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In-House Software Development or a DDT Model: What's Best for You

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High-quality software development requires considerable effort. However, many development options are available today, and businesses must determine the most effective strategy. This issue has sparked a debate between those who favor in-house development – or outsourcing. As outsourcing is becoming more prevalent in the corporate sector, it's not unexpected that this methodology is gaining popularity in technology.

With the growth of remote and hybrid workplaces, as well as the "great resignation" and increasing adoption of advanced technologies, it's most likely that the outsourcing industry will keep growing. With a projected 22% surge in IT outsourcing spending from 2019 to $519 billion by 2023 and a 19% increase in global business process outsourcing spending from 2019 to $212 billion by 2023, the growth is quite evident. Furthermore, Grandview Research predicts that the business process outsourcing sector will grow to $525 billion by 2030.

A clear understanding of the core distinctions between these two development methodologies, as well as the advantages and drawbacks associated with each, will help you to determine the optimal choice for your business.

In this article, we discover in-house vs outsourcing software development, the main differences, and their pros and cons. You will also find insights into when it is best to opt for one of these options over the other. Keep reading!

Using an in-house team for your projects

Choosing the in-house option doesn't always require hiring new staff. Your organization may already have the desired expertise on board. If you have assembled the right team and given thorough attention to this process, it may occur that you already have the desired expertise on board.

However, in the case of complex projects, you may require new talents with specific skill sets and experience. Building an IT team through recruitment, interviewing, and onboarding of new employees can lead to spending additional expenses and take time. Moreover, you may also incur training and development costs to equip the team with essential skills and knowledge for successful project completion.

When to choose an in-house development

  • When you’re an IT-focused startup. If your startup is primarily focused on an IT product, in-house hiring may be a viable option.
  • When your company has a significant amount of resources. In-house development is the best choice for companies with abundant resources, sufficient budget and time for software development. It allows investing more time and resources in hiring and onboarding employees, as well as in paying for the local workforce, office, overheads, etc.
  • When you aim for long-term strategies and fostering company culture. In-house development is well-suited for companies that require high levels of intellectual property and data protection and are dedicated to long-term strategies and developing a strong company culture. Furthermore, an in-house team is advantageous for products that require continuous updates and optimization.

Pros and cons of in-house development

Before deciding on hiring an internal team on board, it is important to weigh the in-house vs outsourcing pros and cons.

Total control

An in-house development team provides the greatest advantage of having complete control. You have the flexibility to efficiently use your workforce and train them according to your company's software philosophies, culture, and the required technologies. This long-term employment also means that they clearly understand the business requirements and vision of the company.

Effective communication

In-house teams have the advantage of being exclusively dedicated to your company, no matter whether they work remotely or on-site. This leads to much more efficient collaboration and communication. You can discuss and implement changes faster without the back-and-forth that often comes with outsourcing. The entire team remains perfectly aligned with the project requirements and updates made to the software.

Enhanced support

The support you receive depends on the quality of your team. If you outsource software development, the company may have other clients to prioritize over you. However, in-house development takes the lead in providing immediate and high-quality support.

As dedicated employees, your in-house team members can focus exclusively on your company's needs. You can ensure immediate support when something doesn't go as planned.

Handpick your team

Choosing an in-house team makes the software development process more efficient and productive as it allows you to gather talents that match your company's culture and requirements. Having an in-house team can also create a stronger sense of commitment among team members.

It enables you to form a team of experts whose expertise and experience match your organization's expectations and needs. Although the hiring process can take longer, this approach allows you to recruit developers who best suit your needs.

Cons of in-house hiring

Let's discover the main disadvantages of in-house development that you may face:

Limited access to talents

When choosing an in-house development vs outsourcing, be aware that talent pools can be limited, especially in smaller or remote areas. Thus, a company may face a lack of skills and expertise required for software development tasks, leading to decreased productivity and hampered company growth.

In this case, we recommend outsourcing software development, which has a wider range of resources and expertise to provide for a company.

High cost

Building an in-house development team can become a significant financial burden as it involves the expenses of hiring, onboarding, and managing the team, providing them with essential equipment and software licenses, and controlling all overhead costs like salaries, benefits, insurance, etc. These expenses can add up quickly, particularly for startups or small businesses, making it a costly and time-consuming task to launch your own team.

Time-consuming

In-house software development vs outsourcing can be a time-consuming process since it requires allocating resources to recruit, train, and manage the development team. Additionally, continuous support and maintenance for the software product must be provided.

Project failure risk

To ensure successful project implementation, a development team requires a significant level of technical proficiency and specialized knowledge in a particular domain. Keep in mind that in case of a project failure, the company faces the initial costs but also the subsequent expenses related to starting from scratch or outsourcing to a third-party provider.

Setting up a dedicated development team

A dedicated team is an outsourcing approach where a remote team of developers is hired to work exclusively on your project. This team becomes an extension of your in-house team and works collaboratively with you to achieve your app development goals.

Building a dedicated team (DDT) model involves careful planning and specific requirements. Here we outline some essential considerations and requirements to keep in mind:

Setting up a dedicated development team

  1. Clearly define the project scope: Before setting up a dedicated team, it's crucial to have a clear understanding of your project's scope and objectives. Clearly define the tasks, deliverables, and timeline to ensure the team's focus and alignment.
  2. Identify required skills: Assess the required skills and expertise necessary for your project's success. Determine the specific roles and responsibilities within the dedicated team, such as developers, designers, project managers, and quality assurance specialists.
  3. Team composition: Consider the ideal team size and composition based on your project's complexity and workload. Evaluate the number of team members required and their individual skill sets to ensure efficient collaboration and seamless workflow.
  4. Talent acquisition: Source and recruit professionals with the required skills and experience. Depending on your preference, you can hire team members locally, internationally, or through outsourcing agencies. Conduct thorough interviews and assessments to ensure the right fit for your project.
  5. Communication and collaboration tools: Establish eff