{"id":11426,"date":"2023-07-19T21:24:12","date_gmt":"2023-07-19T21:24:12","guid":{"rendered":"https:\/\/cheesecakelabs.com\/blog\/"},"modified":"2024-05-08T16:43:49","modified_gmt":"2024-05-08T16:43:49","slug":"in-house-vs-outsourcing-software-development","status":"publish","type":"post","link":"https:\/\/cheesecakelabs.com\/blog\/in-house-vs-outsourcing-software-development\/","title":{"rendered":"In-House vs Outsourcing Software Development: How To Choose?"},"content":{"rendered":"\n<p>Creating new digital products is a great way to enhance customer offerings, streamline workflows, or<a href=\"https:\/\/cheesecakelabs.com\/blog\/legacy-application-modernization\/\" target=\"_blank\" rel=\"noreferrer noopener\"> modernize legacy apps<\/a>.<\/p>\n\n\n\n<p>But for most companies, in-house software development is like building a spaceship in a garage. Recruiting top talent and enduring long development times with stretched resources is nearly impossible.<\/p>\n\n\n\n<p>Thankfully, there&#8217;s a practical alternative. Outsourcing lets you offload the heavy lifting to an external team and save at least <a href=\"https:\/\/www.iso.org\/news\/2015\/01\/Ref1922.html\" target=\"_blank\" rel=\"noreferrer noopener\">15% in development costs<\/a>. No wonder it\u2019s the new standard!<\/p>\n\n\n\n<p><a href=\"https:\/\/www.businesswire.com\/news\/home\/20220316005360\/en\/Software-Development-Outsourcing-Will-Grow-70-by-2023-Commit-Study-Finds\">From big tech to small companies<\/a>, everyone is adopting outsourcing these days, and the market is set to reach<a href=\"https:\/\/www.statista.com\/outlook\/tmo\/it-services\/it-outsourcing\/worldwide\"> $777 billion by 2028<\/a>.<\/p>\n\n\n\n<p><strong>So, should you develop in-house or outsource? We weigh both options to help you decide.<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>In this article:<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><a href=\"#In-house-software-development\">In-house software development<\/a><\/strong>\n<ul class=\"wp-block-list\">\n<li><a href=\"#What-is-in-house-software-development?\">What is in-house software development?<\/a><\/li>\n\n\n\n<li><a href=\"#What-are-the-pros-and-cons-of-in-house-development?\">What are the pros and cons of in-house development?<\/a><\/li>\n\n\n\n<li><a href=\"#When-should-you-use-in-house-development?\">When should you use in-house development?<\/a><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong><a href=\"#Outsourcing-software-development\">Outsourcing software development<\/a><\/strong>\n<ul class=\"wp-block-list\">\n<li><a href=\"#What-is-IT-outsourcing?\">What is IT outsourcing?<\/a><\/li>\n\n\n\n<li><a href=\"#What-are-the-pros-and-cons-of-outsourcing?\">What are the pros and cons of outsourcing?<\/a><\/li>\n\n\n\n<li><a href=\"#When-should-you-use-software-development-outsourcing?\">When should you use software development outsourcing?<\/a><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><a href=\"#Key-takeaways:-IT-software-outsourcing-vs-In-house\">Comparison table: In-house software development vs. outsourcing<\/a><\/li>\n\n\n\n<li><a href=\"#Choosing-the-best-development-services-approach-for-your-project\">Choosing the right approach for your project<\/a><\/li>\n\n\n\n<li><a href=\"#Hire-the--1-nearshore-development-company-in-Latin-America\">Hire the #1 nearshore development company in Latin America<\/a><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"In-house-software-development\"><strong>In-house software development<\/strong><\/h2>\n\n\n\n<p>First, let\u2019s look at in-house software development.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"What-is-in-house-software-development?\"><strong>What is in-house software development?<\/strong><\/h3>\n\n\n\n<p>Developing<strong> <\/strong>software in-house (also called insourcing) means using your current tech team to build your digital product. You handle every aspect of the project internally and hire additional developers as needed.<\/p>\n\n\n\n<p>Theoretically, this lets you work more accurately when projects require <a href=\"https:\/\/www.indeed.com\/career-advice\/career-development\/institutional-knowledge\" target=\"_blank\" rel=\"noreferrer noopener\">institutional knowledge<\/a>, though it depends on the talent and expertise you already have in-house.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"What-are-the-pros-and-cons-of-in-house-development?\">What are the pros and cons of in-house development?<\/h3>\n\n\n\n<p>In-house development can provide the following benefits:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Full control<\/strong> &#8211; This approach puts you at the helm. You have the reins on everything \u2014 from curating your tools to setting the project\u2019s direction.<br><\/li>\n\n\n\n<li><strong>Seamless communication<\/strong> &#8211; Everyone in your team operates in the same time zone and maybe even the same office. This allows easy face-to-face meetings and immediate communication.<br><\/li>\n\n\n\n<li><strong>Security<\/strong> &#8211; Your data remains on-site, where you can control access. (This doesn\u2019t <em>eliminate<\/em> security risks, though \u2014<a href=\"https:\/\/www.proofpoint.com\/us\/blog\/insider-threat-management\/2019-verizon-data-breach-investigations-report-shows-spike-insider\"> <\/a>insiders cause <a href=\"https:\/\/www.proofpoint.com\/us\/blog\/insider-threat-management\/2019-verizon-data-breach-investigations-report-shows-spike-insider\" target=\"_blank\" rel=\"noreferrer noopener\">34%<\/a> of breaches.)<br><\/li>\n\n\n\n<li><strong>Insider knowledge<\/strong> &#8211; Your in-house team is intimately familiar with your company&#8217;s pulse and long-term vision. This tacit knowledge can foster better decision-making and synergistic work.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>However, in-house software development can also be:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Expensive<\/strong> \u2013 The average salary of an in-house software engineer in the US is<a href=\"https:\/\/money.usnews.com\/careers\/best-jobs\/software-developer\/salary\" target=\"_blank\" rel=\"noreferrer noopener\"> $120,730 a year<\/a>, putting the cost of a five-person development team at over $600,000. Besides salaries, you also have to pay for recruitment, training, benefits, and workspace overhead \u2014 not to mention ongoing equipment updates and taxes. These add up to a substantial investment with no guaranteed returns.<br><\/li>\n\n\n\n<li><strong>Time-consuming<\/strong> \u2013 In a perfect world, your current team would have all the skills needed to build<strong> <\/strong>in-house developed software. But in reality, even large companies face technical skill gaps. Filling those gaps requires a few months of interviews and onboarding. And because new developers will likely struggle to get up to speed, the actual development process often takes longer.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"When-should-you-use-in-house-development?\"><strong>When should you use in-house development?<\/strong><\/h3>\n\n\n\n<p>Despite its disadvantages, it might make sense to <strong>develop <\/strong>in-house if:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Your budget is limitless<\/strong> &#8211; In-house development is a viable option if money is no object. Make sure you have enough resources to attract top talent, buy the latest technologies, and manage any surprise expenses.<br><\/li>\n\n\n\n<li><strong>You need complete control<\/strong> &#8211; Some projects require a level of oversight that\u2019s difficult to achieve remotely. In these cases, it\u2019s more practical to develop in-house.<br><\/li>\n\n\n\n<li><strong>You have plenty of time<\/strong> &#8211; In-house software development often takes longer, factoring in recruitment, training, and iterations. But if your project isn&#8217;t bound by strict deadlines, you can take your time to gradually refine your product.<br><\/li>\n\n\n\n<li><strong>You\u2019re worried about security<\/strong> &#8211; Does your project involve sensitive data? To some extent, insourcing reduces the risk of data breaches and maintains confidentiality. However, that\u2019s not to say that outsourcing inherently weakens security. You can always protect your data with robust security measures, regular audits, and clear service and non-disclosure agreements.<\/li>\n<\/ul>\n\n\n\n<p>In-house development can foster better control and communication, but it can strain your resources. Be sure to carefully assess your current capabilities before choosing this approach.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"Outsourcing-software-development\"><strong><a href=\"https:\/\/cheesecakelabs.com\/blog\/outsourced-development-team\/\" target=\"_blank\" rel=\"noreferrer noopener\">Outsourcing software development<\/a><\/strong><\/h2>\n\n\n\n<p>The other option is to outsource your software development.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"What-is-IT-outsourcing?\"><strong><a href=\"https:\/\/cheesecakelabs.com\/blog\/it-outsourcing\/\" target=\"_blank\" rel=\"noreferrer noopener\">What is IT outsourcing?<\/a><\/strong><\/h3>\n\n\n\n<p>IT software outsourcing<strong> <\/strong>means bringing in outside experts to build your digital product. It is categorized into three types based on the developer\u2019s location:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Onshore outsourcing<\/strong> means hiring a provider in the same country. It\u2019s easier to work together because you speak the same language, share the same culture, and are in the same time zone. That said, onshoring is often more expensive than the next two options.<br><\/li>\n\n\n\n<li><strong>Offshore outsourcing<\/strong> means engaging a service provider in a country with cheaper labor, usually on a different continent. This translates to substantial savings, but challenges can arise from time zone differences, cultural nuances, and language barriers.<br><\/li>\n\n\n\n<li><a href=\"https:\/\/cheesecakelabs.com\/blog\/nearshore-software-development\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Nearshore outsourcing<\/strong><\/a> means working with developers in neighboring countries. It combines the benefits of onshore and offshore development, reducing labor costs while removing cultural and time zone disparities.<br><br>For example, <a href=\"https:\/\/cheesecakelabs.com\/blog\/software-development-latin-america\/\" target=\"_blank\" rel=\"noreferrer noopener\">nearshoring to Latin America<\/a> can be practical for North American and Western European businesses seeking cost-efficient labor and seamless coordination.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>At Cheesecake Labs, nearshoring is what we do, and we\u2019re proud to do it well! We\u2019ve been named the <a href=\"https:\/\/cheesecakelabs.com\/blog\/web-app-development-company-in-latin-america\/\" target=\"_blank\" rel=\"noreferrer noopener\">#1 web app development company in Latin America<\/a> by Clutch 3 years in a row \u2014 a big honor for such a vibrant region of development talent.&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>Learn more about our full product delivery and <a href=\"https:\/\/cheesecakelabs.com\/blog\/dedicated-development-team\/\" target=\"_blank\" rel=\"noreferrer noopener\">dedicated team<\/a> models for your nearshore development needs.<\/p>\n<\/blockquote>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"What-are-the-pros-and-cons-of-outsourcing?\"><strong>What are the pros and cons of outsourcing?<\/strong><\/h3>\n\n\n\n<p>There are many upsides to outsourcing:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Speed<\/strong> &#8211; By outsourcing, you can skip the time-consuming recruitment process and start work immediately with a fully-equipped team. It&#8217;s like ordering a perfectly baked cheesecake instead of making one from scratch!<br><\/li>\n\n\n\n<li><strong>Cost efficiency<\/strong> &#8211; Outsourcing eliminates in-house development recruitment, training, and infrastructure costs. This frees up more resources to channel into growing other parts of your business.<br><\/li>\n\n\n\n<li><strong>Access to a wider talent pool<\/strong> &#8211; Need more hands on deck? Don\u2019t limit yourself to local developers. With outsourcing, you can tap into global IT powerhouses like Brazil, which has over <a href=\"https:\/\/www.riotimesonline.com\/brazil-news\/nosubscription\/why-brazil-is-rising-as-a-central-hub-for-software-development\/#:~:text=According%20to%20recent%20figures%2C%20Brazil,and%20opportunities%20in%20software%20development.\" target=\"_blank\" rel=\"noreferrer noopener\">half a million software developers<\/a> working with the latest programming languages like Javascript, <a href=\"https:\/\/cheesecakelabs.com\/blog\/biggest-benefits-of-python\/\" target=\"_blank\" rel=\"noreferrer noopener\">Python<\/a>, Golang, and <a href=\"https:\/\/cheesecakelabs.com\/blog\/apps-built-with-flutter\/\" target=\"_blank\" rel=\"noreferrer noopener\">Flutter<\/a>.<br><\/li>\n\n\n\n<li><strong>Team synergy<\/strong> &#8211; The pre-established rhythm of a <a href=\"https:\/\/cheesecakelabs.com\/blog\/why-working-with-dedicated-team\/\" target=\"_blank\" rel=\"noreferrer noopener\">dedicated team<\/a> irons out any workflow issues. This translates into efficiency, fewer disagreements, and better productivity.<\/li>\n<\/ul>\n\n\n\n<p>Outsourcing lets you essentially \u201ctest-drive\u201d before buying. Before committing, you can evaluate a potential partner\u2019s portfolio to assess their range, expertise, and work quality. This is important because you want a company that can effectively mitigate the potential drawbacks of this development approach, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Less visibility over the development process<\/strong> &#8211; Outsourcing could potentially compromise day-to-day oversight and quality control because of the physical separation and distance involved. Cheesecake Labs solves this issue with a tailored communication plan designed to maintain transparency. We use collaborative tools like JIRA and Slack to provide real-time updates and keep everyone in the loop.<br><\/li>\n\n\n\n<li><strong>Increased security risks<\/strong> &#8211; Sharing sensitive data with an outsourcing provider may compromise your system\u2019s security. But don\u2019t worry \u2014 at Cheesecake Labs, we prioritize data and IP protection, using service agreements and NDAs, and having a DevSecops department to protect your information.<br><\/li>\n\n\n\n<li><strong>Integration challenges<\/strong> &#8211; Different work habits and communication styles make merging an external team into your existing workflows harder. At Cheesecake Labs, we understand this, and as a <a href=\"https:\/\/cheesecakelabs.com\/blog\/remote-first-culture\/\" target=\"_blank\" rel=\"noreferrer noopener\">remote-first company<\/a>, we minimize friction by aligning our development plan and communication strategy with your operational processes.<br><\/li>\n\n\n\n<li><strong>Language and time zone disparities<\/strong> &#8211; These inherent barriers can lead to misunderstandings, errors, and delays. But with Cheesecake Labs, you don\u2019t have to worry. Our teams are proficient in English, and our operational hours align conveniently with the US and Western Europe.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"When-should-you-use-software-development-outsourcing?\"><strong>When should you use software development outsourcing?<\/strong><\/h3>\n\n\n\n<p>Software development outsourcing can be a strategic tool if you want:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>A shorter time-to-market (TTM)<\/strong> &#8211; Need to get things off the ground fast? Working with an experienced software outsourcing company can help speed up your TTM to make your digital product <a href=\"https:\/\/www.strategy-business.com\/article\/18881\" target=\"_blank\" rel=\"noreferrer noopener\">more profitable<\/a>. These experts manage their tech and have worked on projects similar to yours, removing the learning curve.<br><\/li>\n\n\n\n<li><strong>Cost-effectiveness<\/strong> &#8211; Outsourcing gives you access to top talent at better prices. For example, it costs less to hire a top-tier developer in Brazil than to hire a US-based counterpart. Plus, outsourcing eliminates HR costs like employee retention and insurance.<br><\/li>\n\n\n\n<li><strong>Scalability<\/strong> &#8211; Outsourcing lets you swiftly scale up or down based on demand. This flexibility is crucial if you have fluctuating requirements and a tight IT budget.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"Key-takeaways:-IT-software-outsourcing-vs-In-house\"><strong>Key takeaways:<\/strong> IT software outsourcing vs In-house<\/h2>\n\n\n\n<p>Looking for quick information on in-house vs. outsourcing pros and cons? Here\u2019s a quick comparison:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1200\" height=\"655\" src=\"https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/07\/it-outsourcing-vs-in-house-1200x655.jpg\" alt=\"comparison table it outsourcing vs in house\" class=\"wp-image-11427\" srcset=\"https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/07\/it-outsourcing-vs-in-house-1200x655.jpg 1200w, https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/07\/it-outsourcing-vs-in-house-600x328.jpg 600w, https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/07\/it-outsourcing-vs-in-house-768x419.jpg 768w, https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/07\/it-outsourcing-vs-in-house-1536x838.jpg 1536w, https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/07\/it-outsourcing-vs-in-house-760x415.jpg 760w, https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/07\/it-outsourcing-vs-in-house.jpg 1920w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"Choosing-the-best-development-services-approach-for-your-project\"><strong>Choosing the best development team for your project<\/strong><\/h2>\n\n\n\n<p>If having full control over every aspect is a priority, in-house development is a solid choice. This approach requires more time, money, and resources, but you can maintain a direct hand in shaping your project.<\/p>\n\n\n\n<p>Outsourcing is the best option if you&#8217;re looking to hit the ground running and reduce <a href=\"https:\/\/cheesecakelabs.com\/blog\/how-much-does-it-cost-to-build-an-app\/\" target=\"_blank\" rel=\"noreferrer noopener\">app development costs.<\/a> You can readily tap into your partner\u2019s expertise and capabilities to achieve your goals efficiently.<\/p>\n\n\n\n<p>Need the best of both worlds? Consider augmenting your team with outsourced technical talent. This hybrid approach blends the strengths of your in-house developers with specialized skills from external experts. It lets you bring fresh skills to the table without sacrificing control over your project.&nbsp;<\/p>\n\n\n\n<p>When it comes to <a href=\"https:\/\/cheesecakelabs.com\/blog\/custom-mobile-app-development\/\" target=\"_blank\" rel=\"noreferrer noopener\">software development<\/a>, there&#8217;s no single \u201ccorrect\u201d choice for every situation. Take a moment to consider what matters most to you \u2014 whether it&#8217;s speed, control, or a balanced combination \u2014 so you can make the right decision.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"Hire-the--1-nearshore-development-company-in-Latin-America\"><strong>Hire the #1 nearshore development company in Latin America<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/cheesecakelabs.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" width=\"1200\" height=\"628\" src=\"https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/02\/how-to-choose-nearshore-development-company.png\" alt=\"\" class=\"wp-image-11156\" srcset=\"https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/02\/how-to-choose-nearshore-development-company.png 1200w, https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/02\/how-to-choose-nearshore-development-company-600x314.png 600w, https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/02\/how-to-choose-nearshore-development-company-768x402.png 768w, https:\/\/ckl-website-static.s3.amazonaws.com\/wp-content\/uploads\/2023\/02\/how-to-choose-nearshore-development-company-760x398.png 760w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/a><\/figure>\n\n\n\n<p>With a decade of experience across <a href=\"https:\/\/cheesecakelabs.com\/portfolio\/\" target=\"_blank\" rel=\"noreferrer noopener\">300+ projects<\/a> and a <a href=\"https:\/\/cheesecakelabs.com\/blog\/web-app-development-company-in-latin-america\/\">#1 ranking from Clutch<\/a> and <a href=\"https:\/\/cheesecakelabs.com\/blog\/top-development-company-brazil\/\" target=\"_blank\" rel=\"noreferrer noopener\">The Manifest<\/a>, Cheesecake Labs excels at building world-class digital solutions.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>I am impressed at the enthusiasm, genuine care for the customer, and strategic thinking of the team. CKL is not your typical nearshoring agency, in that they provide much value added services above and beyond delivering code. They were very helpful with providing insight, feedback, and a customer perspective on the products they were developing<\/p>\n<cite>Karen C. Chang, VP of Product &amp; Engineering at Stellar Development Company<\/cite><\/blockquote>\n\n\n\n<p>Our <a href=\"https:\/\/cheesecakelabs.com\/blog\/nearshore-staff-augmentation\/\" target=\"_blank\" rel=\"noreferrer noopener\">nearshore software development<\/a> services combine onshore collaboration and offshore cost-efficiency.\u00a0So if you\u2019re interested in outsourcing software product development, you deserve no less than the best. <a href=\"https:\/\/cheesecakelabs.com\/en\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Let\u2019s chat<\/a> about your ideas today!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Creating new digital products is a great way to enhance customer offerings, streamline workflows, or modernize legacy apps. But for most companies, in-house software development is like building a spaceship in a garage. Recruiting top talent and enduring long development times with stretched resources is nearly impossible. Thankfully, there&#8217;s a practical alternative. Outsourcing lets you [&hellip;]<\/p>\n","protected":false},"author":81,"featured_media":11429,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[54,1244,1199],"class_list":["post-11426","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-tag-mobile-app-development","tag-nearshore-development","tag-software-development"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>In-House vs Outsourcing Software Development: How To Choose?<\/title>\n<meta name=\"description\" content=\"Which software development team you should hire to work on your app? 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