Business Case: Costs and Benefits of In-House vs. Hiring Outsourced Developers
Your client load is steadily on the rise, and they are clamoring for software solutions. You need developers who can jump into your company culture and hit the ground running. How do you know whether to go in-house vs. outsourced?
The answer largely depends on the scope of the project at hand and your hiring budget. Is it a short-term fix that requires only a few extra hands for a month or two? Or a long-term need that will necessitate multiple projects over months or years? Do you have the resources to provide a comprehensive benefits package, including an employer-match 401(k)?
Some businesses opt for a hybrid model. Of course, the option you choose depends on a variety of factors that are unique to every business. Let’s weigh the benefits and drawbacks of in-house hiring and outsourcing.
Look Local: Pros and Cons of In-House
- Company lifecycle: If you’re just starting out as an organization and working to establish your identity and brand, in-house makes sense. The team that makes these crucial initial decisions should expect to make a long-term commitment to the cause. Having the team under one roof, able to turn on a dime and shift direction when needed, is vital at this early stage.
- Personal engagement: Some projects thrive on face-to-face conversations, which can generate energy, encourage innovation, and spawn the next Big Idea.
- Common cultural language: If a complete immersion in the U.S. cultural experience is important for your company’s work environment—free-wheeling conversations about sports, pop culture, and so on—then in-house is the better fit. It’s difficult to have after-work drinks or Thursday bowling with a distributed team.
- High cost per hire: It can be a struggle to attract top talent in an age when Facebook, Amazon, and Google easily dangle $200K for mid-level developers. It only gets harder when you consider that site reliability engineers and DevOps wizards command top salaries and report high job satisfaction.
- Pricey benefits: For U.S.-based employees, medical, dental, and a generously matched 401(k) are par for the course. These costs can add up quickly, particularly compared with a freelancer’s flat rate.
- HR hurdles: Hiring developers is a complex task, one for which many small to midsize companies don’t have the internal expertise. Add to that onboarding and training, and your costs begin to soar. If a worker then decides to leave, you’re back at square one again. A nearshoring staffing firm may be just the solution, as many specialize in developers and have a short list of great candidates at the ready.
Expand Your Horizons: Pros and Cons of Outsourcing
- More work, more profit. Once you’re up and running, customers will come calling, and you need more hands on deck to keep up with demand. Staff augmentation is an affordable, efficient solution when your founding team no longer has the capacity to keep up with the to-do list.
- Specialization. Some projects call for expertise in a very particular area. It may not be efficient or cost-effective to hire a full-time, in-house specialist when you likely won’t need them once the project ends.
- HR solutions. The process of hiring an in-house employee can be daunting—find an external recruiting company, get it up to speed on your needs, wade through dozens of applications, conduct lengthy interviews, and so on. Nearshoring agencies can provide workers of the same caliber on a shorter timetable. When deadlines loom and contracts are at stake, this can make all the difference.
- It doesn’t work for every department. Tech leadership roles, in particular, can be difficult to fill remotely. This is where a hybrid model may serve you well.
- Cultural differences. Distributed teams based outside the U.S. bring with them their own cultural preferences, which can show up in engineering, design, writing, and creative direction. A freelancer in the U.K. or Southeast Asia may have a different design aesthetic than one based in New York or Silicon Valley.
- Different time zones. While traditional outsourcing locations such as India are 10.5 hours ahead of the East Coast, a growing market of nearshoring agencies in northern areas of South America—known as “Silicon Vallecitos”—offers a unique solution to this particular problem. Common concerns with far-flung outsourcing countries—production delays, underwhelming quality, and rewrites—occur less frequently, and rising tech centers such as Ecuador and Colombia are just a four-hour flight from southern U.S. cities.
An Outsourced Solution with an In-House Vibe
In the end, your company’s mission, workload, and resources will determine whether a distributed team suits your needs. If your ambitions exceed the local talent pool—if your budgets reflect a small company with big dreams—then Jobsity’s staff augmentation solution may be just the thing to make your vision a reality.
Want a deeper dive into the cost-benefit analysis of staff augmentation? Have a look at our staff augmentation guide to learn more about how you can build up your team.