Every role in every company can be done one of two ways: Insourcing and Outsourcing. Software development often determines whether internal skills are necessary or achievable outside the organization.
How to decide: Outsource vs. Insource?
How “core” is this business function?
In each business, there are core and non-core jobs.
For some organizations, software development work sits between core and non-core, and in this way they outsource a portion of the work and oversee the rest in-house. Programming and IT is fundamental for the smooth running of multiple businesses.
In more modest organizations, this crossover approach may not be affordable. Hence they either outsource the whole thing or look for cheaper options.
What will it cost?
Since the outsourcing came into the picture, it has always been about cost. Keeping it in-house can incur the following costs:
- Net compensation
- Expense and other required government commitments
- Annuity commitments
- Office and IT costs
Additionally, costs of recruitment, training, bonuses and expenses will need to be factored in. If you are struggling to hire for a role, chances are high that your competitors are looking to hire for the same skill set. This increases salaries and other benefits.
When you outsource, you agree on a fixed hourly or daily rate for the life of the contract, with potential adjustments depending on flexible elements of the project/contract, and that is it. The firm or individual you have partnered with are managing their own costs (such as office overheads and pension contributions, etc.) as a percentage of the payment agreed between both parties.
How urgent is the delivery?
When it comes to hiring developers, anyone who has ever recruited for software roles knows how competitive the landscape is. Talent does not come cheap. Neither does experience. You are competing against big tech firms, other corporates, high-growth startups, and development firms. Your company is also restricted by geography. Most new hires come from within a commutable distance – in most cases, up to an hour.
Outsourcing software development allows tapping into global tech talent. The talent that wouldn’t ordinarily find your company is suddenly accessible and ready to work with you. And the beauty of outsourcing means that you aren’t waiting months from deciding to go ahead with the project and having the team in place to deliver the work. In some cases, you can assemble a skilled team ready to work on a project within two weeks.
Waste no time, and keep your costs lower with outsourcing. Outsourcing software development projects can actually help strengthen other core processes. When you outsource software development to other companies, you avoid overwhelming your in-house developers with work that doesn’t match their skill level, further allowing them to focus more on strategic goals.
What are the skills needed?
Putting the right team together depends on the technology stack already in use, how the new application or platform is going to interact and integrate with that stack, and the skills you’ve already got on-board. Outsourcing software development is the right solution when you need access to rare technologies. There are over 2000 different programming languages out there and, certainly, you can’t hire engineers who know all of them in-house.
If you are going to outsource software development work to a technology team, you need to start with a clear understanding of the scope and therefore skills required. Developing this scope should involve the input – if not the direction of – an internal tech leader. Someone who can scope out the project and bring the insight that translates business goals into technology outputs. With these insights, you can outsource a team that includes the most relevant and useful skills to deliver the project outputs and goals required.
What are the risks involved?
While outsourcing software development can offer many benefits for a company, it also involves some additional risks that have to be considered. Managing risk is something companies are increasingly aware of when outsourcing.
Insourcing means that you retain control. You’ve got more control over the quality, over the transfer and movement of data and over ensuring that compliance standards are maintained. It doesn’t mean that things can’t go wrong.
Outsourcing is better when you have closely vetted an external provider and are confident they will deliver the work needed without compromising data security and compliance. If the work being delivered poses little risk to data integrity and the customer-experience then outsourcing is a sensible and cost-effective approach.
Control vs. Innovation
Another argument for outsourcing is that external companies can solve problems more effectively. Internal teams soon get bogged down in office politics and internal processes that can slow down innovation. Neither of which is helpful when you are creating innovative software products and solutions.
Working with external providers reduces the risks associated with internal teams. Outsource teams can move faster, innovate quicker, are more agile and will come up with solutions those on the inside often miss.
Businesses often think about outsourcing purely in terms of cost savings, but outsourcing can do more than just lower expenses. As your business grows, outsourcing can be a way to promote innovation, disrupt your industry, and access new skill sets that reposition your company in the market.
When considering how outsourcing can help you grow, don’t limit yourself to looking at the cost of hiring outside contractors versus handling a task with your current staff. Focus on the value a contractor’s expertise adds to your company.
As an experienced and trusted outsourcing/outstaffing partner, we are happy to answer any questions remaining, or to help you to create the online impact you need to thrive in your business. Call us at +31 853 012 993, or click here to visit our website. We are looking forward at the opportunity to create just the perfect website for you. Together we can make your (online) business a success!