Software Development

Differences between In-house and Outsourced Product Development

June 16, 2023
Differences between In-house and Outsourced Product Development

When you as a business owner have realized that you need an IT product for your business, the next step is to decide where to develop it. Should it be your own IT department, or should you hire an IT outsourcing company? 


In this article, we will speak about development processes in-house and outsourced ones. We will share our own IT development experience, so you could decide what to choose for developing your IT product. 

Overview

The quality of an IT product developed either by an IT department or an IT outsourcing company is the same (taking into account that an IT outsourcing company has been chosen rightly). However, the process of creating an IT product differs. 

Who takes the final decision? 

Whether you will opt for external or internal IT product development, you will need a technical task and a project design. 

Hiring an IT outsourcing company, you would get also a project manager who will help to define the future IT project, so you will get a full understanding of your project and how it will fit your business. The PM balances business tasks and development tasks. The PM assists in writing a technical task for developers, so will have a detailed calculation for the developers of work. 

  • Having a technical task and a project design, you will know what part of the work you will get and by what time. So you could get the final costs for your project before it will be developed.
  • A project manager will communicate with you and assist you during all working processes, for example, to help you to submit any changes for a project if there is a need. 


When your company has its own developers, they could provide you with a technical task. The in-house development team tries to understand the desired results the colleagues would like to have and understand if they could be realized as IT solutions. So here the developer works also as an IT partner for their colleagues. 


As there is no PM, nor a product owner, submitting proposals and changes is going differently than with an outsourcing company. Employees could add changes and corrections anytime, so the amount of time and resources spent is increasing, and it leads to growing expenses. 


For example, when a business needs an IT product and several departments are engaged as they will use this product, there is no person responsible for taking final decisions about the functionality, logic, or architecture of a product. Workers from different departments could submit and add changes and corrections anytime. It makes a project's technical task and product design subjected to constant changes. 


Also, when there is no person responsible for final decisions and in case of the constantly changing technical task, there is a risk to develop an IT product as a Tower of Babel. Such IT products will have many features that were added by different departments, so in the final version, this IT product will be adjusted to the needs of no one and will not be used in the company. 

Advice: Appointing a person responsible for a project will help you to save money. If you chose to develop your IT product internally, then appoint an employee to be an internal product owner, who will process requests for needed functions in a new product from the engaged departments, prioritize and build a step-by-step development process.


Workforce to be considered 

Whether your IT department or IT outsourcing company will do it, the quality of the project will be the same. However, the price and terms will differ. IT company could do it faster, so the final budget will be higher than an IT department. 

  • IT outsourcing companies could do the work faster not only due to the strict plan but due to the ability to engage the additional workforce. When there is a need to accelerate or an additional workforce, it could easily augment its team to meet the deadlines. 

Often in-house software development lacks specialists, especially the QA, as this is the type of work needed for particular periods of the project development. The same story could be any other specialist whose assistance you need for some period of time. When you realize that you need to hire a new specialist for your in-house software development, you should be patient, as recruiting is not a fast process, and it takes time and resources.

  • So you need to analyze what resources the project will demand and what resources you have, what workforce you have and how they are loaded with work, and what are their competence and skills. You should analyze if it will be profitable for your IT product: to spend resources on hiring a professional on staff, ask for a staff augmentation or to outsourcing.

Large businesses that need an additional workforce have to wait while the HR department will find a professional, so there could be possible delays and pauses in the IT projects. Usually, the terms for internal IT projects are quite flexible in the case of necessity, a company could do a staff augmentation or give a project to an IT company.

How the communication is organized?

With the IT outsourcing company, you have the communication process built: you communicate with the project manager and if it is needed with the developer (it depends on the difficulty of the project). 


The in-house development team is in a constant communication process with its colleagues. For example, a logistics department needs a management tool linked with a calendar. In-house departments start discussions with their colleagues from the logistics department to understand the whole concept. Then they determine tasks to do and develop the solution. Colleagues could come up with their propositions at any time, so the in-house development team needs to balance them and implement them somehow in the project. 


As it happens with in-house and outsourcing development, the initial project could differ from the final one: the developer helps to design the final product and his colleagues from other departments submit their comments and changes all the time. It makes work under the IT product longer. 


How to Combine Both

If you would like to develop, for example, a mobile application, your IT department could have no competence in such type of work. You could hire an IT outsourcing company to do it. 

However, you could combine the assistance from an external IT partner and your own IT department. For example, if you need a new CRM system, an external IT partner could develop it and your internal IT department could support the project. An IT outsourcing company could also integrate solutions, and your internal department could support it. 


Collaboration with the IT outsourcing company allows having professionals for a project without a need to hire them, so their skills and competence could be applied to a particular project and when it will be finished, your internal IT department could support the project. 

Takeaways 

Choosing between internal and external development, you will get the same quality of product, but the question of resources spent will be raised. With the outsourcing company, you could get a product faster and according to the detailed plan. When your internal IT department will develop a product, it will be subjected to change and provoke unplanned expenses. But you always combine both approaches and hire an IT outsourcing company additionally to your IT department.

If you have any questions, you could make a free appointment with our company. 


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