When you have one or more software development projects on your hands, you have two options: build your own in-house development team, or outsource your project. By now, you have probably heard about the low cost benefits that are afforded by outsourcing, but you might still be worried about the quality of the service. As a result, you are considering your options, and maybe building your own in-house development team might be the best way to go. Before you make your decision, let’s take a look at the benefits, risks, difficulties and costs associated with each option.
Building an in-house development team
One of the first bumps in the road for this option is the hiring process. If you’re in the US, software developers are scattered throughout the country. In 2016, there were 223,000 vacant software developer positions. This issue persists in 2018, and it will most likely continue going forward. In other words, you will have to compete for developers by offering exciting prospects, high wages, good benefits and an attractive brand.
The risks associated with building your own development team are related to the length of the hiring and on-boarding process. It can take a long time to find the right developers and integrate them into your team. On top of that, if your offices are located in a non-hotspot area for developers, you will have to convince candidates to relocate.
In terms of costs, you can expect to pay around $100,000/year for each new team member. You will also have to take into account the costs that will go into hiring each employee, which will include the salaries of the recruitment team. In concrete terms, you can expect each hire to take around 40 days, with agency fees of 22% of the candidate’s salary, or 12% in case you are using an HR department. That adds up to $22,000 for the agency, or $12,000 for the HR department when hiring developers at $100,000/year.
When hiring a remote team, you will have control over the team structure, and be able to add or remove members in order to meet project needs. You will need to research companies, and choose the best candidates on the basis of time zone, size, cultural fit, technical skills, English skills and general compatibility. The whole process can take anywhere from two weeks to several months.
You will run into problems with this option if you rush the hiring process, where you will end up working with a company that is not suited for a long-term commitment. You also have to make sure that you are prepared to work with a company in a distant time zone, otherwise, you risk running into communication problems, lack of personal rapport, and delays.
Costs will generally depend on the area in which the company is located. For example, in the US, you can expect to pay anywhere in the $100-$200/hour range, while in Latin America you will find price points around the $40-$50/hour mark, in Eastern Europe in the $50-$70/hour range, and in Asia in the $25-$40/hour range.
Choosing between these two options generally comes down to cost considerations. Success with both in-house development and outsourcing will depend on the initial hiring process. If you take your time and go through various teams and candidates, you will be able to find quality, long-term commitments with both options. However, outsourcing is much more dynamic than insourcing, and your possibilities remain open throughout the development process.