In-house Vs. Outsourcing: How to develop a Mobile App in 2023?
In-house app development or outsourced app development is a not-so-easy question for tech startup founders and even billionaire tech giants. This is because there is no answer. The right decision isn’t always clear, as both approaches have their pros and cons and there are tons of variables you need to consider. In today’s reading, let’s compare in sourcing versus outsourcing to help you make the right decision for your business. What is internal software development?
In-house software development means building your software development team from scratch and developing your application right in your office. You will be the one to fill positions, bring in new employees and oversee the entire development process. In-house development allows full control of the project, but at a much higher cost than outsourced software development.
How much does it cost to create an app?
Internal development is like hiring permanent staff for your company. You will need to go through all the hiring processes, from recruiting to on boarding. Arguably, the cost of hiring a new employee is one of the most expensive parts of running a business. You have to spend around $ 4,000 per hire, but the cost varies by role.
If your business isn’t focused on an IT product, it may not be as cost effective to hire an in-house software development team. However, in-house software development can offer many benefits.
Advantages of In-house Development
Complete cultural match
Full-time employees pay much more attention to the specific needs and values of the company they work for. They are more motivated to get better results and to deliver as much value as possible. It is much easier for internal employees to integrate with the corporate culture.
Direct communication
Daily face-to-face communication is a clear advantage that attracts hiring in-house software developers. Sharing the same working hours and being in the same office makes the communication process easier and more comfortable. Direct communication increases mutual understanding and effectiveness.
Flexibility
When you have an in-house development team, it’s always faster to tweak app features, add new ones, and discuss technical issues. Also, in-house developers can fix all bugs and rerun the product without delay.
Cons of in-House development
High price
When hiring internal team members, be prepared to cover both visible and hidden commissions. According to Payscale, the average salary of US-based software developers ranges up to $ 80,000. This does not include the hidden costs required to hire an in-house developer, including recruiting, onboarding, sick leave, insurance, and vacation. When the team is inactive between projects or assignments, you have to cover their fixed salaries.
Turnovers
Recruiting the best talent for your team is easier than keeping them by avoiding all attempts by recruiters and competitors. In the end, it can counter offer better benefits and increase staff. Otherwise you may lose your talent and finding new developers always takes a lot of time.
Talent shortage
The growing demand for IT products creates a growing demand for qualified technology specialists. Hiring a new specialist who meets all the hard and soft skills can take months, so your development processes can slow down or stop for quite a long period of time. Cons of internal development
When to opt for In-house development?
Internal software development team
You already have a sufficient number of necessary specialists or there is the possibility to hire / train them in a short time. At the same time, it is necessary to ensure that the rest of the employee’s work does not suffer from additional tasks. It is always better to entrust the project to truly reliable and competent specialists. It will save you from mistakes due to ignorance or lack of time of employees.
Material resources
You have the necessary material resources or it will be profitable for you to buy or rent them. They can be machines, equipment, furniture or work rooms. But even if the necessary resources are available, alternative options for their use, such as rent, must also be calculated. It may be more profitable to rent office space and spend the profit to pay for the work of an outsourcing company. Acquiring equipment and other assets may also not be profitable if the project is short-term and the purchased equipment will not be used after completion. Also, you shouldn’t spend any money if the profits from the project don’t allow you to cover the additional costs. In this case, it is best to hire an outsourcing company with all the necessary equipment and offices.
In-house project management
You have time to carry out the preparatory phase of the project: develop a detailed plan, attract specific experts, recruit and train employees and make sure that these people can interact comfortably with each other. Such preparation is necessary for a long-term task, a task that will be carried out for the entire existence of the company or for a long time. In this case, the establishment of a new unit in the structure of the company will be justified for the realization and management of these projects.
The details of the project suggest that the people who work there are very knowledgeable about other business aspects of the company. Permanent employees are better than temporary workers. They are more motivated to get quality results for their company. In all opposite situations, an internal method can be expensive and unwarranted. Putting all forces into a short-term project poses risks in both relationships: for the project itself and for the company’s core activities. Competent specialists or material resources are distracted from the core functions of the company, which weakens the company as a whole. It works primarily for small businesses that don’t have enough resources to create new structural divisions for each new project. And any such undertaking involves high financial and labor costs.
What is software development outsourcing?
Outsourcing means delegating the software development process to an external vendor. Today, many companies choose to outsource software development processes to save time, reduce costs, and find highly skilled IT professionals. Software development outsourcing has been a growing trend since its inception and its steady growth has shown no signs of slowing. It is expected to reach $ 186.4 billion in revenue by 2028.
Benefits of Outsourced Mobile App Development
Cost flexibility
There are countries where premium talents cost a lot less. Central and Eastern Europe, the Balkans and Asia are the main regions to outsource software development services. Central Europe is becoming a central hub for software outsourcing thanks to highly skilled talent, low taxes and government support for the IT sector. To find the best country for software development outsourcing, check out this article.
Larger Expertise
Expanding your talent pool helps you find the right talent for your project. When outsourcing, you are not limited to local candidates. Outsourcing gives you unlimited opportunities. You can consider specialists from anywhere in the world and choose the best.
Latest technologies
Some projects require unusual skills and finding people or companies with all the required skills and technologies can be a real challenge. However, you can partner with some software development companies who are well versed in the different tools and technologies needed to bring your idea to life.
Disadvantages of Outsourced App Development
No direct communication
Located in different countries, there are several things you need to take care of. Many people worry about the language barrier, but it has become a thing of the past. The vast majority of IT professionals are fluent in English. a lack of control
When outsourcing, you need to access the development team directly. Delegate all development, advancement, and troubleshooting to your third-party vendor. But that doesn’t mean you won’t know what’s going on with the projects.
With regular meetings, the PMs will keep you informed on the progress of your project and any obstacles. However, the provider takes care of everything from recruiting to technical issues, while you have more time and resources to focus on your core business.
Trust and security
You entrust confidential information to a third-party vendor. So you may feel unprotected and worried about the agency’s privacy policy. When signing an NDA, you can legally protect all of your interests.
When to choose outsourcing over in-house?
A noteworthy argument in favor of using outsourcing companies for a large company is the ability to quickly start and implement a specific project. It is often advantageous for large companies to outsource the early stages of a project. After all, the selection of a team, the search for qualified managers, the organization and integration of the work group by a small company cost less than by a large company. In addition, the necessary specialists help subcontractors to carry out highly specialized tasks without delay.
Often the geographic factor is the last but not least factor to consider. Contacting subcontractors in another country where the required services are cheaper is more
The same is true for situations where it is necessary to implement a particular project in another country. You need specialists with local knowledge who are physically located in that country and ready to start working immediately. In these cases it is more justified to use subcontractors than to set up a branch abroad, hire new employees and adapt to the local market.
Combine outsourced + internally and get the best of both
Historically, choosing between in-house and outsourced development is a real challenge. However, you can find a middle ground by combining outsourcing and in-house and get the best of both approaches.
You can assemble an internal core team and outsource capabilities that require specific technical skills or expertise. At Digital4design, we take care of projects of any complexity and develop applications according to all customer requests. For more information, you can consult anytime with our experts.
