In-house or Outsource: 5 Questions for Your Engineering Team

Organizations that develop software must decide whether they will perform the work in-house or outsource it. This issue is often a matter of weighing the organization’s needs against the capabilities of their software engineering team, which requires the answers to several questions.

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.

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 on 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 needed to build an effective team.

What Drives Your Core Business?

Modern organizations are often software driven, especially those that develop software. The need to bring high-quality software to market quickly 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. Forty-eight 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 may have many specific causes, although they generally favor outsourcing over in-house development due to the time typically required to build a team with direct hires. Each new hire typically requires at least six months to become a productive team member, while a software engineering outsourcing team can be put to work in a comparatively short period of time. Furthermore, outsourcing places the responsibility of providing the necessary skills and experience onto 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 in the 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 an 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 keep customers 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 also critical for achieving commercial success. For example, an organization may have a software development team that’s 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 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 it currently focuses 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 must then be integrated into the existing team, especially when the project is under serious time pressure.

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 proceed quickly, while creating less stress for the existing team. 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?

An organization that’s already adding staff rapidly is under pressure to hire software engineers with the right combination of skills, experience and attitude. This environment can take away from the focus needed to develop a software project with an in-house team. Geographic location also has a direct impact on an organization’s ability to meet its staffing needs. For example, tech hubs are more likely to create competition for hiring and retaining experienced engineers, resulting in greater compensation requirements. However, these areas also provide engineers with more amenities and a higher quality of life.

A nearshore software development team can relieve some of the wage pressure of 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 you to ensure that their needs align with those of their partner. Other factors to consider include the cost, time constraints and scale of the project. An outsourced team with the right skills is much easier to find when you already know what you’re looking for at the beginning of the project.

Tiempo Development provides nearshore software development that specializes in the agile methodology. We also offer a flexible engagement model tailored for customers in North America. Contact Tiempo today if you would like to know more about how our services could work for you.

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