{"id":357,"date":"2020-03-07T13:14:09","date_gmt":"2020-03-07T13:14:09","guid":{"rendered":"https:\/\/winatalent.com\/blog\/?p=357"},"modified":"2021-05-15T15:45:47","modified_gmt":"2021-05-15T15:45:47","slug":"in-house-vs-outsource-vs-freelance-software-development","status":"publish","type":"post","link":"https:\/\/winatalent.com\/blog\/in-house-vs-outsource-vs-freelance-software-development\/","title":{"rendered":"In-House vs. Outsource vs. Freelance Software Development"},"content":{"rendered":"\n<p><em>&#8220;Do I build an in-house team (insource) to develop my software product?<\/em><\/p>\n\n\n\n<p><em>Do I <a rel=\"noreferrer noopener\" href=\"https:\/\/winatalent.com\/blog\/2019\/12\/why-is-outsourcing-your-mvp-a-good-idea\/\" target=\"_blank\">outsource<\/a>&nbsp;my product?<\/em><\/p>\n\n\n\n<p><em>Or should I <a rel=\"noreferrer noopener\" href=\"https:\/\/winatalent.com\/blog\/2019\/12\/hiring-a-freelancer-a-leap-of-faith-or-winning-a-talent\/\" target=\"_blank\">hire freelancers<\/a>&nbsp;instead?&#8221;<\/em><\/p>\n\n\n\n<p>Answering these\nquestions is a common struggle among all companies. Typically, when companies\nwant to establish a new software project or&nbsp;<a href=\"https:\/\/winatalent.com\/blog\/2019\/12\/how-to-build-a-successful-minimum-viable-product-mvp\/\" target=\"_blank\" rel=\"noreferrer noopener\">build a minimum viable product\n(MVP)<\/a>, they have to choose between the three preceding options.<\/p>\n\n\n\n<p>Of course, there&#8217;s no &#8220;right&#8221; or &#8220;wrong&#8221; answer; the best option varies in different circumstances for different companies. <\/p>\n\n\n\n<p>For instance, many companies may praise the merits of outsourcing or hiring a team of freelancers, while others had horrible experiences.&nbsp;<\/p>\n\n\n\n<p>To get a better sense\nof each of these three options, it&#8217;s worth defining what each concept means and\nwhat its advantages and disadvantages are.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What\nis an in-house team or insourcing?<\/h3>\n\n\n\n<p>In-housing (or\ninsourcing) refers to conducting an operation within the company instead of\nseeking outside help; it&#8217;s the practice of assigning a project to a permanent\nemployee (or a department).<\/p>\n\n\n\n<p>When companies build\nan in-house team, they select and hire regular, full-time employees.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">Pros of building an\nin-house team<\/h5>\n\n\n\n<ul><li><strong>In-house teams are more dedicated<\/strong><\/li><\/ul>\n\n\n\n<p>For regular employees,\nthe company is always a priority in case of an emergency event, since the\ncompany is their only source of income. They are almost always available and\ncan immediately take care of an unexpected issue.<\/p>\n\n\n\n<ul><li><strong>In-house teams have a long-term commitment<\/strong><\/li><\/ul>\n\n\n\n<p>Once companies decide\nto hire an adequate individual, they regularly pay a salary and invest in the\nemployee&#8217;s talent and time. Consequently, the employee has an in-depth\nunderstanding of the business and sticks around longer while striving to grow,\nand in turn, helps the company develop.<\/p>\n\n\n\n<ul><li><strong>Companies can train their in-house team<\/strong><\/li><\/ul>\n\n\n\n<p>Even if companies fail\nto find an individual who matches their requirements, they can train&nbsp;their\nemployees and develop their skills to the level deemed necessary after hiring\nthem.&nbsp;<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">Cons of building an\nin-house team<\/h5>\n\n\n\n<ul><li><strong>Companies will be entirely dependent on the in-house team<\/strong><\/li><\/ul>\n\n\n\n<p>When companies hire\nin-house developers, their whole work becomes dependent on them.&nbsp;<\/p>\n\n\n\n<p>If a team member faces\nan issue and becomes unavailable, the entire project suffers. The consequences\nmight be grave, too, such as cost overruns and extended deadlines.<\/p>\n\n\n\n<ul><li><strong>Finding skilled local employees is a challenge<\/strong><\/li><\/ul>\n\n\n\n<p>Sometimes, even after\ncompanies spend tremendous amounts of time and effort on searching their local\ntalent pool and finally find a suitable candidate, their rates are too high.<\/p>\n\n\n\n<p>Since there&#8217;s a high\ndemand for skilled developers and the local talent pool is limited, finding a\nprofessional with the exact skill-set you need is difficult.&nbsp;<\/p>\n\n\n\n<ul><li><strong>Building an in-house team can be costly and time-consuming<\/strong><\/li><\/ul>\n\n\n\n<p>The process of finding\nthe right developers can be lengthy and stressful, and companies might have to\nspend hours interviewing different individuals.<\/p>\n\n\n\n<p>Building an in-house team can also be quite financially challenging, especially for newly established organizations with lots of foreseen or unpredictable overheads.&nbsp;<\/p>\n\n\n\n<p>Aside from the costs\ncompanies undergo in the vetting process, covering the developers&#8217; health\ninsurance and high salary is not easy.&nbsp;<\/p>\n\n\n\n<p>Even though some\nbusinesses have continuously grown and improved their resources and in-house\nteams, some others aren&#8217;t as well equipped. That&#8217;s why companies outsource\ntheir projects or hire freelancers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What\nis outsourcing?<\/h3>\n\n\n\n<p>Outsourcing is the opposite of insourcing; it&#8217;s the process of hiring an outside organization, a third party, to complete a specific task.<\/p>\n\n\n\n<p><em>We&#8217;ve also written other posts about outsourcing; read <a href=\"https:\/\/winatalent.com\/blog\/2020\/01\/why-software-development-outsourcing-fails\/\">Why Software Outsourcing Fails Most of the Time<\/a>.<\/em><\/p>\n\n\n\n<p><em>Below, we will discuss the pros and cons of outsourcing software development to another software company.<\/em><\/p>\n\n\n\n<h5 class=\"wp-block-heading\">Pros of outsourcing software development<\/h5>\n\n\n\n<ul><li><strong>Outsourcing is less costly and time-consuming (especially with an offshore company)<\/strong><\/li><\/ul>\n\n\n\n<p>When companies\noutsource their software product, they don&#8217;t go through the lengthy process of\ninterviewing and hiring they go through to find a suitable permanent employee,\nand that saves them plenty of time and money.<\/p>\n\n\n\n<p>Companies also don&#8217;t\nneed to pay high salaries every month when they outsource; they only need to\ncover the agreed expenses.<\/p>\n\n\n\n<p>Also, since the rates\nare much lower overseas, outsourcing to an offshore company is a viable option.\nThese overseas companies can deliver the same quality of work for a quarter of\nthe local cost.<\/p>\n\n\n\n<p><em>Read about <a href=\"https:\/\/winatalent.com\/blog\/2020\/03\/all-you-need-to-know-about-global-software-outsourcing-rates\/\">global software outsourcing rates<\/a> in another post.<\/em><\/p>\n\n\n\n<p><em>You can also read about&nbsp;<\/em><a rel=\"noreferrer noopener\" href=\"https:\/\/www.daxx.com\/blog\/development-trends\/average-rates-offshore-developers\" target=\"_blank\"><em>offshore developer rates<\/em><\/a><em>&nbsp;on DAXX.<\/em><\/p>\n\n\n\n<ul><li><strong>Outsourcing is perfect for short-term projects<\/strong><\/li><\/ul>\n\n\n\n<p>It&#8217;s only natural to build an in-house team when you have a regular and consistent workflow or large-scale projects. But hiring permanent employees for a one-off or short-term project is not very efficient. Outsourcing is ideal for these types of projects, and the outsourced company and its contractor can bid farewell after the project&#8217;s completion.<\/p>\n\n\n\n<ul><li><strong>There&#8217;s no need to train anyone!<\/strong><\/li><\/ul>\n\n\n\n<p>Outsourced companies\noffer you a team of experienced software professionals. You don&#8217;t need to spend\nany time and effort to train anyone, because you have access to the talent you\nneed already.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">Cons of outsourcing software development<\/h5>\n\n\n\n<ul><li><strong>Communication is tricky<\/strong><\/li><\/ul>\n\n\n\n<p>Most companies are\nconcerned about their involvement in project development and fear losing\ncontrol over it when outsourcing and for good reasons.&nbsp;<\/p>\n\n\n\n<p>Sometimes, outsourced companies and their contractors fail to communicate thoroughly, and this can cause deviations in the project or delays in the development process.<\/p>\n\n\n\n<ul><li><strong>Outsourced data&nbsp;<em>can<\/em>&nbsp;be leaked or misused<\/strong><\/li><\/ul>\n\n\n\n<p>A disadvantage some\nbusinesses see when outsourcing their software product is the possibility of\nsecurity risks.&nbsp;<\/p>\n\n\n\n<p>It&#8217;s not uncommon for\nproprietary information or sensitive data to leak to a third party, even if it\nis unintentional.&nbsp;<\/p>\n\n\n\n<p>Still, signing a\nnondisclosure agreement (NDA) might not be a bad idea; this contract prohibits\nthe outsourcing company from sharing sensitive data.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What\nis freelancing?<\/h3>\n\n\n\n<p>A freelancer is a\nself-employed individual who offers services and makes money on a per-project\nbasis (and usually works on several jobs for various clients).<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">Pros of hiring\nfreelancers<\/h5>\n\n\n\n<ul><li><strong>Hiring freelancers is even cheaper than outsourcing<\/strong><\/li><\/ul>\n\n\n\n<p>Freelancers will most\nlikely charge you even less than an outsourcing company since they don&#8217;t have\nthe overheads outsourcing companies have, especially if they&#8217;re from overseas.<\/p>\n\n\n\n<p>Companies also don&#8217;t\nneed to pay the expenses they pay for regular employees for freelancers (like\nhealth insurance).<\/p>\n\n\n\n<ul><li><strong>Freelancers&#8217; nature of work is temporary<\/strong><\/li><\/ul>\n\n\n\n<p>Since freelancers take\non project-based jobs, companies can hire them for a short amount of time for\nspecific tasks and functions, and even hire them again in case they need to.<\/p>\n\n\n\n<ul><li><strong>Companies can handpick the talent they need<\/strong><\/li><\/ul>\n\n\n\n<p>Luckily, with the development of freelance platforms like&nbsp;<a rel=\"noreferrer noopener\" href=\"https:\/\/upwork.com\/\" target=\"_blank\">Upwork<\/a>&nbsp;and&nbsp;<a rel=\"noreferrer noopener\" href=\"https:\/\/www.fiverr.com\/\" target=\"_blank\">Fiverr<\/a>, finding and hiring suitable freelancers is an easy task.<\/p>\n\n\n\n<p>All companies need to\ndo is determine the exact set of skills they need in a developer and select the\nbest applicant in their local or global talent pool.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">Cons of hiring\nfreelancers<\/h5>\n\n\n\n<ul><li><strong>Freelancers might not be available when you need them<\/strong><\/li><\/ul>\n\n\n\n<p>Unlike permanent\nemployees, one company is not a freelancer&#8217;s only source of income, and their\ncontracts can be relatively short. Freelancers will move on to another job\nafter they finish one; their schedules can be pretty packed as well.&nbsp;<\/p>\n\n\n\n<p>Therefore, sometimes\nwhen an unexpected issue comes up, and companies need freelancers to handle it\nimmediately; freelancers are not available.<\/p>\n\n\n\n<ul><li><strong>Freelancers might not be as committed and dedicated as\n     regular employees<\/strong><\/li><\/ul>\n\n\n\n<p>Freelancers can take on numerous projects from various companies, and one job is not strictly their priority; that&#8217;s why they always view their contractors as buyers. Therefore, they may lack the commitment in-house teams have.&nbsp;<\/p>\n\n\n\n<ul><li><strong>Data&nbsp;<em>can<\/em>&nbsp;be leaked or misused with freelancers<\/strong><\/li><\/ul>\n\n\n\n<p>Just like with\noutsourcing companies, freelancers can also intentionally or unintentionally\nmishandle sensitive data or leak it to a third party.&nbsp;<\/p>\n\n\n\n<p>Companies can sign an\nNDA with freelancers to ensure their data&#8217;s confidentiality as well.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion<\/h3>\n\n\n\n<p>Companies ought to\ndetermine their expectations and requirements to choose the option that suits\nthem best; while also considering each option&#8217;s advantages and disadvantages.<\/p>\n\n\n\n<p><em>What is the scope of\nthe project? Is the project a long-term one that needs a continuous working\nrelationship after its completion? Can you find the talent you need in your\nlocal talent pool? How much is your budget?<\/em><\/p>\n\n\n\n<p>These are all things companies need to consider before choosing between these three options and the services they offer to develop software products.&nbsp;<\/p>\n\n\n\n<p>Of course, there are other options as well; for example, companies can temporarily hire individuals for specific jobs from leasing employee agencies. <\/p>\n\n\n\n<p>The employees&#8217; withholding, depositing, and reporting responsibilities remain with the leasing agency, and companies can use the employees&#8217; services for as long as they need. <\/p>\n\n\n\n<p>Through leasing agencies, companies don&#8217;t have to cover all the expensive overheads they do with regular employees (such as taxes and insurance). <a href=\"https:\/\/winatalent.com\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"winatalent\">WinATalent<\/a> also offers these services as a leasing agency.<\/p>\n\n\n\n<p>Below is a chart that summarizes everything we discussed in this post.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"709\" height=\"567\" src=\"\/blog\/wp-content\/uploads\/2020\/12\/In-House-vs.-Outsource-vs.-Freelance-Software-Development-chart.jpg\" alt=\"in-house vs. outsource vs. freelance software development chart\" class=\"wp-image-775\" srcset=\"\/blog\/wp-content\/uploads\/2020\/12\/In-House-vs.-Outsource-vs.-Freelance-Software-Development-chart.jpg 709w, \/blog\/wp-content\/uploads\/2020\/12\/In-House-vs.-Outsource-vs.-Freelance-Software-Development-chart-300x240.jpg 300w\" sizes=\"(max-width: 709px) 100vw, 709px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">What\ndoes WinATalent do?<\/h3>\n\n\n\n<p>WinATalent is an&nbsp;<a href=\"https:\/\/winatalent.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">online\nfreelance platform<\/a>&nbsp;with a vetted network of talented\nindividuals who are ready to help you develop your software product.<\/p>\n\n\n\n<p>WinATalent offers\nvarious project estimation services as well.<\/p>\n\n\n\n<p>We estimate the scope,\ntimeline, and budget of your project based on criteria such as your\nexpectations and your team.<\/p>\n\n\n\n<p>We also help you get a better sense of your project&#8217;s completion process and its final product via analyzing different aspects of your project.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\"><a href=\"https:\/\/winatalent.com\/\">Sign up now for free!<\/a><\/h5>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;Do I build an in-house team (insource) to develop my software product? Do I outsource&nbsp;my product? Or should I hire freelancers&nbsp;instead?&#8221; Answering these questions is a common struggle among all companies. Typically, when companies want to establish a new software project or&nbsp;build a minimum viable product (MVP), they have to choose between the three preceding [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":774,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21,125],"tags":[35,18,56],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>In-House vs. Outsource vs. Freelance Software Development - WINaTALENT Blog<\/title>\n<meta name=\"description\" content=\"Do I build an in-house team, outsource, or hire freelancers to develop my software product? 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