Product Development: In-House vs. Outsourcing

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There are two approaches to developing digital products: doing it in-house and outsourcing it. Let's look at the pros and cons of both options and what a business should choose.

What is in-house development and when is it used?
In-house development (from the English inhouse - internal) is the process of creating a website , application or software directly within the company.

The product owner independently forms a team social media marketing service and hires specialists to the staff. The company fully controls the development process at all stages: from setting the task to the release. In-house work is carried out taking into account the specifics of the organization and its business processes - this allows for the creation of more tailored solutions.

In-house development is suitable if:

The project is strategically important for the company.

A high degree of confidentiality is required.

Flexible and rapid adaptation of the product to changing conditions is required.

The company has the resources to create and manage a team of in-house specialists.

Pros and cons of in-house development
Let's look at the advantages and disadvantages of in-house development. Among the advantages of this approach are:

Full control over source code and data, no competition in priorities with projects of other companies.

The company can quickly respond to any changes and adjust its strategy depending on the market situation.

The development team knows the product well and understands the organization's business processes.

Specialists work in the same office or in the same digital space, for example, Jira. This facilitates communication, especially when an error needs to be urgently fixed.

All processes remain within the company, which reduces risks in intellectual property management.

The disadvantages of this approach include:

High costs of hiring and maintaining developers, which may not pay off due to the specifics of the product.

The company may need more time to find and train experienced specialists. It also has to compete for candidates with other employers. The IT market is experiencing a shortage of personnel. Behind the developers, there is a queue of HR managers ready to bargain for a qualified applicant.

Delayed result. If you build a development department from scratch, you need time to build processes, establish management, and work together.

Staff turnover. A valuable specialist can leave at any time if he/she has lost motivation in the project or received a lucrative offer from another employer.

What is outsourced development and when is it used
Outsourcing development (from the English outsourcing - using an external source) is a practice in which a company transfers the execution of certain tasks or projects to an external contractor organization.

The product owner defines specific tasks that he wants to outsource. This could be the development of a new software product (for example, creating a web application ), support for an existing application, or the development of a separate feature. The company selects a suitable contractor based on their experience, cost of services, portfolio, and other criteria. The parties enter into an agreement that clearly specifies the terms of cooperation: deadlines for completing the work, cost, and responsibility of the parties. The contractor performs the assigned tasks, and the product owner accepts and pays for them.

Outsourced development is suitable if:

The product owner does not have in-house specialists with the necessary skills, or the project requires specific expertise.

Need to quickly expand a team of developers to complete an urgent project.

The company wants to reduce development costs.

Pros and cons of outsourced development
Let's look at the advantages and disadvantages of outsourcing. Among the advantages of this approach are:

Reducing development costs. The product owner does not need to hire and train their own specialists, pay taxes for them, purchase equipment and software.

Reducing Time to Market. The company does not need to set up processes from scratch. The contractor has its own team of developers that can start the project at any time.

Access to expertise. It is easier and cheaper for a business to hire a contractor team than to assemble its own. It is easy to confirm the outsourcer's integrity with the help of reviews and cases.