Outsourcing or In-house IT - which is more profitable?

Outsourcing or In-house IT - which is more profitable?

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Create your own ready-to-go development team and enjoy independence? Or opt for an external partner with experience and focus on other tasks? Both solutions have their advantages and disadvantages, and come with costs that we may not consider when making a decision. Before making a choice, it is worth checking which option will be more cost-effective for us.

In-house IT or outsourcing - advantages and benefits

Certainly, both solutions have their advantages. Having our own team of talented and experienced programmers is a dream come true for almost every company. This option is first and foremost a greater convenience of operation - our team is constantly available and ready to work, the communication process is simplified, and we have a great deal of influence over the project. What's more, in-house IT, allows us to work with people who already know the company, so they can be much more strongly involved in the project. Among the advantages of having programmers on an exclusive basis, it is also worth mentioning the image value - as we can thus increase our prestige in the market.

The decision to work with an outsourcing partner also brings many benefits. The implementation of projects by an external contractor allows us, first of all, to reduce costs - we do not have to worry about additional fees resulting from, among other things, the preparation of space or equipment for our employees. In addition to financial resources, we also save time. While a team of specialists is working on our project, we can fully devote ourselves to the company's important tasks. Cooperation with external specialists is also a guarantee of high quality services and optimization of solutions. We can be sure that experts specializing in specific solutions will be selected for our project. In addition, they will offer a fresh perspective and look for creative and non-obvious solutions.

Surely these are the benefits themselves?

While both concepts sound attractive, we must remember that they have their drawbacks. In the case of an in-house team, the main disadvantage is the high cost. Creating and maintaining a team of specialists means regular expenses. Moreover, when deciding on an in-house team, we will have to reckon not only with high financial outlays, but also with the need to devote a large amount of time. Simply assembling a team that will guarantee our projects at as high a level as possible is time-consuming. Finding employees means starting a complex recruitment process, and this in turn leads to further complications - the demand for specialists in the market is high, so if we want to attract top-notch programmers, we need to prepare a really attractive offer. Completing the arduous recruitment process and welcoming the ideal employees on board does not at all mean the end of potential inconveniences. A consequence of having a permanent team may be the gradual closing of our specialists to certain solutions - our experts may develop their own style and problem-solving strategy over the years, which may contribute to the avoidance of less obvious solutions. Creative activities and flexible approach to tasks can also be limited by the awareness of working for a "demanding boss" or lack of proper motivation. A fixed team also means a lack of fresh eyes. We also need to remember that we will not be able to have experts who specialize in every field.

Of course, choosing outsourcing does not mean reaping the benefits alone. The decision to cooperate with an external company should be well thought out, and we should consider all the disadvantages and potential difficulties before doing so. One of the main disadvantages of outsourcing is the risk involved in choosing a cooperation partner. Inaccurate research and a hasty decision can cause us to hire an unprofessional company, which will bring, among other things: poor quality of service, communication problems, unsatisfactory results or even the need to find a new company. Outsourcing cooperation is also associated with an increase in the risk of security breaches, including data leakage. Transferring the implementation of a project to an outsourcer will allow us to devote more time to other tasks, but at the same time may reduce our control over the entire process. Outsourcing cooperation itself requires us to be much more flexible than working with our own team.

Which is more profitable? Let's keep all costs in mind! 

One of the main factors in choosing between an in-house team and outsourcing is cost and the desire to control the budget. In-house IT seems to be an attractive idea - for a fixed payment to employees, we get a team operating on an exclusive basis and full control over the project. However, we must remember that this solution generates many more expenses that we may not take into account when making our decision. Among other things, we need to provide our specialists with the opportunity for continuous development by organizing training and financing courses. There are also expenses related to providing team members with attractive positions, equipment and programs. We must also not forget about the need to take measures that will make our programmers want to stay with the company for the long term.

In the case of outsourcing, several factors affect the cost, and we should discuss most of them before signing the contract. Particularly important is the model of cooperation, which determines the form of payment - we may have to deal with daily or hourly rates, and in another case payment for the achievement of a specific goal in product development. It is worthwhile to agree in advance on the issues of any additional costs that may arise in the meantime. Among other things, we must take into account the appearance of potential errors and the possible need to work night shifts, holidays or overtime. Changes and rotations occurring within the team may also expose us to additional costs, so it is worth discussing this issue much earlier. If our outsourcing partner is a company from another country, we should include in our contract the approach to currency exchange and exchange rate fluctuations, which can take place after the start of cooperation and affect the final cost of the service.

Bottom line - which solution will be best?

Which solution will be the best and most cost-effective for us? It all depends on our needs, of course. Even if we are already leaning towards one of the options, it will be a good idea to carefully analyze the pros and cons of both solutions. An interesting suggestion, especially for companies that have not yet used outsourcing, is to start with a small project requiring only 2-3 specialists. This approach will allow us to see if this form of cooperation suits us and we are satisfied with the results. Among others, Education First - a global leader in the education industry - has built cooperation with Britenet in this way.

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