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In-house or External Software Development

4 Minute Read

Deciding whether to build an internal team for software development or outsource it is a critical decision for all companies. Both in-house and outsourced teams have their pros and cons, but your current company needs will shape which decision is better for your business. Let’s explore some of the pros and cons of each choice:

 In-house or External Software Development_SDS

In-house development:

Most major, public company CEOs recommend to do in-house development. This is due to several strategic benefits that accompany in-house software development. In-house development allows you to build a team, assign them a project and improve core business operations. This in-house teams will likely be the core of your company because they develop the critical software that drives your business.


An important benefit of in-house development is control; you will have direct access to your team and communication is easier. If there’s a bug or problem, you’ll know exactly who to reach out to and how it can be fixed. If the company decides to pivot, your team can adjust quickly instead of reaching out to an external team that can be busy at the moment. Another benefit is that you can establish your company’s culture to your IT team. If your company is a startup, you can incorporate startup culture into your IT team to grow faster and better your company.  A lot of external IT teams require multiple meetings to explain your company and goals and this can take a lot of time. With your own IT team, you can move much more quickly and meet your goals.


Although in-house development has many benefits, the cost of payroll is one of the most apparent cons. Staffing a competent IT team is very costly because you’ll have to pay to have skilled employees. In addition to payroll, you will be responsible for setting up equipment, finding production space, payroll taxes, health insurance and more. The cost is not very upfront and you should expect rolling costs that increase as your team gets bigger. Additionally, you’re in charge of team management and hiring. You are responsible for team morale, finding new talent and fixing any problems within teams. This will likely require you to have HR staff to help with day to day operations.


Outsource Software:


Outsourcing software has many benefits and it can be a great way to start before developing a full in-house team. Cost is the primary benefit of outsourcing software; developing an in-house team will require a lot of capital upfront in comparison to having an external IT team. Instead of spending all your company’s capital on payroll, capital can be spent on developing your business and other revenue-generating aspects. In addition to cost savings, you won’t have to be responsible for hiring, training and onboarding new employees; this is an additional cost in itself along with the time it takes to hire employees. Outsourced teams already have skilled employees at your disposal to propel your business. This allows you to focus on urgent tasks like meeting client deadlines and marketing your business.


There are several drawbacks of outsourced teams. Communication and feedback with teams is not as quick as having an in-house team. Your external team might be handling several clients’ project along with yours, so your business’ needs are not the main priority. Also, your external team can be located in a different time zone which can complicate many aspects of your business. If your business is in a niche where information is very sensitive, there can be several security risks with outsourcing your IT and data to an external team. Checking with your clients is optimal before hiring an external team.


Whether you have in-house team and you’re looking for help on a project or if you need a full service IT-team, explore some of SDS’ services and talk to one of our experts today for a free consultation.


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