In-house developers vs freelancers vs software development outsourcing – what works when

With the software market constantly growing, both in terms of business software and software products, it’s clear that the problems with hiring experienced software developers are not going to end soon. According to Coding Sans “State of software development 2021” hiring talent is currently the biggest challenge organizations face, forcing companies all over the world to pursue the most effective ways of enhancing development capacity. Thus, the discussion of whether you should focus on in-house hires only or cooperate with freelancers or software houses to effectively allocate your limited resources is now more important than ever. This text presents the pros and cons of each of them, to illustrate which choice works best in a given scenario.   

What you need to know before comparing potential alternatives

Before diving deep into the cooperation types and their strengths and weaknesses, it’s worth looking at project traits that define any cooperation, and thus indicate which choice is the most effective. As none of the 3 alternatives can be treated as a solution for all problems and the ultimate way of solving capacity issues, making a knowledge-based choice is critical. So, what do you need to know to determine the best choice?   

1/ The project scope and duration

Agile embraces some level of change in project scope and it’s impossible to predict everything beforehand, especially if the project is just launching. But, you should know whether you’re looking for a helping hand to overcome a single challenge at a particular moment or a long-term partnership. What should be emphasized is that even crafting the MVP, which for some might seem like short-term work, should be treated as the opposite. If your proof of concept is validated, there’s no better way to expand it than by working with people who know the concept and the code behind it inside out.  

2/ Project Management

Depending on the choice you make, the cooperation might require more or less management work from your side. The specifics of each of the possible options will be described in detail later, but before starting to compare them, you should analyze your internal management capacity. Having experienced in-house managers, that can take more specialists under their supervision allows you to benefit from all the listed scenarios, but the lower your management capacity is, the less choice you have. Such a situation requires either hiring not only in-house developers but also a PM to manage the work or rely on an autonomous dedicated team that would come with an included project manager or even product owner who would ensure that work is not only being done effectively but also that the project is moving in the right direction. 

3/ Culture

Being on the same page when it comes to organizational culture and approach to development makes it much easier to rapidly find common ground and achieve seamless cooperation, making culture an important factor in choosing the right people to work with. And while many think that this is only relevant when working with external specialists like freelancers or software development companies since internal hires can adapt to company culture after some time, this is not completely true. Obviously, it’s easier for the in-house employees to adopt your culture, as they are closer to it, but culture match should be verified during the interview regardless of which alternative you will choose. The better fit you have at the start, the easier it will be to succeed in any scenario.  

4/ Security

Read also: Agile and Software Development Outsourcing

When comparing these 3 alternatives, security-related issues cannot be overlooked. Nowadays cybercrime is a significant threat for almost all companies that use the internet – so basically, all companies. But while every business owner should regard cyber security as extremely important, for organizations in highly regulated sectors like finance or healthcare, the need to maintain the strictest security regulations while cooperating remotely might be an additional challenge, that can be dealt with but only if properly managed. Therefore, remember to verify security measures when comparing potential partners to support your development teams. If you wonder how to verify if potential software development partner matcher your security-related needs click here.  

5/ Budget

Last but not least – your budget. While everyone would love to have an unlimited one, this is impossible, so every decision should ensure an effective use of limited resources. Thus, verifying how much can you invest in growing your development team and based on that choosing the alternative that allows you to make the most out of it is paramount. At the same time, remember that the popular saying “buy cheap, buy twice” is also true when it comes to hiring developers – if you choose the cheapest option it might backfire with missed deadlines, poorly written code and other problems that require much more time and effort, and thus more money, to be fixed, than paying a fair amount for the quality you desire in the first place. Rather than looking for the cheapest, you should check any potential cooperation from a cost-effectiveness perspective.    

So, what works when?

Having described what you should know before comparing the 3 alternatives, we can move to the main part, focusing on what choice works best in a given scenario. But before comparing them on the previously listed criteria, it’s worth considering the pros and cons of in-house developers, freelancers and cooperation with a software development company. Remember, whichever option you choose, it is important to make sure that the people/teams you select have the skills, experience and knowledge you need to ensure the quality you expect. 

In-house developers

Hiring in-house employees is usually the go-to approach for CTOs aiming to either build development teams from scratch or expand existing ones. You simply require a particular skill, post a job offer or send one of your recruiters on a proactive hunt to try to find someone who is the best match. Yet, while this “classic” scenario has several benefits, often it’s not the best one.  

Hiring developers internally allows you to maintain complete control over their work, manage their time during work hours, and since internal hires are usually long-term, they can get completely familiar with both the product they are working on and the environment they are working in, which will make them highly effective. Additionally, keeping everything in-house enables you to maintain an extreme level of security.    

At the same time, hiring in-house developers has some downsides, which many managers either overlook or try not to think about. Firstly, this is the most expensive option of the 3 – and you should consider not only the amounts spent on wages, but also the investment in infrastructure necessary for the employees, all the benefits you should provide to keep the retention level high, and recruitment – which in case of software developers is not only costly but also really lengthy. This is also connected with the next con of employing in-house developers – the lowest flexibility.   

With internal hires, it not only takes a lot of time to recruit new people if you need to ramp up to keep up with growing market demand, but it’s also difficult to ramp down as that may require firing people who you might require once again when the slowdown is over and have a negative impact on company morale. What’s more, this scenario makes it nearly impossible to incorporate people with additional skills that may be required for only a short period in your project.  

All in all, hiring in-house developers is a proven choice when you want to hire people with core competencies for the long-term and who will develop a detailed knowledge of your project and environment.    

Freelance developers

On the other end of the spectrum is freelancers. This cooperation model is getting more and more popular as it’s a perfect way of dealing with short-term capacity issues or solving problems that you face in the moment. Cooperating with a freelancer simply means that, rather than hiring people for your company or kickstarting cooperation with a software house, you look for people that offer their services as independent contractors – you can find them online using one of the many popular freelance work websites.    

The main benefits of this approach are flexibility, low costs and short time required to find and “hire” a specialist. This makes it extremely suitable if you need a helping hand ASAP for a clearly defined scope of work.    

However, the longer the cooperation, the more the flaws of freelancers become visible. Firstly, the freelance developers are the least reliable of the 3 – they usually have more than one client, and you can’t be sure they won’t be overloaded with tasks from someone else. Or they may even decide to leave your project overnight if they receive a better offer, get bored or simply feel that the time has come to change something. After all, freelancers are usually not looking for long-term collaboration. What’s more, it’s hard to control a freelancer’s work (perhaps not micromanagement per se, but ensuring that the quality of the code is not starting to degrade is important) and you can’t be sure if communication will be effective. Finally, if you want to rely on freelancers only, that will require several dispersed contractors covering different elements – front and backend, QA, DevOps, and so on – making a project extremely hard to manage.    

All in all, if you need help solving a particular problem ASAP, freelancers are a perfect way solution. But if the job to be done is long-term, complex, and requires more involvement, hiring developers internally or cooperating with a reliable software house seems a better choice.    

Software houses

With the last option on our list, it isn’t an overstatement to say that it’s somehow the best of both worlds, combining long-term engagement, flexibility, reliability, and cost effectiveness. However, like everything, cooperation with a software development company is not a magic pill that works in every scenario, and there are some points you should consider.    

As the popularity of outsourcing software development is constantly growing let’s define it only briefly – instead of hiring in-house experts or looking for a freelancer, you start to cooperate with a company that’s taking care of part of the work you want to delegate. Their engagement may differ, depending on your needs, and you may outsource only a number of developers to expand your internal teams or choose a dedicated team model to get a complete development team with its own management. But what’s important is that whatever you choose, apart from experienced and battle-tested people, you also have the entire back-office covered. The software development company provides the infrastructure for their employees and gives them all the benefits and opportunities to grow, not only to retain the best talents but also to ensure that their specialists are always at the top level.    

Since this text is not about the benefits of software development outsourcing in general, let’s focus on the aforementioned elements only. Cooperation with a company from one of the top outsourcing destinations like Kraków allows you to reduce costs without compromising on quality. The flexibility level of such cooperation is also more than enough to always keep a team size and composition that corresponds to your needs. What’s more, reliable software development companies usually have extensive experience in various environments, which allows them to not only turn user stories into code rapidly, but enables them to help you choose the best tools and solutions to ensure that you will be able to reach your goals through consultancy and guidance.    

So, where’s the catch? The value of cooperation with a software development company depends on being able to choose the right development partner. Making an evidence-based decision requires some time and effort – learn how to find a perfect partner for your needs here. Additionally, to obtain all the benefits of cooperation with a software house and justify higher costs than that of freelancers, you should treat them like a development partner and plan long-term cooperation, rather than using them to deal with short-term challenges ASAP. Finally, if you work under extremely strict regulations that may require more effort to find a company suitable to maintain the security level.  

The impactful choice

The choice between in-house developers, freelancers and cooperation with a software house will define what the work on your project looks like, so spending the time analyzing what works best should be treated as an investment – making the right choice will definitely pay off. This blog outlines a solid foundation, but since no two companies, or projects are the same, the number of factors requiring consideration might grow. With more than 22 years’ experience Software Mind has seen a lot and is ready to help – get in touch with our experts by filling out this contact form. Our team is ready to learn about your goals, guide you in the right direction and design a tailor-made strategy that enhances your development capacity, speeds up software delivery and boosts your revenue.