Inhouse vs. Outsourcing

These days, it’s no longer a question of whether to develop a business software solution or not. Now, what organizations consider is whether to develop in-house or to outsource. Indeed, inhouse versus outsourcing has remained a central topic among entrepreneurs through the years.

Just like everything else, there are pros and cons to inhouse development and outsourcing. Let’s walk through the difference between in-house and outsourcing to help make a more informed decision.

In-house Development

In-house software development is a practice wherein the work is done in-house or within the organization. The business organization hires or uses its own employees to do the job. Why do companies opt for in-house development instead of outsourcing? Let’s find out.

In-House Development, the Pros

1. Development of Talent

Upgrading the skills of your in-house team or employees is easy if you need some domain expertise. Furthermore, you could further develop their skills without going outside and hiring new talents. This is not easily done when you outsource to an external team.

Investing in employee development enables the staff to be more motivated in their own incentives and learning.

2. Physical Availability

An in-house team means you could supervise the team physically. Moreover, there is better understanding and communication between the management and the team, which makes the work more effective and synchronized. Since everyone in the team works together within the same time zone and workplace, getting this done is easier.

As developers work together in the same office, changes could also be done fast. With an in-house team, the organization could leverage several benefits, like:

  • 100 percent work visibility
  • Long-term association
  • Same time zone
  • Data and IP protection
  • Better and more effective communication

3. Better Understanding of the Values of the Company

Being regular employees of the company, the in-house team is more aware of the company’s needs and values and are more culturally fit. Also, they have a different approach to work and act faster via greater project dedication and communication.

In-House Development, the Cons

1. Expensive

Hiring an in-house development team is naturally more expensive. Why? Because you have to invest in the recruiting process, training employees, and pay salaries, and so on.

Moreover, you also have to invest in infrastructure to buy or rent a workspace of your development team. When it comes to the costs associated with insourcing, outsourcing may seem a better option.

2. Less Employee Retention

Today, employees tend to jump from one job to another more often. It’s always a risk that someone would leave the organization in the middle of a software development project, which could hinder success. When looking for a replacement, the workload could grow and the whole process slows down and could result in a delayed launch.

3. Skills Shortage

In an in-house team, it’s not possible to expect that all have the same level of skills and experience. You may have to hire someone with more skill sets and experience, which is not easy because it’s difficult to find highly qualified specialists at present.

Outsourcing Software Development

Software development outsourcing is where the project is outsourced to an outside company instead of the internal team. Outsourcing is a great option if you require more expertise to manage it internally or require developers on a non-permanent basis.

Outsourcing Development, the Pros

1. Focus on the Core Competency

Outsourcing enables organizations to focus on their core competencies as well as other aspects of the business. Furthermore, outsourcing provides a competitive edge and accelerates business growth. Having an outsourcing partner reduces the workload considerably and boosts productivity.

2. Risk Mitigation

When you outsource to an outsourcing service provider, you mitigate the different risks involved. These risks could involve operational risks, schedule, technical risks, and so on. Outsourcing means handling over the responsibilities to a third-party provider as well as joining hands and cooperating to achieve the outcome desired.

The risk percentage considerably drops when having an offshore partner. Thanks to outsourcing, organizations all over the world were able to lower their costs and boost their services.

3. Cost-Efficient

Nowadays, organizations opt to outsource because it works as a cost-cutting method for them. Moreover, it helps cut down on the different associated costs in hiring in-house talents. Typically, outsourcing is a short-term contract and involves paying by the hour or a fixed amount without the burden of having to pay regular employees and providing them other benefits.

Outsourcing Development, the Cons

1. Lack of Control

In outsourcing, organizations lose project traction. This could occur due to the lack of understanding by the offshore team. Outsourcers have not regular working hours and it may be impossible or them to work synchronously with the team.

2. Communication Issues

According to Saigon Technology, hiring a contractor to work in a project could be more difficult when it comes to keeping track of the progress. Communication could be a bit complicated and issues could arise if the team is in an entirely different time zone.

3. Data Security

Failure to secure data could led to vulnerability. This could result to a leakage of data, critical data deletion, and a breach of information.


Recently, organizations opt to outsource their software development requirements. The choice whether to develop a software solution in-house or to outsource depends greatly on your preferences and priorities.

Inhouse vs. Outsourcing was last updated December 28th, 2022 by Jenna Thorne