Choosing between in-house and outsourced development

📒 Intro

Just imagine: you have a one-million-worth idea. But who precisely shall execute your vision and turn it into a thriving business venture?

There are two ways to build development teams:

• You can establish a company and hire a key role such as a CTO to recruit an in-house team of tech specialists.
• Alternatively, you can choose to outsource.

But what should you pick for your case?

🙇 Challenges along the way

Undoubtedly, any business owner wants a quick start and fast delivery of their idea for the cheapest price.

It is expected that a business owner will face certain risks during the development process, such as:

• Costly development;
• Hidden costs (HR services; paid sick leave; employment tax)
• Delays in team formation (due to the founder’s lack of knowledge of development organization; lengthy time frame for hiring a developer)
• Difficulties in adjusting the dev process to meet business requirements;
• Motivation decrease;
• Departure of key people.

⚖️ Weighing risks

To choose a process, you need to determine your capabilities. The table below shows the main costs for each process:

(*) depends on expertise and location in Europe

Based on our own experience, each development approach carries the following risks:

✅ Conclusion

So which way is suitable for you?

If your business is well-established with a functional HR department and a clear project plan, you may prefer to opt for in-house development. This will offer greater flexibility if you need to adjust project scope (including pivoting), team structure (e.g. creating smaller teams from development guilds), or terms of work (such as introducing share appreciation rights).

If none of the above applies, outsourcing may be a suitable option. This will provide comprehensive risk coverage for a reasonable price.