Software Development in 2021: Outsource or Hire in-house?

Nowadays, software is part of every industry and vertical. Every business, big or small, benefits from software in some way. As business owners are realising the benefits of software, more and more businesses understand that customized software can solve their specific problems in a targeted manner, and hence bring them bigger benefits.

Every company which wants to have it’s own piece of customized software application built has faced this question - to hire a developer in-house or outsource the project to software development agency? Either way has it’s own pros and cons, and the right answer differs for every business.

Before you can decide if you need to hire a software developer in-house or outsource to a software development agency, here are some of the questions you need to answer:

What are your goals?

What is the single biggest objective of the software you wish to build? What are the sub objectives? What is the final business goal you wish to achieve - like reducing your operating costs, increasing your employees’ productivity, becoming accessible over the internet, etc. This business goal will define the focus areas of your software and in turn give you clarity on the cost of the hire vs outsourcing.

Do you have any software background or in house capabilities?

This is the most important question to answer. You need to have a certain level of knowledge about how software works, either yourself or inside your company. Often, the business owner has a business perspective and the software developer has a technical perspective. Having some kind of technical or software background helps in tying these two perspectives towards a common goal. Proper communication is needed to ensure that both parties are on the same page. This is where most businesses take a wrong call and end up losing money to a freelance developer or in house developer who builds software that does not really solve their problem.

How complex is your requirement?

As a business owner, you understand the problem you are having, and the outcome you need from the solution. The software that solves your problem and provides you the desired outcome might sometimes be very complex. As such, high technical expertise is required to write such software. The software might need to be built using multiple technologies & optimised for running costs. Proper licensing of various technologies, their implementation and proper deployment needs to be ensured.

As the complexity increases, so does the need for rigorous testing. Writing proper test cases, taking into account all the factors that would affect the software, requires expertise, teamwork and a proper project plan.

Software development agencies have experts of various technologies as well as experience in doing complex projects.

Is the problem specific to your company?

Is the problem that you’re trying to solve with the software specific to your company, or do other companies in your industry or vertical face the same problem? This is a very important question to ask. If other companies face the same problems as you, you might want to see what software they are using. If the problem occurs commonly in your industry, there already might be software tools available off the shelf, which are much cheaper than a custom built alternative.

One more reason to ask this, is that if the problem is commonly occurring, you might want to speak with other companies regarding their issues with the software that they use - whether it has actually solved their problem or not. Many times, other issues crop up after the software has been built, that prevent the company from getting benefit of the software. For eg. sometimes users are unwilling to use a new software due to inertia.

Best to hire in house if-

Communication in technical terms possible

You will need to know technical terminology if you need to communicate effectively with a software developer. The communication gap often results in software that ultimately does not perform as per requirement, with neither party being responsible. The rework involved can stretch the project budget, often resulting in compromises and software bugs.

If you are able to communicate effectively in technical terms, hiring can actually ensure a big cost benefit for you. It can also result in a software that is exactly as per your requirement, with you being able to supervise and oversee every iteration.

However, there are other costs associated with hiring an employee. If it’s your first time getting a software developed, lack of experience may prove to be an obstacle.

Have software project management capabilities

Project management is the biggest cost associated with in-house software development. From proper requirement finalization to project planning, to execution - proper project management is required to ensure that the project is completed to satisfaction, within time and budget.

If your company has access to an experienced project manager, then in-house software development is easier and cost effective. If not, then it is advisable to outsource the project to a reputable software development agency.

Every software development process follows something called as the software development lifecycle model. There are different models available and usually every software follows one of these for a measurable, standard process and outcome.

If you possess knowledge of these models inside of your company, you will be able to solve issues before they occur, plan timelines, budget better and gain an understanding of the difficult parts of the implementation, as well as make timely adjustments.

Have budget to compensate for delays

Delays are an inseparable part of any software development. Delays can occur because of external circumstances like natural calamities, power failure, etc. or due to unavailability of the developer because of personal/ health issues, etc.

Delays are always unexpected, so planning for delays takes some amount of experience in the software areas as well as business domain. If you’re planning to develop in house, it is better to set aside some part of the budget for unexpected delays.

Have testing capabilities

Proper testing is necessary for any software to work as desired. Testing frequently for the correct parameters requires drawing a test plan and test cases. Having dedicated testing capabilities not only reduces the development time, but also enhances the software quality and hence, the chances of software success.

If your company has knowledge of scientific software testing methodologies, technologies and expertise to execute testing, your software has a high chance of being completed on time, polished and producing the expected outcomes.

Best to outsource if -

Multiple, complex technologies involved

If your proposed software needs to serve it’s users on multiple platforms - for eg, a mobile app as well as a website - it is a good idea to outsource your project to a software development company. Such a company has experts & specialists in multiple technologies. The big advantage is that these different experts can come together to work as a team and build the software as cohesively as possible. Testing can be done in for all the different components, technologies and outcomes of the software in one place. Bugs can be tested for and fixed faster as well.

First time building a software

For the first time, software is being looked as an essential part of them by lots of businesses, regardless of their size and revenue. If your business is building a customized software for the first time, it is highly recommended that you outsource the development. Outsourcing not only reduces the cost and the risk, but you will also gain access to specialised talent and experience. As such, advice and input from these experts will help you make better decisions about your software.

Tight Budget / Timelines

Outsourcing agencies will help you get the best outcome within your budget or timeframes. Experienced specialists from these agencies will be able to help you fit in the requirements inside your budget by separating the essential requirements from others. They can also help you plan your project according to your budget or timelines, aligning with your business goals.

Flexibility is Needed

Outsourcing your project will get you flexibility - you can hire an outsourcing agency for the duration of the project, or on quarterly or annual basis, or just for maintaining the software - it’s all in your hands. This reduces the risks associated with the software development. If found unsatisfactory, the software agency can be replaced by a better one. This also helps you get the best possible ROI for your project.

Need Better Time Management

Almost all software projects face delays due to various internal and external factors. Software development agencies have experienced & skilled project managers that ensure that delays are prevented. In the event of a delay, these agencies will help minimise the impact of the delay on your cost, timelines and business goals.

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