Hot Topic: In-house vs. Outsource Development

The explosive trend in outsourcing software development continues to gain momentum. Organizations that develop software must decide whether to perform the work in-house with internal teams, outsource, or choose a combination of both. The issue is often a matter of weighing organizational needs against capabilities of internal software engineering teams. Many factors are considered in weighing these options. Which option is right for you?

The driving force behind an organization’s core business is one of the most important factors in determining who should develop its software, according to ZDNet. Factors that drive a software engineering firm commonly include applications, services and technology.

Time-to-market constraints are also important issues in developing any new product. The time needed to bring a product to market is highly dependent upon issues such as the release of the competing product or simply a desire to make money.

Organizational concerns such as team culture and product focus also influence the in-house/outsourcing decision of software development. Managers must also ensure their organization’s software engineers are capable of completing the project. This process includes assessing the skill sets of the current team members, availability of skills in the market, and the time required to build an effective team.

What Drives Your Core Business?

Modern organizations are often software driven, particularly those that develop software. The need to quickly bring high-quality software to market is a critical requirement for organizations that are transitioning into software-driven enterprises. A 2015 study commissioned by CA Technologies shows that 43 percent of the respondents believe that becoming a software-driven enterprise is already a driving factor in achieving a competitive advantage, and 78 percent of respondents thought this statement would be true within three years, while 48 percent of respondents indicated that becoming a software-driven business would help an organization gain market share.

Otto Berkes, Chief Technology Officer of CA Technologies, elaborates on the growing importance of customer service in a software-driven economy. He says, “It’s no longer enough for companies to have superior products or services. Today, success depends upon delivering a superior customer experience.” The results of the survey by CA Technologies also show that this trend will result in even bigger changes in the future. Berkes explains, “As companies undergo digital transformation, they must focus on the customer experience since it will be a key differentiator in today’s application economy.”

Do You Have Time-to-Market Constraints?

Time-to-market pressures can have many specific causes. The favor of outsourcing over in-house development is typically due to the time required to build a team with direct hires. Each newly hired internal employee typically requires at least six months to become a productive team member. On the other hand, a software engineering outsourcing team can be put to work in a comparatively shorter period of time. Furthermore, outsourcing places the responsibility of providing the necessary skills and experience with the outsourcing partner.

Each feature of a software application requires time to develop, which therefore increases the time needed to release the software. The process of bringing a software application to market also requires striking a balance between the features you would like to have versus features that are necessary to meet user requirements. Rushing a product to market without a clear vision of its purpose can reduce customer acquisition, while overloading it with features can make a return on investment (ROI) too small to justify the development cost. Software developers with experience in lean product development (LPD) can be highly useful in cases where a software project has significant time-to-market constraints.

What Is Your Biggest Organizational Concern?

Every market and organization has biases that influence its software applications. Financial software is generally biased toward providing stability in a consistent financial return; while games need to be first to market and continually keep customers engaged and playing. Organizations with agile cultures have a bias toward iterative improvement in customer focus, while organizations in tech hubs have a bias toward capitalization and rapid growth.

Understanding an organization’s culture is critical in achieving commercial success. For example, an organization may have a software development team that is very “hands-on.” Such an organization is likely to have difficulty in outsourcing the entire software development project. On the other hand, a service-based organization is more likely to be driven by customer satisfaction. These organizations are more likely to outsource software development, since engineering work is primarily an enabling factor to success.

The key factor in addressing organizational concerns when deciding to outsource is establishing close communications between the engineering team and project stakeholders. An outsourced team needs to hit the ground running with a partner-based attitude, allowing the in-house team to focus on providing value for the customers. This process must avoid creating adversaries at the beginning of the project.

How Do You Assess Your Current Software Development Team?

Transitioning an existing software development team to a new project is generally a challenging task, especially when the focuses is on maintaining productivity and performing customer service. siliconANGLE advises that this process typically involves carving out roles for existing staff members over time. However, agile development requires a cross-functional team with the experience needed to seamlessly switch between roles. This requirement can make it very challenging to build a productive team from individual hires that are integrated into the existing team, especially when the project is under serious time constraints.

A software engineering outsourcing team with the necessary experience can ease this transition by taking on work, while helping the in-house engineers adjust to their new roles. This approach can allow the project to migrate quickly, while creating a less stressful team environment. The primary challenge is to perform the collaborative planning needed to obtain a partner-level attitude from members of the outsourced team. However, it does allow an organization to retain the knowledge and experience of the existing team, which isn’t easily replaced.

Do You Have Growing Staff?

Organizations are under the distinct pressure to hire software engineers with the right combination of skills, experience and attitude. The flux of employees and change in team environment can take away from the focus needed to develop a software product with an in-house team. Geographic location also has a direct impact on an organization’s ability to meet its staffing needs. For example, organizations in cities that are close in proximity to tech hubs are more likely to experience competition. Hiring and retaining these experienced engineers often leads to greater compensation requirements because of this competition.These areas also tend to entice engineers with more amenities and a higher quality of life.

A nearshore software development team can relieve some of the wage pressure in making direct hires, while allowing the in-house team to maintain their current standard of living. This strategy also provides an organization with more opportunity to remain in contact with other companies that could become business partners in the future.


Outsourcing a software development team requires alignment of needs between the organization and partner. Cost, time constraints and scale of the project are important to consider. It is much easier to find the right outsourcing team with the right skills when needs and expectations are in place ahead of time.

About Tiempo Development

At Tiempo, we are making the business of software development easier and more affordable with a unique combination of a nearshore business model, agile methodology, and advanced talent management. Our Development teams engineer powerful technologies that align with the goals and strategies of our customers for both their internal and public-facing development initiatives. The Tiempo Quality System is the agile product lifecycle management framework that makes all of this possible and supports companies in launching software releases sooner without draining important resources. To learn more, visit our home page or contact Tiempo Development (

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