It’s not secret that software is hard and expensive. There’s also a shortage of Software Engineers which attribute to increase development costs. As more and more businesses look to automate processes, introduce artificial intelligence, or utilize mobile and e-commerce applications, software plays a vital role in the success of many companies.
Many software companies will either embrace the costs and hire from the available talent or do one of two options
Hire a person on a work visa or outsource the development to another agency that is usually in a different country. Both of these options are typically cheaper because you can either pay a lower salary or you don’t have to offer full benefits.
For this article, I want to share my thoughts about the topic. Should you outsource or build your software in-house? I believe that if you build the right team, it is significantly cheaper for you to build in-house. When you build in-house, you have full control of the entire life cycle. Many companies believe that if you outsource their development costs, they can save a ton of money. But in my experience, things are not so simple. Oftentimes, the work that is outsourced is sub par and sometimes has to be rewritten. Other times, the code isn’t documented so you have to continue paying for changes and updates. All these little things can add costs. In extreme cases, the software that is outsourced can lead to catastrophic safety violations that end up not only costing millions of dollars to fix, but also tarnish the reputation of the company.
I don’t know about you, but a company’s brand is priceless. If your brand is tarnished because your software killed someone or something really bad happened, how will consumers trust you? But of course, when requirements and decisions about outsourcing are being done, executives aren’t paying too much attention to the risk of outsourcing. What they are seeing is an instant cost savings and more money in their pockets which typically mean bigger bonuses!
Some good examples of in-house development gone right are seen in Tesla. Tesla develops everything in-house because they have discovered that it’s actually cheaper to just have full control of everything. Look at Apple as well. When you rely on your internal team to develop everything for your product end to end, you know exactly what is going into your product. You set the requirements, you validate the testing and you decide your future. Sure, you pay a little more, but the long term gains are tremendous.
The amount of time and money you need to invest to make sure outsourced code integrates well is just too costly. The cost isn’t immediate and sometimes it doesn’t happen, but when it does happen, it’s going to be very expensive to fix.
In my opinion, and in case it wasn’t clear from this post, pay the money up front and hire good people. You want to hire people that you can trust and the believe in your companies vision. You don’t want to hire jerks or people that don’t know how to work well in a team. These types of folks help drive costs up because in the end, a team of diverse people come together to build something. If your teams can’t work well together, well that makes things expensive. Spend the time up front to make sure people are compatible and train your team to have strong emotional intelligence. With a team that has a positive attitude, anything is possible and your costs in the long run are most likely going to be significantly lower.