In the year of 2022, hiring isn’t as easy as it used to be (as if it ever was).
With remote working becoming more widely accepted, the Great Resignation, and the increase in spend on innovation, the level of demand for software developers is unprecedented. What was already a difficult task has become even more difficult and costly.
So as you look to take on new tech initiatives, you’ll want to look at all your options. You could augment your team with contractors, hire internally, or outsource your development. Here we’ll walk through hiring internally vs outsourcing your development, so that you can decide what’s best for your team.
- Decide what factor’s are the most important for your company: cost, area of expertise, or schedule
- You get more control with a full time hire, but there’s a lot of unplanned costs involved
- A development team gets you instant access to a wide range of expertise, but it’ll cost you a higher rate
But first, what’s most important for you?
Before getting into the nitty-gritty, it’s important to remember that you and your company will have metrics to hit and guidelines to stay within. When deciding between bringing development internally or outsourcing it to a firm, you’ll want to ask yourself some of these questions:
|Is this a one off short-term engagement, a longer-term partnership, or something in between?||What technology are you using? Do you have the needed expertise? Is there a skill set that is lacking?||How much time and money do you have to spend in the short-term? Long- term?||How do you currently operate? What communication style works best for your team? Do you have experience working with external teams?|
Focus on what’s most important to you and your business: whether that’s finding a short-term solution, building a team with a certain skill set, or staying within your budget. That way, you can make sure your deciding factors are evidence-based instead of a gut-feeling.
With that being said, let’s look at those tradeoffs and benefits; here’s some pros and cons of hiring a full-time developer vs bringing on a development firm.
Full Time Developer Pros and Cons
A full-time developer is any software engineer brought onto your team. They’re managed by you and work solely for your company. Building a complete team can be expensive and time consuming, but you can utilize them all day to reach your long-term goals. Let’s not get ahead of ourselves: here’s why you should (and shouldn’t) go for an internal team.
Pro: Lower Upfront Cost
When looking at the short-term costs, adding a developer onto your team requires little upfront cash (Unless you’re using a recruiting firm, we’ll get into that in a second). For actual money you’ll spend immediately, it isn’t much; you usually won’t start paying a salary until the second week into hiring.
Con: Long Term Cost of Benefits
One issue is that while you’re technically spending less money upfront, you’ll have to pay more than just salary in the long run. You’ll have to dish out for taxes, paid vacations or leave, insurance, equipment, and licenses.
Pro: Exclusively Working on your Projects
In-house developers don’t have several companies they’re focusing on; your company and projects are the only thing they need to worry about. What that means for you is no distractions.
Con: Time and Money in Hiring
Remember earlier when we said upfront costs were lower? We didn’t mention hiring or recruiting costs. Bringing on a good developer takes unplanned time and money to find them and make sure they’re actually good. If you use a recruitment firm to help, you’ll be paying them 20 – 25% of their starting salary. Not to mention that no matter how you go about hiring, it’ll take you around 45 – 90 days on average to find the talent you need.
Pro: Concrete Budgeting
When something’s internal, you’re able to manage and account for all costs associated with it. For development, that means managing exactly what resources are spent where, and in turn knowing exactly what you’ll spend each month to get something done.
Con: Bring them up to speed
With any development, you need to make sure everyone’s on the same page. With an internal team, there’s all types of onboarding that needs to happen: company policies, your process, and culture. It can take a lot more time to ramp up than expected.
Related Article: Pros and Cons of Outsourcing Development
Pro: Motivated to do Great
It’s no secret that reward-based work can lead to better outcomes. If a developer can see that the success of a product will directly lead back to benefiting them, they’re more likely to put in the effort. Internal teams share your culture, and will want to positively build on that.
Con: Are you playing the long game?
You don’t want to pay someone to sit and twiddle their thumbs. An internal team works best if you have a long development roadmap. If your backlog isn’t that long, you may quickly run out of things for them to develop.
Pro: Development is your Oyster
You’re in charge of everything when it comes to an internal team. That means you get to build exactly what you want and how you want it. At the end of the day, you get to create the team however you want or need to.
Con: Alone, or From Scratch
If you’re hiring one developer, they may not have all the skills you need. If you try to hire a team, however, all the costs and issues multiply. Not to mention the added wrinkle of building a well-rounded team; you’ll want developers that have a wide range of expertise who can work well together.
Pro: Planning for You
As the head-cheese, you get to say what work gets done and ways it gets done by your developer. You can focus on their capabilities and different tasks depending on their skills or tasks at hand.
Con: Workplace Inefficiency
When you hire a salaried developer, they’re getting paid for 40 hours a week no matter what. Lost productivity looks different in our remote world, but it’s still an issue; it’s estimated that employees spend between 700-750 working hours not directly working. That’s time you’ll have to pay for if your developers are in-house.
Development Agency Pros and Cons
Development Agencies are companies who have development teams already built that other companies can leverage. Utilizing them means you’ll have access to talent quickly, but it’s gonna cost you (and not just in money). Let’s dive into the pros and cons of hiring an outsource development agency.
Pro: Instant Expertise
Development Firms have a large team, each with skill sets and experience you can leverage. You’ll also get to lean on each team member’s experience and perspective, making sure your product has out-of-the-box thinking behind it. This doesn’t include the variety of services they offer outside of development. TLDR: you’ll be getting a lot for what you pay for.
Con: That Price Tag
This is the biggest turnoff for working with an outsourced team: it’s going to cost you. While you’re not directly paying for it, developers at these firms need salary and benefits. To combat this, outsourced development comes at a higher hourly rate than if you hired an internal team or a freelancer.
Pro: Specializing in Specialized Tech
Sounds special, doesn’t it? Sometimes you may need a developer with experience in a very niche technology or industry. It’s easier for a development firm to find or employ a developer with a specialized skill set, as their expertise can be used across several projects.
Con: Stretched Too Thin?
If the entire development company was only working on your project, then outsourcing wouldn’t be cost effective for anyone. The con here is that you can’t be certain your project is the top priority at the moment. Other companies’ deadlines can cause your project to take a back seat for a moment.
Pro: Put those Hours to Use
With access to multiple people on a firm’s team, you’ll also have access to more work hours. That means faster turnaround time; it’s basically as if your one developer could be 10 in the same timeframe.
Con: Access Denied
If you’ve attempted to use a 3rd party business before, then you know you’ll speak with sales people before talking with a developer; sometimes this extra layer means you won’t see a dev until you’ve signed the dotted line.
Pro: Long Term Savings
While looking at the final price tag of outsourced development might make you sea-sick, it’s important to remember everything that goes into that estimate. By paying for a 3rd party, you won’t have to pay for salaries and benefits, as well as a whole slew of other unplanned costs. These include time-off, office space rental, and ‘goofing off’ time. In the long run, you’re actually more likely to save money.
Con: Just as Bad?
As we mentioned above, you may never talk to a developer until after you’ve signed the contract. How will you truly know the quality of development until it’s too late to back out? You could talk to past clients to help make sure you’re not being swindled.
Pro: Flexible with Involvement
One great benefit of development firms is that they’re (usually) flexible in terms of your involvement. Want to be hands off? You can do that. Want to be more in the loop? That’s also an option. However hands on you want or can be, an outsourced dev team can be structured to your liking.
Con: Location, Location
It’s important to point out the difference between onshore outsourcing and offshoring (read our blogs on those for more info). In trying to get the benefits of an outsourced dev team for a lower cost, you may look to offshoring. While there are good firms out there, some cut corners to give you that lower price. Make sure to discuss their work culture as well as potential time zone and language barriers to make sure it’s a good fit.
That was a lot; did you get all that? To recap: you need to decide what factors are the most important to your company before deciding which direction to go. Once you have an idea, check out whether you should hire an internal developer or an outsourced firm.
While you have more control over an internal employee, you may not have the time or resources to execute full tech projects effectively. Outsourced development allows for quick access to a diversified team, you’ll have to pay a higher rate.
Hopefully we didn’t sway you one way or another (unless you wanted to be.) 😏