How to Know When It's Time to Hire In-House Developers and Move Away from Outsourcing?

Yarek Rotar, Stanislav Shcherbakov

Aug 30, 2024 • 8 min read

In today's tech world, every company eventually faces a choice:

continue collaborating with software development outsourcing companies or build an in-house development team.

This decision not only reflects the current needs of the business but also shapes its future. Let's discuss the signs that indicate it's time to change your development approach and explore when outsourcing remains a beneficial solution.

Signs That It’s Time to Transition to an In-House Development Team

The first and most obvious sign is fatigue from outsourcing. Many companies experience delays, misunderstandings, and quality issues that can significantly slow down a project. If you start feeling that managing the outsourced team requires too much time and effort, it might be time to consider building your own team.

Another important factor is the need for closer interaction with developers. An in-house team allows for more effective communication and quick adjustments to the project, which is especially important for rapidly growing and dynamically changing businesses. A critical aspect is also the protection of intellectual property and data security. An internal team provides a higher level of control and security, which is vital for projects involving confidential information.

Finally, the growth and scaling of a project may require a more flexible and adaptive development approach, which is difficult to achieve when working with outsourcers.

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An in-house development team allows the company to quickly adapt to changing project demands and scale.

When to Hire Your Own Development Team

Many companies start their journey in the IT field with outsourced development but eventually face several problems and pains that signal the need to form their own development team. Let's look at the key issues:

#1. Project Delays

Problem: Outsourcing companies sometimes miss deadlines due to being overloaded with other projects.

Solution: An in-house team will be fully focused on your project, ensuring timely completion of work.

#2. High Long-Term Costs

Problem: Continuous use of outsourcing for various projects can turn out to be more expensive than maintaining an internal team.

Solution: Forming your own team allows you to optimize costs and gain better control over the project budget.

#3. Integration and Compatibility Issues

Problem: Solutions developed by outsourcing companies can sometimes be difficult to integrate with existing systems due to a lack of deep understanding of the client’s infrastructure.

Solution: An in-house development team has a complete understanding of the company's internal ecosystem, making integration and system maintenance easier.

#4. Confidentiality and Data Security Issues

Problem: Outsourcing data to third-party companies increases the risk of confidential information leaks.

Solution: An in-house team ensures a higher level of security and control over data and intellectual property.

#5. Lack of Understanding of Business Goals and Corporate Culture

Problem: Outsourcing teams often are not immersed in the corporate culture and mission of the company, which can reduce the effectiveness of their solutions. Differences in time zones, language barriers, and cultural differences can complicate communication and alignment.

Solution: An in-house team has a deeper understanding of business goals and corporate values, which contributes to the creation of more focused and effective products.

#6. Limited Control and Flexibility in Project Management

Problem: Working with outsourcing companies, businesses often face difficulties in making changes and adapting the project to changing conditions.

Solution: An in-house development team allows for faster and more effective responses to project changes, providing greater flexibility and adaptability.

#7. Lack of Innovation and Creativity

Problem: Outsourcing teams may focus on completing tasks with minimal requirements, without investing in innovation and creative solutions.

Solution: Internal developers, being fully immersed in the projects and goals of the company, can propose innovative ideas and creative approaches that better meet business needs.

#8. Dependency on External Providers

Problem: Long-term collaboration with outsourcing companies can lead to dependence on their technologies, methodologies, and work processes.

Solution: In-house development allows the company to build and optimize workflows according to its own standards and best practices, reducing dependency on external providers.

#9. Maintenance and Product Update Challenges

Problem: After a project is completed, outsourcing companies may offer limited support or high fees for further maintenance and updates.

Solution: Having an in-house team ensures continuous support, prompt bug fixes, and regular product updates.

These issues are clear indicators that it's time to reconsider your development approach and think about building your own development team. Creating an in-house team may require significant initial investments and efforts, but in the long term, this solution will provide greater control over development, improve product quality, and make processes more flexible and adaptable to your business needs.

When Outsourcing Remains Beneficial

Even with the numerous advantages of forming your own development team, outsourcing development continues to be a valuable solution for many scenarios.

Here are the key points when it’s worth considering outsourcing agencies:

Projects with a clearly defined timeline and limited scope are often easier and more economical to implement through outsourcing.
If the project does not require regular updates or the addition of new features, outsourcing allows you to avoid the costs of maintaining a permanent team.
For startups and small businesses, where every penny counts, outsourcing can be the optimal solution for development, allowing you to reduce overall IT costs.
Outsourcing can be particularly advantageous when specialized expertise is needed, which is not available within the company, or when you need to quickly scale the team for short-term tasks.

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It is important to evaluate all aspects—from the cost of mobile app development to understanding how much it costs to develop a website—and compare them with the potential expenses of hiring and maintaining an in-house team.

Cost Comparison: Outsourcing vs. In-House Team

For a clear comparison of the costs of mobile app development and website creation when working with outsourcing agencies and an in-house development team, let's present the information in the form of a comparison table. This will allow you to better understand the differences in costs and make an informed decision.

Criterion	Classic Development Team	No-Code Development Team
Skills	Requires deep programming knowledge, including full-stack developers.	Focuses on process logic, doesn't require deep programming knowledge.
Development Speed	Depends on project complexity; can take months due to the need for manual coding.	Significantly faster thanks to ready-made templates and visual programming.
Flexibility	High, due to the ability to customize the code.	Limited by the capabilities of the chosen platform, but suitable for adapting to changing project requirements.
Cost	Higher due to the need for specialized developers and scrum teams.	Lower, as the need for specialized skills is reduced, and project management is simplified.
Scalability	High, with the ability to modify and extend the code to support project growth.	May be limited by platform constraints, making it difficult to expand functionality as the project grows.
Project Management	Requires experienced management and scrum methodology for coordinating large teams.	Simpler, thanks to visual management tools and less reliance on complex project management methodologies.
Tools and Technologies	Wide variety of choices, including the latest innovations in tech startups.	Limited to the chosen no-code platform, although many platforms offer integration with external services.
Customization	Nearly unlimited customization options due to direct access to the code.	Limited by platform templates and tools, which may not meet specific project requirements.
Prototyping	Can be time-consuming but offers complete freedom in design and functionality.	Rapid prototyping through visual tools, but with complexity limitations.
Testing and Deployment	Complex processes with manual and automated testing, supporting continuous integration (CI/CD).	Simplified testing and deployment thanks to built-in platform tools, but with less control over the process.
Security	Allows for custom security settings and enhancements.	Dependent on the security measures provided by the platform, which may raise concerns for large projects.
Integration with External Services	High degree of integration through APIs and custom solutions.	Varies depending on the platform; some no-code solutions may limit integration.
Long-Term Maintenance	Support and updates require ongoing work from the development team.	Easier to manage and update due to the centralized platform but with the risk of vendor lock-in.
Adaptability to Change	High, with the ability to quickly make changes to the code.	Quick adaptation to market changes is possible within the platform's functionality but may be limited for complex modifications.
Development Approach	Supports both agile and waterfall methodologies, providing flexibility in project management.	Often relies on agile approaches due to its flexibility and development speed, but within the tools provided by the platform.

This table demonstrates the key differences between development approaches.

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It’s important to understand that the choice between outsourcing and an in-house team depends on many factors, including the project’s specifics, available resources, and the company’s strategic goals.

Examples of Companies That Need an In-House Development Team

These examples highlight the importance of having an in-house development team for organizations where technology is a key element of their strategy, operations, or business model. An internal team not only allows for more effective management of the development process but also ensures flexibility and the ability to make quick changes to the product, which is critical in today’s dynamic business environment.

#1. Tech Startup Developing an Innovative Product

These companies often face the need for rapid iteration and adaptation of their product to changing market demands. An in-house team provides full control over the development process and the ability to quickly respond to user feedback.

#2. Large Company with Constant IT System Development and Support Needs

For such companies, having an in-house team ensures continuous support and development of corporate applications, which is critical for maintaining operational efficiency and security.

#3. Manufacturing Enterprise Integrating Digital Technologies into Its Processes

Companies aiming for digital transformation of their manufacturing processes need a development team to create and adapt software to specific production needs, integrate existing systems, and implement innovations.

#4. Financial Organizations Developing Their Own FinTech Solutions

Banks and financial startups developing online banking platforms, payment systems, or other FinTech products need a development team to create secure, reliable, and user-friendly services capable of handling high loads and ensuring data protection.

Examples of Companies Where Outsourcing Remains the Optimal Choice

Outsourcing can be the optimal solution for companies that need a flexible approach to development, have limited resources, or have specific short-term tasks. Using external developers allows such companies to quickly adapt to market changes, experiment with new ideas, and optimize costs without compromising the quality and speed of project execution.

#1. Small Business or Startup in Early Stages

Companies with limited budgets and an unstable flow of development tasks can significantly save by using outsourcing, paying only for the work done and avoiding the costs of maintaining their own development team.

#2. Non-Profit Organizations with One-Time Projects

Charitable foundations or educational institutions that need to develop a website or mobile app for a specific campaign can effectively use outsourcing to minimize costs and focus resources on their core activities.

#3. Startups Testing New Ideas on the Market

For startups at the stage of validating a business idea that does not require ongoing development, outsourcing allows for quickly and cost-effectively creating prototypes and MVPs (Minimum Viable Products) to test them with real users.

#4. Companies with Seasonal Projects

Organizations operating in highly seasonal industries (e.g., tourism or retail) may require the development of special promotions or apps for a specific season. Outsourcing in such cases allows for optimizing costs by hiring developers only for the project’s duration.

#5. Enterprises Conducting Short-Term Research and Development

Companies engaged in research and development of new products or services that require specialized IT knowledge can effectively use outsourcing to attract the necessary specialists for the development stage, minimizing long-term staffing costs.

Conclusion

The choice between outsourcing development and building an in-house development team is a key decision that can significantly impact the success and flexibility of a business. Outsourcing offers flexibility and cost savings in the short term, especially for startups and projects with limited budgets. Meanwhile, an in-house team provides full control over the development process, better protects intellectual property, and contributes to the strategic development of the company in the long term.

Ultimately, the choice should be based on a thorough analysis of your business’s current and future needs, as well as your readiness to invest in developing internal resources.