In-house Development Team vs Outsourced Software Development: Which Is Better for Your Business Project?

Creating your own software product gives a boost to your business, but what is the most cost-efficient way to get it well-designed?

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Outsourcing IT services has been a steady trend in business over the last five years. Delegating the design of business software to a third party seems right to entrepreneurs that use it as a way to fulfill their business goals. However, there are a number of cases when having IT experts in a crew becomes a must.

To know when you should go for either option, you can read this detailed analysis showing the major benefits and shortcomings of each approach.

In-House Development


– No language and cultural barriers. In-house development lets you work with people sharing the same cultural background, which greatly simplifies communication during project building. In case you are faced with issues, it becomes quicker to solve problems.

– Deep involvement. In-house workers develop a high level of understanding of your operational processes and the kind of software you need to meet your business needs.

– Business confidentiality. Since no third party is engaged in your business processes, the likelihood of information disclosure is low. You can control access to confidential data and undertake minimal risks of data leakage.


– High price. Keeping IT professionals on a regular basis is costly as you need to take care of payroll, vacation and sick leave, training, office space, and equipment.

– Staff turnover. Even if you offer the best working environment with perks and career prospects, employees can quit at some point, and you will have to raise new talents to fill the vacancies.

– Skills shortage. Looking for specialists in one area limits your access to tech experts as the demand for IT experts is growing and you need to compete with others for their recruitment.

Outsourced Software Development


– Expertise. Outsourcing allows hiring IT specialists across different regions. This advantage becomes more important when you want to adopt the latest innovations and need the top developers and engineers to drive this transformation for your business.

– Streamlined processes. You are not expected to deal with staffing, managerial and organization issues during the project development process. It gives you more time to devote to your core business activity and improve its value.

– Flexible pricing. It is possible to find an IT sourcing company that fits with your project budget. If you are not searching in San Jose or Bangalore, there are plenty of IT developers that are willing to collaborate at an affordable hourly rate.


– Communication gap. Working with IT professionals from other countries can be challenging in the context of various cultures. Unless you are fluent in their language, you should be poised to get over cross-cultural differences.

– Low agility. The lack of a direct connection with a development team won’t allow you to make changes to the product’s functionality quickly. You will have to arrange calls and meetups before you see it done.

– Security risks. Partnering with an outsourcing company requires sharing part of confidential data. NDA can be an effective guarantee of your business safety; however, there is still a potential of data loss if your IT partner fails to maintain data confidentiality on their part.

What’s the best approach?

While startups can easily go with in-house software development, large enterprises prefer having an on-site team of experts. Visa, McKinsey, and BCG are all non-tech companies that have in-house IT specialists that support their business processes. If you are at the start of your entrepreneurial journey, outsourcing seems the most sensible solution. But in time, you should prepare to turn to in-house development because when the business scales up quickly, it is safer and more convenient to educate staff that will have the right vision of your business values from day one of working for your company.

To understand which option is best suited specifically for your business case, you should think of the complexity of the product you plan to design. If it has a complicated design and requires maintenance after launch, investing in an in-house team will pay off eventually as you will be able to control and update your software without engaging third-party specialists. However, if you need, for example, a business mobile app or CRM system to improve customer service, it is reasonable to partner with IT companies that offer custom software development for small businesses, as they possess vast expertise in designing this type of products and will deliver it to you faster.

This article is brought to you by Computools and reflects only the opinion of the author.

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