Outsourcing vs. Insourcing: Which is better?

Overview

You want to work with the top professionals, but how can you decide between outsourcing and hiring your own developers? The final decision is usually made based on project objectives, scope, and the tech expertise available within your organization. 

Let’s find out which of the two available variants you should choose: inhouse or outsource.

What is in-house hiring?

This model presupposes hiring specialists who will become members of your team. As a rule, such business relations include long-term cooperation and are associated with a row of financial responsibilities that companies should bear.

In this case, we are talking not only about monthly salaries but also about social payments, bonuses, taxes, etc. When you opt for this way of establishing cooperation with specialists, your HR department will need to perform all the tasks in the framework of headhunting, recruitment, and hiring, and a wide range of related administrative processes as well, including onboarding, training, etc.

What is outsourcing?

This is the practice of transferring some part of work to outside suppliers instead of expanding your in-house team with new hirings. This model is rather popular today in many spheres. And software development traditionally remains one of those where outsourcing is widely spread.

Outsourcing can be chosen for long-term projects. Nevertheless, it can become a feasible solution for small tasks as well, when there is no sense in investing time and money into in-house hiring. Outsourcing helps companies reduce costs and ensure a higher level of flexibility in comparison to what in-house employment can provide.

In-House Overview

While speaking about the in-house vs. outsourcing dilemma, it is very important to clearly define each of these two options. That’s why let’s closer consider them both in more detail.

For many years, in-house hiring was the only available option for businesses. This is a traditional approach that many companies are accustomed to. Nevertheless, modern business conditions require much more flexibility which explains why this model has not only pluses but also a row of minuses. And when you need to choose between in house recruitment vs outsourcing, you need to analyze all aspects of these options.

Pros of in-house staffing

• Each new project is an opportunity to improve the skills of your team.
• A full-time employee is already immersed in the atmosphere of the organization and understands the goals of the company.
• You can set the work schedule: everyone will be available and ready to collaborate at the same time.
• Having an in-house team reduces the risk of privacy breaches.

Cons of in-house staffing

• Recruitment of in-house developers is a time-consuming process, which includes a lot of steps. You need to find potential candidates fully on your own, conduct interviews, make job offers, deal with a lot of paperwork, onboard, and train new employees. 
• Today it is quite difficult to find Delphi developers with the required skills. 
• A lack of necessary expertise can become a barrier to project realization.
• Your lead developer may decide to change a job at a crucial phase of the project.
• In-house staffing requires ongoing involvement and has fixed costs for labor and benefits. 

When does it make sense to hire in-house developers?

• Your company specializes exclusively in IT products and needs resources for long-term work.
• You have a big budget set aside to offer attractive packages to hire top talents.
• You want to have full control over the process of project realization.
• When your company has an acute privacy issue (e.g., you are a state-owned enterprise or a large company).

Outsourcing Overview

Today a lot of companies prefer to opt for the second option from the in house vs outsourcing pair. Further, in our article, we will dive into more details of the outsourcing model. But speaking generally, it’s important to highlight that it allows businesses to leave aside a lot of tasks and responsibilities related to hiring and recruiting. In other words, companies have much more time and available resources to focus on their core activities. Moreover, outsourcing ensures more flexibility and this point is of high importance in today’s business environment.

Nevertheless, we strongly insist that before making up your mind, you should attentively study the peculiarities of this model and concentrate not only on its pros but also its cons.

Pros of outsourcing

• You can save time by getting access to a rich talent pool.
• You can work with people worldwide and find specialists even with the rarest skills and a deep understanding of the most complex tools and technologies.
• An outsourcing team is very flexible. Changes in its composition will require significantly less time and effort from your side.
• When you delegate an entire project to a vendor, you can focus on other business tasks.
• You get a third-party opinion of your software. This allows you to make better decisions for your core business initiatives.
• Work on a turnkey basis, over the implementation of your project will work not only developers, but also PM, BA QA, DevOps experts and other professionals.

Cons of outsourcing

• Contractors and freelancers do not have a set work schedule. If you want them to work in close cooperation with your team, it can be asynchronous collaboration, especially in those cases when you hire someone from a different time zone.
• If a vendor doesn’t adhere to the same strict rules as you do, you can end up with a substandard service or a non-viable product.
• You will depend on the vendor for maintenance services. It is important to find not just a service provider, but a reliable partner who will arrange the transfer of knowledge and share insights with your team after the project is over.
• You can face the difficulty of finding the right outsourcing company, which will offer the best solutions, not just fulfill the TOR.

When does it make sense to hire outsourced developers?

• There is a necessity to reduce your workload at all project stages from planning to execution in order to focus your efforts on tasks that require your attention.
• You want to hire a pre-assembled development team for your project.
• You need a team with previous experience in migration, modernization, integration, and software development, as well as industry expertise.
• You don’t want to waste your time on looking for developers with the tech stack that is required for your project.
• You don’t have the possibility to monitor the entire development process yourself.

In house recruitment vs outsourcing: Key differences

Parameters for comparison	In-house hiring	Outsourcing
Initial costs	Higher	Lower
Talent availability	Limited	You have access to specialists from all over the world.
Communication	Easy	Possible language barriers and issues caused by different time zones (however, to avoid such problems, you can indicate the necessary English skills and flexibility in working hours among your requirements)
Time to start	Long (recruitment and hiring procedures can take quite a lot of time)	Quick
Control	You are fully responsible for the delivered quality.	You can discuss the level of your control with the chosen vendor.
Risk management	Your company will be fully responsible for all the risks.	You will share responsibility with the vendor.
Flexibility	Limited	High
Security risks	Lower	Higher (Nevertheless, when you work with a reliable vendor such risks are minimized)

Which one to choose: In-house hiring or outsourcing?

In-house hiring is a sensible approach for those companies that have a stable workload for developers and can allocate big budgets for software projects. 

It’s worth considering this option when you are sure that your corporate structure allows you to expand your team with new specialists. Nevertheless, you should keep in mind that in this case, you have a limited geography for hiring which could result in some issues related to the lack of the required skills in the local market.

When businesses strive for the optimization of their resources and an increase in their performance, outsourcing becomes the best solution. According to Deloitte’s Global Outsourcing Survey, 65% of respondents said that outsourcing helps them focus on core functions.

Very often companies turn to outsourcing when they have pressing deadlines and they need to start the project realization as soon as possible. Moreover, it’s a good variant when it is impossible to predict the workload or when you are quite confident that your requirements for the project (as well as the volume of work and the desired set of skills) may seriously change over time.

Conclusion

If you think that outsourcing is a good choice for your business, you need to find a reliable vendor. Actually, to leverage all the benefits that this model can provide to you, you should have a good partner by your side. Otherwise, you can face various unpredictable challenges that can turn out to be fatal for your project.

With more than 15 years of successful work in the software development industry, Softacom can become a good choice for you. Our company can boast not only a great team of specialists with strong practical skills and deep theoretical knowledge but also well-established business processes. Thanks to them we can ensure the required flexibility and smoothness of cooperation.

We believe that our goal is not just to fulfill the tasks set by you in the framework of our work but to become your real partner and support your business growth.