Articles

Outsourced vs In-House Software Development: Which one is better for startups?

by Vijay Khatri Community Manager

The startup world today has an irrational vitality towards digital transformation. To have a digital backbone, startups often face a circumstantial question of having hired help or opt for traditional outsourcing. But since the past 5 years, startups with a vested focus on digital excellence, and to best transact the idea into a reality within a narrow timeline, are slowly shifting towards strategic outsourcing. Although there have been arguments on whether outsourcing (especially in terms of IT related solutions) has lost its relevance with time, it still remains a preferred hiring arrangement. Here’s an unbiased listicle on what resource gathering management to opt for your software development assistance: 


Differentiation factors in between in-house software management model vs outsourcing model: 


Software Developers

  1. Resource Scalability: Software development companies scale their teams rapidly, but when it comes to hiring in-house developer, you have to go through an entire HR drill again, which is time-consuming and eats up substantial resources. 

  2. Skills & Experience: Unlimited skills and experience are at your disposal when it comes to outsourcing project as they are available at the beck and call. With in-house staff, comes limited choice. 

  3. Knowledge: Since the outside agency’s business depends on keeping up with the technology as if they don’t move on in the industry, the competition gets ahead. In-house talent is usually not exposed to diverse projects which means their skills are rigid. 

  4. Access to Large Talent Pool: Software agencies have a pool of talent working under them, which means you get access to all kinds of resources under one umbrella. 


Work Factors

  1. Workload Sharing and Allocation: When you appoint an in-house resource, you are aware of the skill-set you hired, but in case you outsource work to an agent who isn’t aware of the requirement first hand, can deliver ineffective results. 

  2. Collaboration: It is easier to collaborate with your own team as communication is direct, with development agency on appointment work, communication becomes a bit shaky. 

  3. Quality Control: With appointed in-house candidate you have a quality control from the first day, but with outsourced work, control over progress and quality is limited to meetings and reporting. 

  4. Testing and Professional Quality Assurance: This is where outsourcing excels, as development agencies have their own dedicated QA departments. 

  5. Guaranteed Results: There is a possibility that development agencies may fail to zero on algorithms which gives you the power to withhold their payment, unlike in-house resource. 


Cost: According to a survey: “12% of Total IT budget is now being spent on IT outsourcing.” and Statista: “Global Outsourcing market size of IT services in 2017 was about $89 billion.”

  1. Human Resource Cost: Review of outsourcing partners takes less time and involves slimmer cost than hiring a software developer on 9-5 pay grade. 

  2. Training Cost: Training cost is usually higher when it comes to hiring a full-time software developer as compared to bringing on board an expert team who have an impressive portfolio and requires no narration of work. 

  3. Personnel Management Cost: Extra luxury pays of medical, travel and other allowances occupy a substantial amount of budget which is unjustified for an average software developer. 

  4. Cost Center: Outsourced software agencies of freelancers usually possess all the latest equipment and software. 

  5. Expert biased cost for an average developer (only niche skills): Cost of an average developer is usually $60,000. Outsourced projects usually charge half of this and avoid dragging of work. 

  6. Performance-Based Liability: Outsourced agencies usually charge only upon delivery, unlike in-house resource who is paid irrespective of target accomplishment. 


Overheads: When you are not responsible for hardware and human resources expenses, your overheads decrease drastically.  


Pressure and Challenges: Outsourcing allows you to pass on your challenges and stress to the hired development agency. The resource hunt and financial liabilities attached to the process becomes zero. 


Business Focus: Software development agencies are driven with an entrepreneurial mindset and dedicate their focus on more constructive purposes. 


One-Stop Solution: Multiple jobs at one single place, done and dusted with software development agencies. The process is convenient and cost-friendly. 


Final Words: What suits you and your startup is determined by your specific requirements, but an overall global analysis suggests software development agencies offer modern productivity, better project management tools, and real-time results. 


Originally Posted Here.



About Vijay Khatri Junior   Community Manager

2 connections, 0 recommendations, 14 honor points.
Joined APSense since, December 15th, 2018, From Haryana, India.

Created on Jul 25th 2019 02:49. Viewed 113 times.

Comments

No comment, be the first to comment.
Please sign in before you comment.