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In-House vs. Outsourced: Choosing Your Development Path

Brandon Estes February 24, 2023

In-House vs. Outsourced Development

Explore the debate between in-house and outsourced development for your business. Learn about cost implications, the pros and cons of local versus overseas outsourcing, and how to choose the best development strategy to meet your company's needs and goals.

In-House vs. Outsourced Development

If your business lacks a website or needs an update, you might wonder whether to outsource the development or hire an in-house team. While both options have pros and cons, it's notable that in 2021, 60% of companies outsourced some or all of their development needs. This trend is growing, with a 4% increase in companies switching from in-house to outsourcing solutions.

Percentage of Companies Outsourcing Work

Companies often choose outsourcing over in-house development mainly to save money. Building a website or a basic application might seem manageable, but it usually requires a team of at least four professionals, making it a significant undertaking. Expecting one developer to handle all aspects of a project isn't practical. A team offers a range of specialized skills, making it difficult for a single developer to compete.

Let's consider the cost for a team of four: a front-end developer, a back-end developer, a UI/UX designer, and a project manager. The average hourly cost, considering salaries, benefits, and other associated costs, is about $184.38/hr. A basic website project with this team can astonishingly cost around $5900.16 per day due to startup costs and full-day wages for all team members. This explains the shift towards outsourcing, as it's more cost-effective for businesses with limited development projects.

Cost of In-House vs. Outsourcing

Onshore vs. Offshore

The thought of saving money by outsourcing overseas might be tempting. While manufacturing companies save costs this way, development work has unique challenges. Security risks, cultural and language differences, and the difficulty in holding overseas developers accountable are significant concerns. Time zone differences and communication barriers can also lead to project misunderstandings and lower quality outcomes.

Comparing costs between developers in the United States and India, the difference is about $8-$9/hr. This minor cost saving doesn't justify the potential risks involved in offshore outsourcing. American developers often have certifications and extensive experience, providing a sense of reliability and quality assurance to companies.

Ultimately, each business must make decisions based on its specific needs and structure. The data for this insight were collected from various sources, including development agencies, research firms, and government statistics, to ensure accuracy. While every company's experience will differ, this analysis aims to reflect the needs of a broad business spectrum, helping you make an informed decision for your company's future.

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Insight by Brandon Estes

Data Analyst

Brandon is a Data Analyst passionate about understanding how data and trends can impact business, as well as how to best leverage situations to generate untapped growth. His background in mathematics and programming allow him to find new insights and methods of interpreting data for customers.

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