Most companies require the services of software developers at one point in their business operations, whether it be for developing an app for internal use or as a tool to reach out to their customers. And then there are some companies with an already existing in-house development team who are looking to upgrade or expand their digital service offerings. The top of mind question that stymies any business owner or decision-maker then is whether to invest in expanding the number of in-house developers or outsource the development work to an external software house.
What benefits can in-house development bring?
Having your very own in-house development team is appealing to many business owners, who credit their always availability, loyalty, expertise, familiarity with the company culture and ability to keep sensitive information within the company as pros. This is very true and is why we would like to start with a quick brief on the advantages an in-house development team can bring you.
1. Shorter turnaround time – in-house software developers are a company’s asset due to their always-on availability. Having a face to face meeting with internal employees who you already have a rapport with and understand the company’s business needs will help get the development started right away.
2. They know the business – in-house developers have an innate understanding of the company, its people, process and will be able to grasp the business requirement for the new software. They can then use this knowledge to highlight gaps and even make suggestions for improvements.
3. Compliance to existing code quality – the code of a company’s products matures with it and gives rise to quality benchmarks expected of the code in future products. Your in-house developers would be familiar with such standards and ensure the new code meets these parameters.
4. No extra payments – the biggest concern many companies have with outsourcing their work to external software houses is the additional costs that would need to be incurred. In-house developers are part of the company’s existing personnel and require no extra payment to start work on the new software requirements. This is ideal if the requirements are minor and needs to be deployed rapidly.
5. Best cultural fit – with no lack of stories about how software projects were derailed due to misfits between clients and software development houses, your concerns about a good cultural fit is justified. You need not worry about this with in-house developers as they have already gone through the 4 stages of team formation (forming, storming, norming and performing).
We admit that the above advantages make a pretty convincing argument to hiring more developers for your in-house dev team. But bear with us for a moment and take a look at the not so positive side of in-house development too.
What are the disadvantages of in-house development?
1. The lack of developers – you don’t hear the term unemployed software developer much, as the ever-growing demand for skilled software developers is eclipsing its supply. This increased demand for specialists in the field of computer software is expected to grow by 24% from 2016 to 2026 (faster than the average for all occupations) as per the United States Bureau of Labor Statistics (BLS). No wonder software development skills were chosen as the 2nd most promising job in the US for 2019 by LinkedIn!
The real question then is do you have the resources necessary to attract a software developer that is being poached by many companies? Skilled software developers today care more about the level of challenges they encounter, the company’s purpose and their work-life balance over the mere promise of higher pay. Can you tick all these boxes?
2. Hidden-costs – remember how we mentioned that you wouldn’t be paying extra to get any development work done by in-house developers? What you have to remember however is that having high earning in-house developers can have you paying more for rent, equipment, software, insurance, taxes and retirement funds. These are fixed costs that you would incur whether the developers are busy with projects or idle.
3. Training with new technologies – continuous professional development is vital for software developers in order to keep up with new and emerging frameworks. Such training, however, does not come cheap and will have to be borne by you.
4. Lack of domain expertise – developing software requires project managers, designers, QA testers and not just developers. A lack of these skill sets would mean that you need to look outside the company for freelancers or an external agency.
5. Management of personnel and processes – the development of your project needs to be planned meticulously in order for it to be put into action. It also needs to be managed once the work begins and should be done by someone with some knowledge of project management, coding, design and QA.
6. Shifting of focus – tasking your in-house developers with a new project might cause their focus to shift from their daily duties.
7. Reduced creativeness – in-house developers who do most of their work within the company work in a silo and might not be as creative as external software houses who keep in touch and are inspired by new standards in design, development and QA.
In-house development as you can now imagine can be a tricky path to trod, especially if you do not have the resources you would need to take a project from the planning stage to its deployment. This is where outsourcing to software houses that have the necessary skills, capacity and creative thinking can prove to be a boon.
What advantages do software houses bring?
1. Reduced costs – hiring a software house for your project will be cheaper in the long run as you would only pay for the hours of its development and nothing more. These payments are directly tied to the development of product features agreed upon at the planning stage with your software development partner.
Such an agile pricing approach is more beneficial for you as you need not spend too much on recruiting and contributing towards the pension funds and insurance of an in-house development team.
2. Time-saving – recruitment, on-boarding and everything associated with hiring new developers take valuable time and resources that could be better diverted to a software house who will begin work immediately.
3. A comprehensive range of services– a software house possesses the project planners, designers, developers and QA testers needed to make your project come to life. These teams have many years of developing software products and have innate processes that can help deliver a great product, faster (that means cheaper).
4. Updated on the latest technologies and trends – a software house’s revenue is heavily dependent on the products it creates. The designers, developers and QA testers must, therefore, stay updated on the latest technologies and educate themselves in order to maximise the value it generates for its customers.
5. Creativity – the developers in a software house have worked on a multitude of projects before you and even some that are in the same industry. They would, therefore, be more creative and think innovatively when compared against in-house developers who are locked into certain thinking patterns due to organisational mental models.
6. Quality products – end to end software development teams create higher quality products due to their ability to function as one. This, however, wouldn’t be possible if the designers, developers and QA testers were freelancers and new to working with each other.
Outsourcing your software development to an external software development team is a good idea that can be attested by many. This demand for software houses is propelling an industry that can at times contain some disadvantages.
What are the disadvantages of hiring software houses?
1. Distance – we’ve seen many companies outsource their development work to software houses situated in very distant countries, making it nearly impossible to communicate and resolve issues. It is for this reason that we at Mood Up team prefer to nearshore and work with clients who are closer to us geographically. Remember, a certain overlap in time difference that allows a team to catch other during office hours is acceptable. Not one where both teams are up too early or too late.
2. Cultural fit– outsourcing your software development work to a nation where the cost of labour is low might not be the best idea if the two cultures are at odds with each other. This is another reason why we prefer clients who nearshore their work to us.
3. Difficulties picking the right software house – picking a software house is not a task that should be taken lightly as the wrong choice might mean a loss of a sizable amount of money, time, peace of mind and more importantly, opportunity. This is why at Mood Up encourage you to dig deep into a software house’s people, skills, previous work and processes. Ask for a trial period if you must.
4. Security and confidentiality – breaches of contracts by dubious software house can have you concerned for the confidentiality of your project and data. This, however, can easily be remedied by entering into a partnership with a reputed partner that offers NDAs and all source code to you at the end of the project.
Picking between expanding your in-house software development team and hiring an external software house can be a daunting decision. Both as you saw earlier have their pros and cons, and the approach to your expansion can only be decided after careful consideration of factors such as the requirements, budget, deadlines and expendable resources. If you do decide to opt to hire an external software agency, make sure you pick one that is right for you with these tips.