Laurynas Pletkus
Laurynas Pletkus

In-house vs Outsourcing - What You Need to Know and Overview of Each

June 20, 2019
6 min read
In-house vs Outsourcing - What You Need to Know and Overview of Each

In our previous blog post, we talked about what you should be looking for when outsourcing tech.

Outsourcing tech development is one of the more convenient ways you can scale up, assuming you know what you’re looking for.

However, the other side of the coin is doing it in-house.

Both of these options are viable and have their own set of pros and cons.

Most of the time, however, the decision comes down to the scope of the project. Factors like the time-frame of the project, the budget, and most importantly, your team, are the most important things to take into consideration.

Is the project short-term? Will you continue the working relationship afterwards? Will you be able to find the right talent locally?

Regardless of the option you go with, it’s important to define your requirements and expectations first.

It may sound obvious, but you need to clearly define what you’re looking for from a project development standpoint first.

This is why there is no right or wrong answer. Each case is different and sometimes you might want to consider hiring in-house rather than outsourcing and vice-versa.

First, to get a better sense of each option though, it’s worth defining what these terms actually mean and what you should look for when considering them.

What’s the difference?

In-house (or insourcing) simply refers to assigning a project to a person or a department within the company instead of seeking outside help.

The cost associated with hiring an inside talent is relatively higher compared to outsourcing. Though it also comes with the benefit of being able to train employees based on the company needs and being available when needed.

Depending on the project, and if it requires physical presence and communication, this can be a good thing.

For example, in the case of an emergency security breach, it’s a good idea to have someone nearby who can take care of it.

If a situation needs to be dealt with immediately, you need to be able to call someone in to deal with it as soon as possible. In that case, you would have no time to look for an outsourced specialist.

By hiring in-house, the company is potentially paying extra money just to be safe. The employee will be trained to the level deemed necessary and most likely, will continue working with the company. Being able to offer a high salary and the room for growth is sometimes enough to make employees become more invested within the company.

The insourcing process is also arguably simpler as the communication happens face-to-face and for most people – this is easier.

There are fewer language and cultural hurdles, no time-zone differences, and the overall management process is also simplified.

Why you should hire in-house

So, to recap, some of the benefits of hiring in-house include:

  • Being face-to-face – Physical conversations offer more engagement between employees (and employers) when covering the same project. This may lead to an increase in morale, a better understanding of the project and faster progress.
  • Long-term relationship – Once a company decides to hire someone they think is a right fit, they’re investing in the employee’s talents, time, and future. If this is the case, they often want the employee to stick around for future projects and help the company in other ways. An increase in salary, room for growth and other on-office perks are great motivators for most people, especially for the long-term.
  • Easier management process – For all the above reasons, the management process becomes much more simplified. Technical solutions usually become resolved much faster, and emergencies are easier to handle. When necessary, an in-house talent can also direct all their attention to a problem that must be fixed quickly.

With all that said, in-house development also comes with its own set of downsides. It’s easy to feel restricted when looking at in-house development and comparing it to other options.

The downsides of hiring in-house

The cons of in-house development can mainly be seen in terms of its restrictions.

You need to consider factors like the financial outlay, time, and quality control.

As mentioned above, hiring in-house also means looking for the right person fit for the job, investing in them, and making sure their onboarding process goes well. Finding the right people and training them can be a costly and time-consuming process.

Additionally, the training never stops, as they will need to constantly update their skills, knowledge, and more. All this, while making sure they’re a right fit within the team culture.

Of course, if they do satisfy all of the above criteria, they will need to be paid a regular competitive salary with certain employee benefits, in order to keep them satisfied within the company.

Team meeting discussing in-house

Once you do assemble a great in-house team with all the required talent, at the end of the day – you’re in full control. You have them fresh and ready for anything you might require along the course of the project.

Together, you will be working together towards a common goal, unified by the culture around your brand and have the precise knowledge of every little detail along the way.

If you have the budget and aren’t constrained in time, this might be the better option for you. If not, however, it’s also worth exploring other options.

Why you should outsource

Finding the right way to approach your operational activities is an important part of working on your business, as opposed to working in your business.

You always want to be looking at the most cost-effective and efficient ways to get tasks done.

Outsourcing has been a common practice for most companies (both startups and corporations) for some time now. Thanks to the internet, it is now easier than ever to hire outside help to improve your development work.

If you want to outsource, we recommend finding a company (or a freelancer) that is the perfect fit based on your requirements.

Each project has its own set of requirements, such as the budget, deadlines, and the necessary skills.

Luckily, when seeking outside help, you’re not restricted in who you can hire as the options are practically limitless.

That is one of the biggest advantages of outsourcing work – the convenience of choice.

Most freelancers or companies are specialists in very targeted fields, such as software development, product design, UX/UI, and more. So, once you know what kind of talent you’re looking for, you can search for one within that specific niche.

It can take much less time to find talent, once you know what you’re looking for. There are many websites for hiring freelancers for quick one-time projects.

illustration outsourcing freelancers for projects

For short-term projects, outsourcing can be ideal.

Because if that’s what they specialize in, you’re saving a lot of time and money. As an added benefit, outsourcing can also be cost-effective because you also have access to cheaper talent with the same high-quality proficiency.

To recap, some of the benefits of outsourcing include:

  • Convenience – If there’s a certain task you can’t do on your own, there are countless websites dedicated to hiring outside help. Usually, the developers there also specialise in a specific field or niche. This is a great way to save time. If you know what you’re looking for, the only thing that’s left to do is book a call to see if they’d be the right fit for your specific project.
  • High-quality talent – You get what you pay for. Depending on the task, it might be worth paying extra to make sure it’s perfect. The online gig economy is constantly growing and because there are so many freelancers available, all you have to do is filter through ratings and reviews. Once you set your expectations, finding the right talent for the job is just a matter of time.
  • Price-factor – Because of the nature of outsourcing, you can hire talent from other countries where the price for their work might be different. These outsourced employees often cost less than their in-house counterparts, and come with the same quality skillset (if not higher).

Collaboration with external workers also involves some downsides, however. So, there are a number of things you need to keep in mind to minimise them.

The downsides of outsourcing

The cons of outsourcing mainly come in being limited within your work relationship.

Most people cite communication as their main concern, their involvement in project development, and finally, also have issues regarding transparency. Here’s how you can minimise all of that.  

A lot of communication issues arise from the difference in time-zones. It may sound scary at first to hire someone from another country with a 10-hour difference but this can be subverted by maintaining a consistent schedule and sticking to it.

To do this, set hours that work for you and the outsourced employee, and have times when both of you will be available for calls.

Proper time-management techniques and having a clear weekly calendar go a long way, as we found out.

Scale3C meeting with Simon Anderson regarding time-management in Utah (US)

“The only challenge could be the time management, but we haven’t had any problems with that, all the work and meetings were scheduled on time. We also thought that language might be a challenge, but Scale3C made sure that everyone in the team members speaks English really well. So we, actually, haven’t had any challenges and we have begun to make the decision to use Scale3C for full-time development positions.” – Simon Anderson, Scale3C Talks.

Once your time-management and communication guidelines are set, the involvement in project management also becomes easier.

By having weekly sprints and daily status updates with a constant feedback loop, we make sure everything is in progress. We follow through this with Q&A sessions once developed features go through quality assurance, which are then validated by UX/UI designers.

Finally, having transparency and trust issues at first might be a factor for those outsourcing for the first time. While hiring in-house definitely makes it easier to handle any trust factors, having a contract or an NDA document in place clears away any doubts.

With that said, you can never be too safe when hiring outside help.

Which is why you should always go with freelancers or agencies you can trust. This is where reviews or word-of-mouth referrals come in useful and it is always a good idea to do your research before hiring.

Mixed approach

Both in-house team and outsourcing require a mix of understanding of skills, patience, and diligence. While outsourcing software development might be the more cost-efficient solution, retaining in-house staff is a sound long-term strategy.

Ultimately, however, most companies often use a mix of both approaches at the same time.

Having a ready in-house IT team might be essential to some degree. Though on the other hand, tasks like customer support, online security or development can be outsourced while you continue working on your business.

If possible, having in-person meetings can also be a great way to boost morale and make sure everyone in the project is on the same page.

Though this is harder to do when outsourcing, we try to make it happen when possible.

This is why we met two of our key clients in Salt Lake City (US) to discuss business and the work we are doing together (more about Scale3C talks here).

Final thoughts

Not all roles are right for outsourcing and some tasks are better to do in-house.

Keeping experts around on the off chance that you might need them in the future can be too costly and time-consuming for most companies. On the other hand, outsourcing all aspects of your business without thinking about your company vision or your customers can kill your momentum.

To find the perfect balance, you might want to define your budget, time constraints, and other requirements in your project management.

It may be hard to satisfy all of your requirements, but as long as you know what you’re looking for, you can manage your project within that scope fairly easily.