In-house development vs Outsourcing: Which is the best option?

Development is a big part of running any kind of business, and the more complicated the product you’re selling, the more important it is to have a capable team developing it.

Developing software can be time-consuming, expensive, and frustrating. And it’s also not a responsibility you want to take on in-house if you’re a startup trying to get off the ground.

But what if you already have an existing product that needs some work? Is it worth the time and money to hire developers, or should you outsource that part of your business? Let us have a detailed discussion on both types of development approaches.

You can also check out the complete guide to software outsourcing for further reference.

What is In-House Development?

In-house development involves hiring a team of developers and building the app internally. In general, it requires effort in recruiting, hiring, and managing internal employees. This can prove difficult for businesses that lack expertise in software development.

Pros of In-House Development

Complete control

The biggest advantage of an in-house team is that you will have complete control over them and can effectively manage the whole project without any external interference.


As the developers will be working from your office and will be using your infrastructure, you don’t have to worry about any data leaks or security issues as everything will be safe inside the network of software development companies.

Fast delivery

As all the developers will be working together under one roof, it becomes easier for them to communicate with each other and understand each other’s needs which results in faster development. In addition, there are no time zone differences so you can easily contact them anytime during office hours.

Complete control

In-house development can also be a great choice if you want to maintain complete control over every aspect of your project. You’ll get to make all the decisions about how it should look and function

Cons of in-house development

High costs

Developing software in-house can be expensive. Not only do you need to conduct the hiring process and then train the right people, but you also need to give them access to the appropriate project management tools, techniques, and development technologies. This can lead to huge setup costs, which usually increase over time as the project grows. It can be quite difficult to choose the best country to outsource software development in terms of costs and effectiveness.


In-house developers are permanent members of your team. This means that you need to keep paying them regularly, even when there’s no work for them to do. This can leave you with a fixed overhead that increases over time – which is bad news if you’re working on a project with an unpredictable timeline or budget.

Lack of expertise

Most companies have limited experience with web and software development. As a result, your team may not possess the technical expertise needed for a project – especially if it requires advanced features (like 3D printing or AI).

Hiring difficulties

Finding skilled developers can be extremely difficult. Because of this, it can take months or years to find the right candidates for your team.

When to use In-house development?

When you are dealing with a highly specialized problem

In-house developers are much more likely to have a deeper understanding of your business and your product. This is crucial when you are dealing with a highly specialized problem that requires in-depth knowledge of the industry.

When you can afford it

A full-time developer can cost anywhere from $50,000 to $150,000 per year depending on their location and skill set. This amount can be too costly for startups that are just getting started and do not have investors funding them yet.

When your product requires constant updates or new features

Because an in-house developer works solely for your company, he or she will be able to work on your product constantly and make updates as needed. This is not always possible when you outsource software development because there could be other projects taking up their time.

When you need someone who knows the ins and outs of your company

An in-house developer will get to know the ins and outs of your company and the product that they are developing. They will be more familiar with the culture of the company and will be able to develop something that fits well within it.

What is outsourcing?

Outsourcing is a development process where you hand over some of your tasks to an external vendor or service provider. In the software development project, outsourcing can be done for different reasons depending on the type of project. For example, outsourcing can be done for performing repetitive tasks like testing, saving costs, reducing time for delivery, and so on.

Pros of outsourcing

Lower costs

For many startups, outsourcing is more cost-effective than hiring an employee to handle a specific task. This is especially true if you need someone with highly specialized skills, like design or development. You no longer have to worry about recruiting, headhunting fees, and benefits.

Frees up resources for core functions

Outsourcing non-core functions allow you to focus on your core business activities, which helps keep costs down and ensures that you don’t miss deadlines for important projects. This is yet another reason why it makes sense for small businesses to outsource tasks like web design that are unrelated to their core competencies.

Access to high-quality talent

If your outsourcing company operates in a country where it’s difficult to find skilled professionals, outsourcing can be the best solution. By tapping into international markets, you can get access to experienced and skilled professionals without having to send out employees overseas.

Increased flexibility

Hiring new staff can be costly and risky but if the need arises, there’s no reason why you shouldn’t be able to find someone quickly with outsourcing. You can also hire people for specific projects or assignments which means that you can increase or decrease your workforce based on how much work you’ve got on.

Improved efficiency and speed

By choosing to outsource certain aspects of your business, you should be able to make your development process more efficient as well as speeding up certain parts of your business whilst ensuring a higher quality of work. This is because many companies that offer outsourced services employ specialists or experts.

Cons of Outsourcing

Communication Issues

To ensure that your project is successful, you must have good communication with your team. In some cases, this can be difficult to do when your outsourcing team is not all in one location.

Increased Costs

While outsourcing can save you money on your project overall, you may find that certain features or phases of the project will require more money than if you were to do it in-house.

Intellectual Property Threats

When you outsource a project, you are giving sensitive information about your company and its products to another group of individuals. While the majority of outsourcing teams are trustworthy, there is always a risk that the information shared could be used against you in the future.

Language barriers

A language barrier can be a big problem in software development outsourcing. So make sure that everyone involved in your project speaks fluent English or your native language.

Time zone differences

This can be a real pain for many outsourcing companies. If you are working with a software development company based in Asia, then you will have to work late nights or early mornings to communicate with them. The time difference can cause problems in day-to-day communication as well as impact the productivity of your software development team members.

Risk of security breaches

Since in most cases the software development team is not located in one office, there are risks of data leakage or theft. It’s also important to remember that many offshore companies use certain tools for managing their projects, thus increasing the risk of sharing your data with third parties (e.g., hiring managers).

When to use outsourcing?

You have a limited budget

If your company has a tight budget, it’s probably better to outsource. Hiring new people is costly. In addition to having to pay a decent salary, you also have to provide them with benefits, equipment, and training. Outsourcing is generally more affordable than in-house development since you don’t have to worry about the costs of hiring new people and setting up an additional office.

You need specialists for a short period

This scenario is very common in the tech industry. If you want to build a new app or website, you’ll need specialists with specific skills and experience that are not at your disposal. This is especially true if your company doesn’t focus on tech products. You can hire freelancers or an agency and work with them until the project is finished and then forget about it.

You don’t need standardized solutions

When you’re working on a new product, there’s always a risk that something will go wrong. The sooner you find out what went wrong, the easier it will be to fix it. In-house developers usually try to come up with a solution that will work across all projects, which is not always feasible when working on something innovative.


Before choosing between outsourcing and in-house development, you’ll want to ask yourself some critical questions. What’s the nature of your product? Does it take longer to develop than you anticipated? Are your resources already spread too thin? These are all questions that you won’t be able to fully answer until your business has already been operating for at least a month. Is it worth risking your company’s growth and standing by in-house development if these issues aren’t likely to change?

While there are challenges, both in-house and outsourcing development can work well. Outsourcing allows you to focus on product development while letting someone else handle the ugly business of building software. In-house development can also have negative consequences (product delays, higher costs, etc.) and is often not a good option for new startups.

Learn more from Development and read Here’s What You Need To Know About Outsource App Development.

John Harper

#1 File Information bestselling author John Harper loves to dispel the myth that smart men & women don’t read (or write) romance, and if you watch reruns of the game show The Weakest Link you might just catch him winning the $77,000 jackpot. In 2021, Netflix will premiere Bridgerton, based on his popular series of novels about the Why Files.

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