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In house software development vs outsourcing. What to choose?

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in house software development vs outsourcing

There are many reasons why companies are faced with a choice – an in-house team made up of IT professionals: programmers, server maintainers, engineers and more, or handing over those responsibilities to an entity that is dedicated to providing technology-related services to a larger client base. There are some considerations that should guide such considerations, and we will consider two scenarios in which both outsourcing and an in-house IT team will work. We will also present an alternative that, while it does involve outsourcing technology-related services, addresses an ever-increasing customer need. It is worth knowing about the fact that the IT industry all the time creates for its customers such an offer that is as flexible as possible.

Outsourcing vs. inhouse software development – which is better to choose?

Let us use an example: we are considering the choice between in-house software development and outsourcing in two companies:

– the first company sells car parts: it uses an online store for its sales processes, which is maintained by an internal team of IT specialists. However, several functionalities need to be developed inside the e-commerce platform. The company has an HR department with well-functioning recruitment processes.

– The second company has so far sold car parts only via external sales platforms such as auction portals. Due to the fact that this business needs to be scaled up and it is part of the strategy to go out to other markets: it was decided to develop a mobile application and a web platform where one can buy the needed car parts. There is only one IT specialist in the company, who primarily looks after the computers and networks used in the office.

Depending on how our situation is – our decision on the choice between software development outsourcing and inhouse team should be different. We also emphasize that the examples presented here should not be treated as “absolute”. Just as there are many companies around the world, so many unique needs and business goals. Therefore, each case should be treated individually and with regard to the whole. It may turn out that only one reason can speak for choosing another option of software development in your company.

A company with its own simple sales platform

Considering the fact that the number one company already has its own sales platform in the form of an online store and only needs to develop a few functionalities in its store, as well as already has its own IT team consisting of specialists who maintain the infrastructure – it will be most optimal to keep this model of working on the software. The project that this company intends to develop is not particularly complicated and only developing the team already present in the company may be absolutely sufficient. Given that in this company, recruitment processes are present and, as we know from the basic assumptions, they work correctly: it can be expected that finding the right specialists who will be able to develop the desired functions in time will not pose too many problems for this company. The costs of such recruitment should not be high, and it will not take long to find the right programmers / software engineers.

On the other hand, the team that will be hired for this project will most likely stay with the company for a longer period of time – so it won’t generate too much costs later on. Overall – given the breadth of the project, the capabilities of this company, as well as the already existing employees should be able to harmoniously bring about the functionality that the company cares about the most. In such a case, indeed, the best way will be to develop your inhouse software development team. The current employees in the company already know each other well, have processes and procedures created. This does not mean, however, that outsourcing should be completely crossed out. Consulting with a company like a software house can be a very useful experience for that company and direct them on how to create even better features for their store. There is another option to develop the team at this company and outsourcing can come in handy here!

Many companies engaged in providing IT services to their clients, provide access to innovative models of cooperation. It turns out that outsourcing adapts to the needs of its customers and often exceeds the boldest expectations of companies that have not even heard of this type of solutions before. Many companies engaged in software development offer the possibility of “renting” their software engineer for the duration of an internal project. In this model of cooperation, we quickly get access to the specialist we are interested in, who will work with us only for the duration of our internal project. When the project ends, the period of “renting” the developer also ends, and we no longer have to worry about the cost of hiring a given specialist. Such a model of cooperation has emerged on the market for the reason that many companies nowadays do not necessarily need to develop their team for a longer period of time – it is not uncommon to require an increase in the number of people in the team only for the duration of one project, small compared to the scale of the entire business.

In such a situation, we do not have to bear the costs of recruiting for a position related to software development. A specialist is available right away. Our partner to whom we entrust the project must give us a guarantee that he will choose the right employee who will be delegated to our project. If it turns out that we are not satisfied with this person, or he does not have the desired set of skills that we need for our project – the partner is obliged to find us a better fit for the position. Such an employee will most likely be delegated to us remotely – which is no longer a huge problem these days. The SARS-CoV-2 pandemic has changed the attitude of many companies towards remote working and it is now an unwritten standard. Although, of course, in those projects where a developer/engineer’s presence in the company is necessarily needed, the “developer rental” model can be a bit of a problem. Despite its great flexibility, this model will not be able to solve absolutely all problems.

A company that wants to create its own store and mobile app

In this case, we are already dealing with a much more extensive project that will require a team of experienced developers. As we know from the basic information about this company – there is no such group of people in it, and the needs are very wide. In addition, due to the fact that this company probably does not have extensive experience in the IT industry, recruitment for positions related to software development could take a long time, or would be very expensive. Therefore, in this case it would be a good idea to take advantage of the opportunities that arise from working with an external software development company: that is, operating in a de facto outsourcing model. The company that is going to create software for us is probably very experienced in developing programs, mobile applications, websites and other IT-related solutions. Moreover, cooperation with such an agency will be cheaper than hiring a whole team “from scratch”.

In the outsourcing model, we do not incur the costs associated with recruitment, and also receive a guarantee regarding the quality of software. If anything goes wrong in this regard – our partner will be obliged to fix everything. What is more, companies that develop software for their clients, have a much wider range of specialists in their teams – in case we need help from specialists in UX/UI, software security, devops team, blockchain and many others – we will get easier access to such people. In addition, in addition to money expressed in the costs associated with recruitment, we also save time, and gain peace of mind. It is also worth noting the enormous flexibility of this model of cooperation – if during the project our needs change, the company that creates software for us, will be much better prepared to respond to it.

Today’s software development companies are also able to advise on business issues. In fact, they also provide consulting services related to IT activities. This is what is doing at Concise Software – over 10 years of experience in the market means a lot of completed projects for the biggest brands in the world, many hours of workshops and a lot of satisfied customers for whom we provide comprehensive IT services. For many companies, such a model of cooperation – regardless of industry – has proved to be a chance to enter the world of many opportunities resulting from having their own high-quality software. Today’s world is not able to function without it and we perfectly understand the needs and expectations of the changing market.

Which collaboration model will work better for you?

Many companies regardless of industry will require software development in the near future. The needs are growing all the time, and at the same time the emphasis is placed on the highest quality and speed of project implementation. Many companies may feel confused by the models of cooperation and methods of software development. Before making a decision, it is worth contacting professionals to discuss the matter thoroughly.
The article was written in cooperation with the concisesoftware.com

We are a team of writers passionate about innovation and entrepreneur lifestyle. We are devoted to providing you the best insight into innovation trends and startups.

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