Expanding Your In-house Team vs. Outsourcing in 2023

Introduction

In one of our previous articles at Visual Craft, we talked about the problems related to hiring remote experts and described the best ways to avoid them. This time, we will focus on the effective expansion of your existing team. 

Why do organizations need software development services in the first place? The goals may vary, from developing a custom solution for corporate needs to offering an engaging and modern mobile application for customers. In any case, in order to achieve results, organizations have two options: hiring experts locally to expand their internal team or forming a partnership with an outsourcing provider to delegate the software development duties. 

Probably, one of the biggest challenges of outsourcing is time zone differences. However, in 2023, outsourcing vendors, thanks to modern tools and practices, are able to set up the development process so efficiently, that your remote team will function as a full-fledged part of your company. 

Another common challenge with outsourcing is a communication and coordination problem. Once again, this is not a big challenge when the development process is set up properly, and even more than that, time zone differences can even become a benefit that would allow you to set up the 24/7 process. This means that the remote team will be working during your in-house team's off-hours thanks to thought-out management practices if you choose to combine the efforts of both.  
Maybe these managerial advancements became one of the key factors in the growth of outsourcing. According to Mordor Intelligence, the size of the IT outsourcing market was valued at USD 526.6 billion in 2021 and is expected to reach USD 682.3 billion by 2027!

Now let’s compare in-house and outsourcing software development approaches in the following sections

The advantages of in-house development

Shorter time for turnaround

The in-house experts are always available since they are physically in your office. You can arrange meetings whenever you see fit, know the organization’s business needs, and make decisions to start the development processes of certain features right on the spot.

Business understanding

Without a shadow of a doubt, your employees will have an inside perspective on your organization, including an in-depth understanding of internal processes and people. Hence, your in-house team will be able to understand the business requirements of software better and be proactive in making suggestions for further product development. 

Cultural fit

You won’t have to worry about any possible misunderstandings with your development team and will make sure that there will be no delays caused by culture-based issues. Your in-house team is able to go through 4 stages of team formation, which include forming, storming, norming, and performing, so the chances for cultural differences are minimal.

Adherence to internal level of quality and corporate standards

The product and services quality of every organization rises, as it matures. All of your internal employees know about the latest quality standards, and software developers are no exception. Your in-house developers are 100% aware of which code quality is expected and work on meeting the required parameters. 

While the above-mentioned statements are making a solid case for expanding your existing software development team, there are some major drawbacks to this approach you should be aware of. Let’s talk about them!

The disadvantages of in-house development

Hard to find and hire talent

The first drawback is the fact that you are limited with the pool of talents available locally. In 2023, the demand for skilled software developers is far bigger compared to the supply. This trend will only increase, according to the United States Bureau of Labor Statistics (BLS) the demand for specialists in the field of computer software is expected to grow by 24% by 2026 (which is faster than the average of any other profession).

Hidden costs

Having more high-level experts with big salaries may cause additional expenses, including higher rent, buying new equipment and software, increased insurance, tax, and retirement fund expenses. Additionally, these fixed costs will stay, no matter whether your developers are busy or not. 

Employee training

Yes, it will be completely your responsibility. In the world of software development, experts must keep up with modern technology stacks and emerging frameworks. Obviously, learning cutting-edge technology is expensive, and you will pay for that, in order to keep your team relevant technology-wise. 

Optimizing workload

The software development process is not limited to the work of software developers. There are also plenty of experts involved, including Project Managers, Designers, Quality Assurance experts, and Business Analytics. Since you are paying for the work of the entire team of experts, you need to put in additional effort to make sure that they always have tasks to do. The reality is, that there could be instances when you won’t need a full-time UI/UX Designer, QA specialist, or DevOps engineer, but you will still have to pay for their employment in your company. 

Lack of scalability

You can’t just give your in-house team a new project and expect that they will retain the same level of effectiveness with their daily duties. Additionally, there will be no guarantees that you will be able to hire quickly, when necessary, so you will end up with limited scalability and flexibility to change focus. 

Limited creativeness

The creativity of your in-house developers may reduce since they are working on the same project of the same company. The fresh perspective of the outside developers with expertise in the latest technologies, trends in development, and design can shake up your organization positively, and you will end up with more effective solutions as a result.

The Advantages of Outsourcing

Cost reduction

While there is an opinion, that outsourcing is more expensive compared to hiring a team yourself, the truth is quite opposite. When you hire outsourcing developers, you pay only for the hours of work, which makes it more cost-effective compared to in-house experts working for regular salaries. 

An outsourcing vendor is responsible for recruitment and HR activities. The vendor also covers rent for office spaces, software license expenses, hardware costs, training employees according to the latest business demands, and manages salaries and well-being compensations for employees.

Saving time

A vendor with years of experience and proven expertise knows how to set up the software development process most efficiently. With numerous similar projects completed, the vendor has the skills to recruit, interview, hire the most appropriate candidates quickly, and begin cooperation as soon as possible. You will save your time and will be able to focus on more important aspects of your business, rather than hiring. 

Access to expertise

With outsourcing, you are no longer limited to talents that are available locally — you can hire whoever you need! It is a huge advantage since experts with specific and narrow skills are often impossible to find locally. Outsourcing vendors are connected to multiple labor markets, where you can find experts to complete your team.

Additionally, a vendor may already have the talent you need, including Business Analysts,  Project Managers, UI/UX Designers, Software Developers, and Quality Assurance experts who may already have years of experience working together in a team. 

Access to the technology

An expert hired by an outsourcing vendor must always be in shape in terms of the latest technology and frameworks. Outsourcing experts are always educating themselves to stay competitive and ensure developing the best products possible in order to stay competitive and take more contracts. 

More creativity

Since you have a wide range of experts available, you also have access to people with entirely different backgrounds, experiences, and visions of how to make your product better.  You will have higher chances to work with innovators, rather than the in-house developers that could be locked in certain corporate approaches of your organization.

Higher quality

Outsourcing vendors are offering end-to-end software development teams that are able to deliver software products cohesively. You will not get this advantage, however, if you decide to hire freelancers separately. 

Faster scaling

Businesses often leverage outsourcing as a way to scale up their processes fast and effectively. There is really no more effective solution when it comes to scaling rather than outsourcing. It suits well for both single projects and long-term partnerships. 

Combined with flexibility, it becomes a major business advantage, since you will be able to scale up or down depending on business demands. Ultimately, outsourcing is freeing up your hands for focusing on core business activities, and not the hiring hassle. As a result, you will grow your business faster and receive more return on your investments in developers. 

Cultural differences are not so critical

While there has been some talk about cultural differences as a blocker in outsourcing, the fact is that culture, and customs in the USA and Europe are not that different. There are actually no significant barriers in communication between the two, that can hurt your partnership. 

A successful example of scaling an in-house team with the help of offshore outsourcing

For over a year, we are collaborating with a seed-level startup in the cybersecurity and cryptography industries. The company already had a core product team but had goals to create multiple web products, so we joined in. 

First, we added a Scrum master and QA engineer to a team in order to improve:

• project management and team management processes 
• long term and short term planning
• product stability

The scope of the product was increasing, hence the demand for quality improvement, creating documentation, and raising overall efficiency was important. 

Since we have over 16 years of experience in working with projects of different sizes and on the different stages of the product, we had created a flexible approach that complements growing companies. Our approach is helping companies to optimize processes and seamlessly integrate remote teams, resulting in a velocity boost on the project and leveraging an entirely new tech stack for the particular project.

By adding an experienced Scrum master, we managed to improve the processes of interaction among all teams working on multiple projects. 

Our QA Engineer helped to organize testing-related documentation. Additionally, dedicated testing tools and automated testing were added for critical components of the product. This move helped to significantly improve the quality of product and production releases. 

The next step was adding a Team Lead and Web Development team, that after a short introduction to the project were able to start working on multiple products fast. Our team on multiple instances used our experience in product design to help develop new ideas, create prototypes, and offer suitable technical solutions. 

It was very convenient to the client, that in addition to the main development team, we were able to engage additional resources for CI/CD processes improvement, app architecture design or UX design.

As a result, our involvement helped to integrate our team into the client’s team in a short time frame, develop multiple products, improve management and development processes, and also make onboarding for the new team members easier.  

Conclusion

So which one is better, in-house or outsourcing? Depends on your individual case. If you need fast scaling, more flexibility to change the direction of the development process, more cost-effectiveness, and unlimited access to experts and technology, you probably need to look forward to outsourcing. However, outsourcing is not perfect, but we know how to deal with all challenges related to it. Read our article about the solutions to outsourcing problems to learn more!