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Outsourcing was and still is one of the most controversial topics all over the world.
While some companies are acclaiming the benefits of outsourcing, a few others had unsatisfactory experiences with their outsourcing partners. This creates a dilemma among companies in deciding whether to hire an in-house developer or outsource overseas.
To clear the confusion, we came up with this post that highlights the pros and cons of both outsourcing development overseas and hiring an in-house developer.
So, have a look and find out which one will be the ideal approach for you.
Pros and Cons of Hiring In-House Developers
There are several instances of companies that have developed strong in-house teams of developers such as Amazon, PayPal and Salesforce – to name a few. Typically, companies hire in-house developers for long-term cooperation.
Hiring and building an in-house development team has both advantages and limitations. Let’s first have a look at what benefits companies enjoy while hiring in-house developers:
Pros of Hiring In-House Developers
As your in-house team will be available on site, you can build and train your team from the ground up or in the way you want, ensuring they know how to leverage the tools to develop products in line with your organization’s philosophy.
As permanent members of the company, in-house developers are more aware of the vision and mission of the company. What it means is that it is easier for the internal team to integrate with the company’s culture, allowing the in-house developers to add more value through their work.
Effective Communication & Collaboration
Having all cross-disciplinary teams present at the same time facilitates the communication process more much clear and less cumbersome. Face-to-face conversations help avoid the risk of lack of communication and instead boost effectiveness.
Cons of Hiring In-House Developers
It’s quite apparent that the cost to hire in-house developers is much more expensive than outsourcing development overseas. The final price is inclusive of many expenses such as recruitment, infrastructure training costs, taxes, overhead salaries, employee benefits and more.
No doubt, the IT industry is evolving so fast but not every developer makes effort to upgrade their skillset with the latest trends, leading to a shortage of talent with a particular skillset.
What it also means is that the time it will take to find the right developers and persuade them to join your organization may be more than you expect. Indeed, you want your in-house developer to be someone who is an ideal fit from both a technical skill as well as a cultural perspective.
As the demand for talented developers is increasing day by day, finding the right developer with the expertise you’re looking for may shift your focus from core issues to non-core ones.
Low Employee Retention Rates
Developers tend to switch jobs quite often. It happens because the demand for skilled developers is high and other companies tend to offer luring packages. Therefore, there’s always a risk that your in-house developer may switch jobs during the critical phase of the ongoing project.
Pros and Cons of Outsourcing Software Development Overseas
The global IT outsourcing market was worth USD 520.74 billion in 2019 and is projected to grow at a CAGR of 7.7% from 2020 to 2027. Today, many companies outsource software development to cut costs and save valuable time to find skilled developers.
Google and Slack are instances of companies that have outsourced development and enjoyed tangible results.
But there are some downsides of outsourcing software development overseas as well. So, before making a final call, let’s have a look at both pros and cons of this approach.
Pros of Outsourcing Overseas
Outsourcing is exclusive of many expenses such as recruitment, onboarding, infrastructure, training. You hire outsourced developers and pay them just for their efforts on the project. If you want to scale up or down your team depending on your current needs, you can do it with ease.
So, what it also means is that you could utilize the cost savings from outsourcing to build more feature-rich products.
Access to Global Talent
When you outsource overseas, you’re no longer confined to a limited pool of candidates within your local territory. You can transcend geographical boundaries to consider developers from all over the world and hire the world’s best talent for your project.
No Long-Term Commitment
The most overlooked benefit of outsourcing overseas is the ability to hire a developer on a project basis without long-term interest. It’s great when you need someone with one skill set now for a while but needs someone with a completely different technical skill set in a few months.
Faster Time to Market
Outsourcing software development overseas doesn’t just help you save on recruiting costs but also helps you save time spent on recruiting. An outsourcing vendor can connect you with already pre-vetted specialists who can jump in and give an immediate contribution to your project, leading to faster project delivery.
Cons of Outsourcing Overseas
Typically, you’ll communicate with your outsourced development team via email, Slack or any other means that doesn’t match the same value as face-to-face communication.
Moreover, you could find yourself working with developers who work in different time zone or don’t speak the same language as you. Unfortunately, this can potentially result in misunderstandings.
With outsourcing software development overseas, you can’t have daily face-to-face communication. So, you can’t control the entire development process and might not feel well-protected while sharing your ideas.
But it depends from vendor to vendor. Ensure to talk about the communication means beforehand. You should sign an NDA contract if you’re afraid that your product idea and code rights will be stolen. The agreement guarantees the protection of your rights and the project idea.
Payroll & Tax Complications
Dealing with the tax system of the home country is quite complicated on its own; when you decide to hire developers from a foreign country, it introduces a whole new set of laws and norms to navigate and tax systems to comprehend.
The very last thing you want is roadblocks to your ongoing software development project due to tax complications. The good news is that there are many ways to deal with paying developers overseas and the best one is to work with a global PEO or EOR to help you stay compliant with international labor laws when outsourcing development overseas.
A Quick Comparison: Hiring an In-House Developer vs. Outsourcing Overseas
|Hiring In-House Developer||Outsourcing Overseas|
|Communication||Seamless communication||Communication gap|
|Speed||Slow down the development||Faster time to market|
|Scaling||Challenging||Easy to scale up/down on-demand|
|Idea for||Long-term projects||Short-term & large-scale projects|
In-house Developer vs. Outsourcing Overseas – Which One is Better?
There is no sure way to tell whether to choose the approach of outsourcing development overseas or in-house development – it depends on your project requirements and goals.
Outsourcing software development is an ideal option when:
- You want to hire a pre-assembled development team for your project
- You want a team with prior software development and industry experience
- You don’t want to waste your time in finding developers with the tech stack required for your project
- You don’t have the time to look after the whole development process yourself
- You want to cut on infrastructure and training costs
Hiring an in-house developer is an ideal option when:
- You have the dedicated resources to recruit and hire the talent
- You want complete control over the development process
- You have a big budget to offer luring packages to hire the best talent
Want to Outsource Overseas without Risks?
If you have decided to outsource overseas, InfoStride is a trusted IT outsourcing partner serving companies worldwide. Our remote development teams have a collective experience of 15+ years and have helped many startups and enterprises across different verticals build result-oriented products.
When you outsource development projects to us, you can expect:
- Administrative & legal support – from onboarding pre-vetted & English fluent developers. infrastructure to payroll and compliance
- Deployment of developers and project managers in accordance with your time zone
- Flexible and affordable engagement models to hire our resources for your project with on-demand scalability of your overseas outsourced development team
Interested? Or any doubts? Get in touch with us and let’s have a discussion around the same.
Outsourcing is a common deal nowadays; it’s considered an effective cost-cutting tool that can drive desirable outcomes within a short span of time. And the risks associated with outsourcing software development overseas can be effectively tackled by choosing the right outsourcing partner.
Whatever development approach you decide to go with for your project – in-house or outsourcing development, be mindful of the pros and cons each one has to offer.