affordable Services

Outsourcing your software development needs is also a fantastic way to cut operating costs for your business.

International outsourcing companies are famous for offering increasingly affordable services to software developing companies. The most popular regions for IT outsourcing are Western Europe, Eastern Europe, and the Balkans.

Faster Results

While it might seem like an in-house team would get your projects done faster, outsourcing actually shaves off a considerable amount of time since it eliminates the need to recruit and train new employees. That way, you can skip right into project development without spending months evaluating applicants.

Challenges Associated with Outsourcing Software Development

If you've read this far, you probably think that outsourcing software development is the solution for you. It certainly does come with many advantages, and it's the preferred mode of operation for many software companies. However, there are some drawbacks to consider. Let's consider some of the negative aspects of outsourcing.

Indirect Communication

Working with an outsourcing company often means either communicating with developers via a third party. It also means you might have a significant time delay in communication due to operations being in different time zones. Some employers might prefer the ease of communication that comes with using an in-house team.

Security Risks

Filtering your projects through a third party often makes business owners feel that their information is at risk or insufficiently protected. You'll want to discuss security issues with your chosen outsourcing company and consider signing an NDA for added protection.

Varying Quality of Work

As outsourcing companies offer services at various price points, clients may jump at the sight of a suspiciously affordable deal. Unfortunately, if the price seems too good to be true, it probably is. Alarmingly cheap services will often produce low-quality work, so do your research ahead of time and avoid any vendors that seem untrustworthy.


Whether you choose to hire in-house and build a team to your exact specifications or fulfill your needs through an outsourced software development company, you have the tools you need to make your project a success.

If you've decided outsourcing is right for you, and you're ready to find a high-quality outsourcing partner for your company, contact us today!

"In-House Development vs. Outsourcing: Overview of Pros and Cons" by Gimena Aguerreberry is licensed under CC BY SA. Source code examples are licensed under MIT.

Photo by Annie Spratt.

Categorized under software development.

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