In-House vs Outsourcing Software Development: What to Choose for Your Company?

By: MRT Desk

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Most businesses require software, ranging from basic calculators to complex databases for their company. The best option for these businesses is to outsource software development or in-house software development. This article will cover the basics of both options and offer suggestions about when each option of in-house vs it outsourcing would be appropriate.

What is In-House Software Development?

In-house software development, also called in-house or internal software development, is the process of developing computer software or applications within an organization. Usually, this includes large corporations with their own IT department or smaller organizations that wish to retain control over their technological developments.

One advantage of in-house software development is that companies can maintain complete control over the entire application building process. They don’t rely on outside contractors or service providers for various parts. This can make it easier to keep all data private and secure.

Pros of In-House Software Development

CONTROL OVER THE FINAL PRODUCT: When you develop software in-house, you have more control over the final product. You can dictate the software’s features, design, and functionality, which may not be possible to contract out to a third party.

EASIER INTEGRATION WITH EXISTING SYSTEMS: If your company has already invested in custom applications or other internal systems, it may be easier (and cheaper) to develop new software that integrates with these systems rather than incorporating new systems with the custom ones.

CONTROL OF INFORMATION: Since it is your company’s software, you have more control over the data processed by it. This may be advantageous if your business deals with sensitive data or contains trade secrets.

COSTS: Developing software in-house does cost less than contracting out to a third party. Also, since there are no licensing fees for the product, you will not have to pay any royalties on top of that initial development cost.

Cons of In-House Software Development

STAFFING NEEDS: You will need to staff a team of developers and other IT professionals to develop the software in-house. These people can be costly, and sometimes a company does not have a large budget to accommodate them all.

TIME TO MARKET: It takes time for a new piece of software to go from the idea stage to reaching your customers. Also, you will need to test and debug it, which may cause delays in the final product.

START-UP COSTS: When you develop software in-house, a start-up cost is involved (e.g., purchasing computers, hiring personnel). These start-up costs can be expensive and impact your bottom line if you want to maintain low prices for your products.

MAINTENANCE COSTS: Most software needs updates, which means that you will have ongoing maintenance costs once it is completed and launched.

What is Outsourcing Software Development?

Outsourcing software development or IT outsourcing entails contracting out work on a project or particular components of a project from an external third party instead of developing it in-house.

Outsourcing is an excellent option for companies that do not want the hassle and expense of maintaining an internal software development team but need high-quality software products.

Pros of Outsourcing Software Development

NO START-UP OR STAFFING COSTS: You can get started immediately without investing anything upfront. Also, you will only pay for the work done without any additional charges (e.g., maintaining a full-time staff).

LOWER PRICES: Since there are no licensing fees and other fees involved with outsourcing, you will ultimately save money on your project. This means that you can charge less for your product and still make a profit!

FASTER TURNAROUND: When you outsource software development, you can begin working on your project much sooner than if you developed it in-house.

OFFSHORE OPTIONS: Many companies now can outsource their projects to offshore locations where labor is cheaper, and talent can be found. This means that sometimes it may be less expensive to hire an outside company than it would be to bring someone on internally! You can check offshore software developer hourly rate to learn more. 

Cons of Outsourcing Software Development

PROBLEMS WITH COMMUNICATION: Since you are dealing with a third party, communication can undoubtedly be a problem (e.g., miscommunication due to different cultures or time zones). Also, you will not have as much control over the end product as if you had outsourced some other type of product.

LOSS OF CONTROL: As mentioned above, there is no guarantee that you will maintain complete control over the development process. You may be limited in your abilities to make changes once the software is completed and launched (e.g., if it has already gone through extensive testing).

DEPENDENCE ON THE VENDOR: If something ever goes wrong or does not work for some reason, you will have to rely upon your developer to fix the problem since they are the only ones with access to source code. Also, any future updates will need to go through them, so you cannot always get what you want when it comes time for periodic maintenance!

MAINTENANCE COSTS: Keep in mind that even though the initial price of the project may be lower, there will still be ongoing maintenance costs that you will need to budget for.

Conclusion: What Types of Companies May Choose In-House Software Development and Outsourcing Software Development?

Companies that need smaller products developed should consider outsourcing software development, while companies that need larger projects developed should consider in-house software development.

For example, if your business needs a mobile app developed, outsourcing would be a good fit because it means you won’t have to pay your employees overtime, and it will be done quickly.

On the other hand, if your business needs complicated software developed for an internal system, in-house software development would be a better choice because there is less risk involved with using people who already know how everything works together.

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