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In-house vs outsourcing software development: benefits and differences

Jul 21, 2021

9 minutes read

In-house vs outsourcing software development has always been a big question for businesses. There are many pros and cons to each. Whether your business has stood the test of time and you’re looking for upgraded software development, or your organization is new on its journey, and you need a solution, we’re going to break down the benefits and differences of in-house vs outsourcing your software development. 

Main pros of outsourcing software development

Outsourcing software development vs in-house was traditionally a great way for organizations to cut costs. Today’s development environment calls for more than just cutting costs as it relates to software though. Organizations need the ability to solve complex development needs and outsourcing provides that over trying to achieve them in-house. Organizations can utilize their own in-house staff for post-implementation maintenance and processes and rely on outsourcing for the skill required for the development.

Outsourcing development is also good for businesses in the startup phase as many don’t have the experienced IT skills required in-house for development. Outsourcing development helps new organizations launch their product much faster than trying to develop in-house.

Pros of outsourcing:

  • Outsourcing provides reduced overall costs for development vs in-house
  • Outsourcing allows quicker product launch to market than in-house
  • Outsourcing creates flexibility in the business to focus where it matters instead of on development vs in-house

Main cons of outsourcing software development

While outsourcing software development is a great option for many, it does have risks associated with it vs in-house. When choosing an outsourcing development vendor, they’re not going to be familiar with or understand your in-house processes or systems right away. There is a learning curve for outsourcing as well as potential confidentiality issues. Low-cost outsourcing vendors also come with a great amount of risk. Low cost may very well mean low-quality output. This also usually means you won’t have the full outsourcing development support you need for your product either than you would with in-house.

Cons of outsourcing:

  • Outsourcing has potential confidentiality risks over in-house
  • Unfamiliarity with processes and team dynamics when outsourcing
  • Development quality control issues with outsourcing

Main pros of in-house software development

While outsourcing software development has its perks, developing in-house has many benefits. In-house offers increased control and a better understanding of the internal environment. In-house provides better security and risk measures as no one externally is involved like with outsourcing. Software development in-house also allows for better team dynamics through streamlined communication efforts. There is not a need to get up to speed on common internal language, systems, and processes in-house as would be the case with outsourcing. In-house teams are able to fully understand development requirements around business specifications.

Pros of in-house software development:

  • Enhanced security in-house
  • Streamlined communication in-house
  • Understanding of business requirements in-house

Main cons of in-house software development

Although it can be beneficial, in-house software development has its cons as well compared to outsourcing. The in-house hiring process alone to hire someone with a software development background can take months and prove to be quite costly as their skills are in high demand. Once they’re in-house, they’ll have to learn systems and processes in place. Expenses are much higher with an in-house development team as well as having to cover everything from payroll, to benefits, to taxes and hope for no turnover during the project. If you don’t have the budget to hire a developer in-house you run the risk of your team having limited to no expertise or experience with the project, which could, in turn, lead to longer launch times and expensive fixes than with outsourcing.

Cons of in-house software development:

  • Slow turnaround time to launch product in-house than with outsourcing
  • Limited in-house expertise in software development
  • Higher in-house expenses are involved for your organization than with outsourcing

General points of choosing outsourcing company to not fail

If you’re in the market for outsourcing your development needs, we’re here to provide you with some helpful tips. There is some prep work to do on your part in-house before you decide who your software developer will be.

1. Never trust super-low outsourcing hourly rates. You’re essentially asking for low-quality development work and not a lot if any, support for your software after the project completes and outsourcing is over. This leaves room for mistakes, errors, and bugs in your system that you wouldn’t otherwise have in-house. This will end up costing you twice what you would have paid to begin with if end up outsourcing with a cheap development company.

2.Always check outsourcing references. Is the company reputable? What is their outsourcing history like working on these types of projects? Do you have any peer companies you can consult with to understand the quality of development work you will receive in-house from the outsourcing company? Reliable development companies will have a portfolio of work to share with you for a proven track record. There are also services out there that help you read and understand reviews and pricing of outsourcing development.

3.Do everything you can to protect your in-house data. Confidentiality is key in these outsourcing projects. Sign agreements like NDAs to ensure your data, practices, and processes are protected. Don’t forget to include special clauses on how the data is transferred between your company and the outsourcing software development company.

Related: How to hire the development team for your startup

Follow these steps to protect your business:

  • Don’t work with cheap software development companies
  • Check outsourcing development company reviews and references
  • Protect your in-house data

Outsourcing software development has become an industry norm in today’s business world. Companies don’t want to deal with attracting and hiring expensive development talent and training teams in-house when they can have an external development company do it for them. Businesses have figured out how to cut back and reduce expenses in-house by at least 50% when outsourcing so they can focus on their core business product and goals in-house. This has led to the outsourcing industry to profit by almost $100 billion and growing.

Cloud-based services

Operating in a cloud-based development is a must. The market continues to expand with more and more companies understanding how important it is to have a cloud solution. Cloud technology is here to stay for all of your data storage needs, it offers high security and maximum flexibility with room to scale.

Artificial intelligence

Artificial intelligence, machine learning, and data science are key developments that will shape the healthcare industry in the future. Artificial intelligence with human-like information processing and decision-making opens up a world of possibilities. Diagnosis precision, speed, and efficiency may all be improved using this technology. Early treatment is possible because of AI-driven analytics, which can assist healthcare practitioners in determining the best strategy for a specific patient.

Increased security needs 

Companies have become a target more than ever for cybercrimes. It’s become evident that they need enhanced development around cybersecurity to keep up with protecting customers’ data. This involves investing more in development areas that matter like GDPR (General Data Protection Regulation.) Outsourcing software development to enhance security is on the rise more than ever.


Robotic process automation offers enhanced coordination, expense reduction, and less room for mistakes or manual errors. Business automation has become a more important development than ever in our digital era. Companies are outsourcing their development needs for robotic process automation. RBA offers payment processing as well as an enhanced customer experience.

Why hire software developers at VITech

We pride ourselves on our hands-on outsourcing approach to seamlessly integrate with your team and deliver top-quality development results. VITech stays ahead of technology development trends so you don’t have to. This involves regular on-the-job training, conferences, and workshops to stay current with our skills.

Here’s what you get with VITech:

  • Highly trained software development experts
  • Professional and dedicated development team members
  • A development schedule customized around your needs
  • High-quality development as if it were in-house

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