In-House Team Vs. Outsourcing Product Development – Evaluating the Pros and Cons

In a fast-paced world, developing and launching a product before the competitor gets a whiff of it has become a priority for product managers. They want to get a product to their customers as fast as possible to establish their position as the market leader. 

Today, product companies believe in launching fast, learning quickly, and making iterative changes to the product to make it relevant to their customers.

Simple as it might sound, companies face challenges throughout the development process. These challenges include fixing a budget, setting timelines, fixing a price, and finding strategies to grow its visibility in the market.

However, one of the significant challenges they face is choosing between outsourcing product development vs. doing it in-house. 

One way to fix it is by weighing the pros and cons of both the options to understand which one would work the best for the company.

In-House Or Outsourcing – What To Choose?

In-house product development 

Pros

  • Culture-fit: Companies passionate about building unique products that make a difference to their users’ lives prefer to restrict the development process in-house. One of the reasons is to ensure that every developer shares the same passion and vision of the company and aligns itself to create products that make a difference. Also, in-house developers understand the company’s established processes better and can adhere to those while developing the products.
  • Easy coordination: When the product development team is in-house, it is easier for the team to collaborate and launch products fast. Also, with an in-house team, a minor bottleneck, such as fixing last-minute bugs or prioritizing the development of a new feature becomes easy. Communication is transparent and seamless.
  • Full control over the project: When development occurs in-house, the product managers have complete control over the project. They know the exact status of the project and can address the challenges and roadblocks in the project better.  

Cons

  • Escalated costs: Getting skilled resources for a project can be quite an arduous task, especially if the product is very niche or requires specific technical skills to work on it. There is also extra cost in terms of time involved in recruiting technical experts with general coding skills and training them. Also, if it’s a one-time project, the costs involved in hiring and training them may prove to be a waste in the future. Apart from that, the company also has to incur extra costs on employee benefits such as insurance, paid leaves, etc. 
  • Lack of versatility: Technology is an ever-changing landscape. What worked yesterday may cease to exist tomorrow or might become redundant. Hence, product companies need to have versatility in their teams, with each developer acing different programming skills. Unfortunately, product companies are so focused on the present development that they put all efforts into hiring and training their employees in specific programming languages, due to which they are ill-equipped for the future until their competitor races ahead. 

Outsourcing product development

Pros

  • Cost-efficiency: Outsourcing is more cost-efficient than in-house development. Studies show that it can cut a company’s IT costs by 30%. Firstly, the company can save money on hiring and training the resources as the outsourcing partner will already have highly skilled developers. Secondly, if a company chooses to outsource the development to another country, labor costs are cheaper, making the development process more cost-effective. 
  • Versatility and expertise: Outsourcing partners have a vast pool of talent. These developers have also worked with different companies – sometimes from the same industry or even different industries. So, they bring the best practices and experience of working on different projects, making the product better than what was envisioned earlier. 
  • Faster turnaround: Outsourcing partners have a dedicated team of developers specially assigned for the project. Plus, they have an agreed SLA to comply with, so there are no major delays during development. The turnaround is faster, leading to faster time to market. 
  • Scalability: Outsourcing partners are well-equipped to manage peak workload during the development cycle. They can scale easily according to the project demands. So, companies do not have to worry about reduced bandwidth during the development process.
  • Reduces the stress of product development: Product development is not limited to developing a product alone. As mentioned earlier, it also involved fixing costs, preparing marketing and sales assets, regulatory compliance, etc. With so many activities involved in developing a product, outsourcing the development tasks will free up the company to focus on more important tasks that need equal or more attention. 

Cons

  • Communication gap: Sometimes, the outsourcing company might be working in a different time zone or different locations. So, there is a risk of a communication gap between the partner and the company. This not only leads to misunderstanding and a lot of back and forth communication, but the product may also be prone to errors if there are too many changes through the course of development.
  • Less control over the project: Product managers do not have a complete view of how their project is progressing, what challenges the developers faced during the course of development, etc. Sometimes they may not even be aware if the developers are following the processes as laid down by the company. They have to completely rely on the status provided by the developers to track progress. 
  • Lack of understanding: Considering that developers are not a part of the company, they may not fully understand the vision behind developing the product or the cultural quirks that the product manager wants to reflect in the product. 

Conclusion

When one compares the two options, it is clear that outsourcing has more benefits than in-house development, especially if the company wants to launch products faster with a limited budget and resources and without set processes. However, they must partner with the right product development company that understands the scope of the project, and that offers the right end-to-end support throughout the development process. 

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