In-House VS Outsourcing: Which is Better for Your Project?

Relia Software

Relia Software

Duc Toan

Relia Software


8 typical differences in in-house vs outsourcing software development are in expenses, expertise, recruitment process, flexibility, project speed, management, etc.

In-House VS Outsourcing: Which is Better for Your Project?

Table of Contents

Any new software project will force you to choose between in-house and outsourcing software development. The key difference in in-house vs outsourcing software development is that outsourcing is cheaper and faster, while in-house development affords more control. These are only superficial differences. You may need additional evidence to decide which one is the best for your projects and businesses.

This article compares in-house vs outsourcing software development to clarify. Once you understand their benefits and downsides, it will be easy to assess your business and choose the best development model for your project. Let's look into the details!

8 Key Differences Between In-house and Outsourcing Software Development

The software development process can be done quickly and cheaply through outsourcing, but in-house development gives you more control. These are merely surface-level distinctions. You might require more proof to determine which is best for your projects and organizations.


All specialists are expensive. Hiring full-time in-house developers may burden your business. You must pay for their insurance, office space, equipment, and continuous education in addition to their income. Internal developers must also be rewarded for downtime.

If you can't afford a permanent team like many businesses on a low budget, outsourcing can be a suitable choice for your firm because it saves costs in a short period and increases cash flow flexibility.


In a dedicated team approach, team members are as invested in your company and project as in-house staff. An in-house development team may know a company's industry and model better. However, this does not mean they are better at building your program.

Besides, for specialized projects, outsourcing organizations have more cross-industry experience. Outsourcing lets you find programmers worldwide, not just in your city. You can even find a team that completed a similar job and understands the ropes.

Recruitment Process

There are only local applicants available to you when hiring for an internal team that works in an office. Alternatively, you need to hire workers who are prepared to move. Put simply, there isn't much talent available in this situation.

Since the location criteria when choosing to outsource is not essential, outsourcing development does not limit organizations' candidate choices. Most outsourced software engineers work remotely, giving firms access to world-class specialists.

Outsourcing businesses saves your company time searching through resumes for software development skills. They can choose from seasoned specialists with extensive skills and competence.

>> Read more:


Outsourcing business models are on-demand because clients can change contract criteria as their projects change. Scalability and flexibility draw firms of all sizes to outsourcing. Business owners can swiftly expand the outsourced staff to accelerate development. You can also reduce the number of professionals employed at any time.

On the other hand, it cannot be flexible to quickly grow an internal team to meet the needs of a changing project. One more thing is that shrinking down is less possible when the project needs less work.

Project Speed

According to LinkedIn's Talent Turnover Rates Report, software had the greatest job turnover rate at 13.2%, with UX designers, data analysts, and embedded software engineers having the highest turnover rates.

Due to strong demand and rising pay, software professionals often switch to better jobs with better benefits, salaries, and networks. Thus, firms always struggle with laborers and waste time because hiring a new, qualified developer during the process can delay or slow down your project. 

Outsourcing allows you to hire a development team with the skills and experience you need without a difficult hiring procedure. Outsourcing or hiring remote developers can consult and quickly assemble your project's tech stack. Thus, your software will launch faster.

Management & Control

When hiring in-house engineers, business owners can control the software development process. With direct access to the development team, they may monitor task implementation, address complaints, and change the development process at any time. This level of control permits tight processes and decision-making for organizations that must meet specific development norms and goals.

You can also better control your personnel with direct hires that work only for your company. Setting work schedules or seeking revisions is easy. Since in-house developers work faster, the time from idea to production is shorter. Additionally, the crew is readily available for technical assistance.

When outsourcing, especially end-to-end or full-cycle, companies lose control over project development, progress, and troubleshooting. This allows corporate leaders and in-house staff to focus on core business activities but makes quality control tougher to meet standards.

The organization can't directly contact the outsourced development team, therefore email responses and meeting times may take time. Communication breakdowns can cause miscommunication, delays, and misunderstandings.


Working in the same office may make face-to-face talks easier and successful. No instructions or communication will be lost during translation because you and your workers speak the same language. Furthermore, the immediate and direct discussion between team members will make the project smoothly running. 

Outsourcing software development teams may cause communication and cultural issues that strain work relationships. Clients usually work with multilingual, multi-time zone expertise.

Even with an outsourced project manager who speaks the client's language, misunderstandings may occur. However, these obstacles can be overcome with good communication and collaboration.  


For in-house software development, a company's IP is a method to identify its inventions, products, and services. For commercial advantage, organizations must protect this precious asset.

Avoiding third parties makes it easier to oversee and defend intellectual property by developing everything in-house. IP rights, patents, trademarks, and copyrights are still necessary for company security.

Meanwhile, outsourcing providers must be trusted with sensitive company data and intellectual property. Because data leaking will pose security and privacy problems for your firms and clients.

The first way to minimize these dangers is to find a reliable outsourcing partner with security safeguards. Companies must also have explicit internal data and leak policies in their contracts. Business leaders should sign an NDA for extra security.

To sum up, let’s look through the short comparison between in-house and outsourcing via the table below:


In-house development

Outsourcing development


Costs a lot because of salaries and fees

Cost-effective because rates vary by location and there is a bigger talent pool


Limit and Accurate



Take time and difficulty

Dealt with by the outsource partner








Steady & Progressive

Fast & Step-by-step

Management & Communication

Better management and communication

Hard to manage and communicate


Well secured

Low but it can be made better with an NDA and other agreements

>> Read more: An Ultimate Guide To Web Application Security for Businesses

In-house vs Outsourcing Software Development
In-house vs Outsourcing Software Development (Source: Internet)

Factors to Consider When Choosing In-house or Outsourcing Development

Business leaders must consider several factors before hiring in-house software engineers or outsourcing project development. They should examine the organization's needs, weigh the pros and downsides, and propose a hybrid approach.

Needs Assessment of Your Organisation

Choosing between in-house employment and outsourcing requires assessing the organization's objectives, goals, and project requirements and peculiarities. Early project scope definition helps business leaders make the appropriate option by making it easier to consider budgets, schedules, and project complexity.

Larger projects that demand devoted resources for a lengthy time may require in-house development. Still, project leaders may need extra people, so outsourcing may be helpful. However, outsourcing may be appropriate for one-time projects or short-term development activities.

The cost gap between recruiting in-house developers and outsourcing software projects is significant. Companies should know their project budget to select which recruiting method best fits their goals and budget.

Considering Pros and Cons

Each model has perks and cons that differ for each company. Companies should compare the pros and cons of both business models to hire wisely.

Make the proper choice to generate high-quality products, reduce time to market, increase efficiency, and boost productivity. In contrast, the improper choice could cost the organization time and money.

Budget Consideration

In-house and outsourcing software development have distinct cost disparities for each project.

What is your project budget? Would a full-time person or team fit in that budget? Answering these questions is crucial. Because outsourcing doesn't always save money, you must decide which development model suits your business the best.

Outsourcing reduces hiring, compensation, and training expenditures. But agency fees still cost. Quality work may cost more at some outsourcing organizations. Outsourcing is always cheaper than in-house, but long-term expenditures can pile up. So you must budget accordingly for your project.

When To Use the In-house Development Team?

Organizations contemplating software development must determine the best in-house development scenario. Specific circumstances when in-house development is advantageous:

  • Complex, ongoing projects: Complex projects that need upgrades and maintenance benefit from in-house development. This method ensures long-term quality and project knowledge.

  • Highly specific industry needs: In-house development ensures that all software is tailored to sectors with specific needs or a focus on compliance and regulations.

  • Tight control and integration required: Internal development is best for projects that require tight control over the development process or strong integration with internal systems.

  • Strategic long-term projects: In-house development helps critical projects align with the company's long-term aims.

  • Data security and sensitivity: In-house development provides better control over data security protocols and regulatory compliance for sensitive data or high-security projects.

  • Building company culture and knowledge: Internal development can help companies build a strong culture and a long-term knowledge base.

When To Use Outsourcing Development Team?

Some benefits of outsourcing development can be listed below:

  • Increase personnel immediately: Outsourcing your development team is practical in some cases. If your firm has to swiftly increase its development team without adding personnel or hiring, outsourcing may work. 

  • Large talent resource: Outsourcing also gives your organization access to a larger talent pool if it lacks development skills or expertise. Companies with specific projects or one-time development needs that require skills not accessible in-house may benefit from it. Companies in specialty industries or with complex development demands may benefit from that.

  • Product launch rapidly: If your organization needs to launch a product rapidly, outsourcing may work. Outsourcing lets your organization use proven delivery techniques to speed up development and launch.

  • Save costs in a short period: Outsourcing to Eastern Europe may be cheaper than in-house development for your organization. Ukraine, Bulgaria, Romania, and Poland are popular outsourcing locations for lower labor prices, overhead expenditures, and faster development.

>> Read more:

Can Firms Use Both In-house and Outsourcing Development?
Can Firms Use Both In-house and Outsourcing Development? (Source: Internet)

Can Firms Use Both In-house and Outsourcing Development?

The choice between in-house and outsourcing is difficult, but there is a middle ground. The hybrid approach combines the best of the two company strategies.

A hybrid approach to development allows an in-house team to perform essential responsibilities while outsourcing others. You can even mix these two models at different stages, giving you flexibility. 

How do you determine which jobs to outsource and which to do internally? The obvious and best advice is not to outsource your strengths or strategic advantages. You shouldn't outsource your key capabilities; it makes you overly dependent on suppliers. If you lack experience or flexibility, outsource. 

>> Read more:


In-house vs outsourcing software development each has its pros and cons. To choose the best hiring plan for their business, company directors need to take the time to think about these pros and cons along with things like budgets and deadlines.

As discussed, if you want to develop your applications rapidly with high quality, Relia Software is an affordable choice for your business. Our professionals understand modern user behavior and design apps that combine originality, transparency, speed, and cost.

From strategy to native apps to backend services, we cover everything needed to create great and high-quality applications.

>>> Follow and Contact Relia Software for more information!

  • outsourcing
  • development