In-House Development vs. Offshore Outsourcing: Real Cost Comparison
In-house software development vs IT outsourcing is a never-ending battle. Indeed, how to understand which practice is more cost-effective — with other conditions being equal?
The mere comparison of hourly wages of local and offshore professionals will not give an accurate picture. It’s vital to factor in all the hidden costs that in-house development includes (payroll taxes, health insurance, paid time off, traveling, vacations and sick leaves, pension contributions, and more).
Imagine you need a Scrum team comprising 8 US professionals for your six-month project. Considering all the additional costs, we get the following numbers for comparison [per team, per hour]: $1,050.26 (in-house) vs $300 (outsourcing to Eastern Europe), i.e. building a software solution in-house will cost 3.5 times more.
Find calculation details here and feel free to share your ideas.