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In-house vs Outsource Analysis – All that you should know

Whether it is a large company or a business owner who merely started in this highly competitive market, finding the perfect business strategy is the key to growing. In this ‘phase’, it’s natural for businesses to face the conundrum ofin-house vs. outsource analysis. While some entrepreneurs are more comfortable with outsourcing, many others decide to stick to an efficient in-house unit. Few have had harrowing experiences dealing with offshore partners, while some others felt that in-house teams lack a broader perspective.

Frankly speaking, there are benefits to each. Also, there are shortcomings in both. Regardless of one’s personal choices or experiences, it’s a wise decision to evaluate the pros and cons of both.

What is this in-house vs. outsource analysis?

In-sourcing or in-house development means that the software used is built inside the organization or you have hired a group of people to do the work in your office. From asking questions to arranging for interviews, finding specialists to accomplish the jobs at hand to controlling almost every process of hiring, and the work in general – it’s done by an in-house team. Since the work is mostly within the organization, so the team utilizes all such developed resources within the very setup, to achieve its goals.

In outsourcing, it is usually the Managed Service Provider (MSP) who you refer. Thereby, a dedicated team is present to handle your issues. The team can comprise of a certain type of specialists (like developers, for example) or diverse talents who can manage all types of work, including development, project management, and so on.  The key motivation to outsource work is to save money. Industries like media, retail, transport, and telecommunications rely on outsourcing to finish vital projects.

Delving into the very basics

To get to the roots, in sourcing or in-house development implies the utilization of full-time programmers in the office setup, or those who are available on-site. A regular or fixed salary is a must for the in-house employee, alongside other emoluments and employee benefits. The development of the infrastructure inside the setting is an absolute necessity. But everything would come crashing down, if the facilties (hardware and software) aren’t included in the set-up.

Contrasted to the above, outsourcing is all about having full confidence on experts or professionals having the necessary skills and talents, to fulfill software requirements. At the time of outsourcing, companies can think of hiring offshore staff, even on an hourly basis, or on a per-project basis, or as required.

Having a clear understanding of both means you can now make a decision about which one will be the best fit. Also, budgetary constraints matter. If you have recently started out, it makes no sense to arrange for a lavish set-up, when employees must be paid well. Also, ensuring that the staff services you hire from outside will match your criteria is a must. Below mentioned are some pros and cons of each, which should help you gauge what you must select.

What benefits can you gain with an in-house team?

First things first, you have a lot of control. The task of team members can be managed internally and thereby you gain optimum control over the processes involved.

Second, you have to spend some time to research thoroughly and then build the team. Once that’s sorted, begin the work right away. Having access to all such talents in the in-house mode means you’re in an advantageous position.

Third, if there’s any specific talent that you’re looking for, develop your employees the way you would need to harness their potentials. This serves dual purposes too. Your employees would be glad to have an opportunity to grow professionally, and you can complete all such tasks from a specialist, present in your team.

Fourth, the in-house team works with the project from inception till completion; so they’re well aware of the features and what exactly is needed to do the job well. This can happen with a great level of understanding. As a contrast, outsourcing implies you need time to grasp the minute details.

What are you losing out on with an in-house team?

In-sourcing in itself is sheer luxury! The recruiting process entails a lot of investment. You need to refurbish everything in the workplace or even rent or buy new spaces because the team is expanding. To add to the expenses, you need to provide salaries exactly, when the project is over or fire specialists and again hire them, when you feel the need again.

Sadly, there’s a dearth of highly qualified and talented specialists in the job market. Those who already have a job, might not be flexible with the idea of a change. You need to think of creative ways to entice them – good pay package, diverse work, and so on. In the process, you also need to build on a cohesive team, so that no work gets stalled.

Imagine if team members are sick or on leave, you might need to pause the project in progress and incur fresh losses!

What are the advantages of outsourcing?

Among the many, the biggest is that it’ll not burn a hole in your pocket. There’s no need to create several interviews or pay a huge salary to any of the top-class in-house specialists or even make arrangements for innovative workplaces. Plus, you need not pay add-on salaries after projects get over.

Second, most IT specialists work with the MSPs, simply because the “top-level talents” prefer variety in the projects that would also help them showcase their own professional development.

Added to that, you can now delegate a portion of the work, and emphasize on some immediate business requirements or even allocate resources, if needed.

There’s a significant reduction in the size of your personnel. Imagine you don’t need to hunt for a bigger space or find new workstations, etc. All you need is a talented and dedicated team, which can function, irrespective of any location. And if you don’t like the quality of the team work – find a new MSP and simply change the team. This flexibility is not present with an in-house team.

What drawbacks characterize outsourcing?

Of course, the first disadvantage is in the shoddy work quality. Sometimes, business owners are forced to resort to a reputed in-house team, because of the ill quality of work rendered by the outsourcing team. To prevent getting into this type of an issue, choose your MSP meticulously. If possible, get some feedback early on.

In addition to this, there is less control over the project. If your MSP is a reliable person, you probably won’t need to control every aspect of the job; however, some entrepreneurs don’t like the idea of delegating work. If that’s the case with you, try involving your on-house project manager in the very project.

The problem with communication persists. For example, when you outsource to India, remember to pay attention to details and issues will be resolved soon.

Bottom- line

There are no winners or losers in the in-house vs. outsource analysis. The approach for each type is different and requirements vary likewise. If you’re keen on spending quality time and adequate money, then in-house teams will be the best fit. But if cost-cutting is what you are looking at (especially if you’re a start-up), and can take into account the risks involved, go for a reliable outsourcing unit. When thinking of the advantages of outsourcing, you’re safe if you find a reliable MSP, who can tackle all such issues and potential hazards.


Remember to conduct an in-house vs. outsource analysis and combine both the approaches, and see how it all works out. Even if this sounds weird, sometimes this is the most efficient way to gauge the right fit for you. But be careful when you choose the outsourcing unit. Ensure you take note of the providers when you outsource to India, read feedback and check ratings from customers beforehand.

John Tie

John Tie is working as a Digital Marketer and content strategist with Virtual Employee, offering affordable and scalable remote staffing solutions for mainly Small and Medium Businesses (SMEs) around the world in over 150 domains. He is a versatile tech writer and loves exploring the latest technology trends, entrepreneur and startup column.

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