Should you in-house or out-source your software development?

When should you choose to outsource your software development? It’s a question we get asked a lot. We like to turn the question around and ask: when should you choose in-house development? Both routes have pros and cons, so here are five considerations to help with your decision.

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1. In-house advantages

There are good reasons for going it alone and developing digital solutions in-house. For example, if software engineering is a core competence, and you know how to do it well. It makes sense for digital businesses to recruit software expertise early on, particularly if they have software products and services. Even traditional industries are embedding developers into their teams as part of their transformation strategies. So, if you’re committed to bringing in the skills and leadership that fully understand how to design and develop modern digital solutions, in-house is a good option.

Other advantages of staying in-house are: if you want to evolve, manage and maintain the product yourself and retain knowledge in the business. Or, if you want to fully protect the privacy and confidentiality of your customers or organisation. Or if you have geographic or language barriers that will be better suited to internal governance. However, with the right outsourcing partner, you can address all of these issues.

2. In-house disadvantages

In-house development has its disadvantages, however, particularly with respect to the skills and expertise required to develop and deliver modern digital products. Recruiting and up-skilling designers, engineers, testing and operations experts takes particular attention and investment.

Consequently, if digital product development isn’t a core competency or requirement of the business, choosing to in-house can be expensive and time-consuming.

3. Outsource advantages

A major reason to outsource is to fill your skills gap and add something you don’t have. External specialists can share expertise and advice, help to upskill your staff and leave your teams with long-term knowledge.

They can also accelerate delivery, particularly if they know your industry or have experience in what you need. And they can strengthen your IT delivery by bringing the latest methodologies, tools, techniques and thinking.

4. Outsourced disadvantages

You are taking a calculated risk when you work with an outsourcing partner. So, naturally, you want to choose wisely, and work out the best outsourcer for you, whether that’s a large consultancy, a bespoke agency, a sole practitioner, multiple agencies, or a service firm with strong ties to a particular vendor.

The disadvantage of software outsourcing is you are potentially handing over control of a project to someone outside the organisation. This can impact customers, reputation and even revenues if things go badly. Data privacy and confidentiality are also at risk when you use external contractors. And, unless the outsourcer leaves sufficient knowledge behind, you may need to return to them if there are maintenance issues in the future.

5. In-house outsourced combination

In our experience, a hybrid relationship between us and our clients is the ideal choice. As an outsider, we are in a position to offer a fresh perspective on things. We can kickstart innovation, challenge current thinking and deal with anti-patterns. We also like to work with our clients to solve specific problems, in order to solve bigger problems in their organisation.

We also find it works when we can complement a client organisation’s expertise. They might have great QA skills or integration but be weak in other areas. As an outsourced partner, working as part of their business, we can bring our own expertise, whether it’s in Agile, Scrum, testing, front-end development, UX or security. And we can help to up-skill in-house teams, and share knowledge that enables them to manage and maintain software after the engagement ends.

Hybrid working means we take ownership as your partner. We take time to understand your business. And we learn and work together to make products even better. In our view, an in-house/outsourced combination gives you the best of both worlds.

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