Would you rather hire an in-house developer or Outsource Offshore?

Many business owners enjoy the benefits of outsourcing development work to other countries. Others have sworn off it entirely after a bad experience. So which is it — should you outsource development abroad, or hire a developer to sit on your own team?

The Advantages of Outsourcing Offshore

1. Cost

Labour cost is clearly much lower in other countries. Why hire a personal developer when the same work can be done abroad for a quarter of the price, or less? Those savings can then fund a larger, more feature-rich application.

Workforce pricing is regarded as the single most significant advantage of outsourcing. Many businesses reason that if you can get more for your money elsewhere on an identical scope of work, there is no sense paying a premium for someone local.

2. Short-term commitment

The most overlooked benefit of offshoring is the ability to bring in an expert on a project basis without a long-term commitment — and without the costs that come attached to one. You may need one set of skills now and a completely different set a few months from now.

3. No workplace distractions

It might seem obvious, but many office environments are a major source of distraction for developers. Between lunch, workplace gossip, and long commutes, there is little uninterrupted time to get things done. It also often means developers work far more hours than they should, which damages morale and, eventually, company culture.

The Advantages of Full-Time In-House Developers

1. Buy-in

Full-time programmers have bought into your idea and carry a high opportunity cost for working with you. They are dedicating time and effort to your idea and have a vested interest in its success. That is huge. They are less likely to leave, and where there is a good fit, they become long-term players.

2. Relevance

Developers sitting next to you know what is going on and can change course easily. Rather than waiting for a scheduled meeting, a new feature may take priority after a casual conversation. They also understand the company's challenges in other areas — sales, marketing — and can offer solutions there too.

3. Aligned interests

By definition, freelancers measure success by winning clients, completing projects, and moving between a variety of them. Business owners measure success by building a company that generates revenue and disrupts a market — and that takes a long time. A software engineer alone, especially an outsourced one, can only take you so far.

The Drawbacks of Outsourcing — and How to Solve Them

Quality control

Quality is the major issue when outsourcing to another country. How do you ensure the code being written is genuinely good? How do you even judge the developers who list portfolios on outsourcing sites? Large overseas development shops commonly list one general portfolio of the firm's work — usually produced by their best developer — so you have no real idea what you are going to get.

The solution: work with an agency that builds real technical portfolios and filters profiles for fit. Good developers then reach you with far greater accuracy. After a technical interview, the agency can confirm the candidate can actually build software, so by the time they reach your in-house round you only need behavioural questions to check the culture fit with your team.

Collaboration on code

When you outsource overseas, collaboration is a huge challenge. Depending on which country you hire in, there can be important differences in how a statement of work is read. Software development is an inherently collaborative process, and you cannot expect developers elsewhere to infer what you mean when they are working from a different context.

Result: Extremely specific, written requirements are the single biggest predictor of a positive outsourcing experience.

The Benefits of In-House Development

1. Cultural adaptability

Hiring a local engineering team means working with people who share your culture and values. That makes it easier for them to integrate with the company and add more value through their work.

2. On-site availability

Being able to talk to one another in person supports effective collaboration and reduces misunderstandings. With everyone in the same office and time zone, changes get done faster.

The Drawbacks of In-House Development

Building an in-house team is unquestionably advantageous — but it is not free of risk. In practice there are more drawbacks to hiring locally than there are to outsourcing. Let's go through them one by one.

1. Expensive

Hiring in-house developers costs significantly more than hiring offshore, because the cost includes infrastructure, overheads, employee benefits, training, and more. Medical coverage is exorbitantly priced, and so are developer salaries. Unless you have a technical cofounder willing to take a large portion of compensation as equity, hiring a developer is expensive.

2. Inadequate talent

The IT industry keeps transforming, which is a good thing — but not every developer keeps pace with current trends. The result is a scarcity of talent with any specific skill set, and your only option becomes paying a significantly higher salary to attract it.

3. Low rates of loyalty

Software developers in Western and European markets change jobs more frequently because demand is high and competing packages are attractive. There is always a prospect that your lead programmer moves on during a critical phase of the project.

So What Is the Solution?

The advantages of working with an offshore team justify giving it a try. Who knows — while working with offshore developers you may find long-term players who are genuinely committed to your organisational goals.

Experts also strongly advise outsourcing to a Scrum-enabled company. Studies show that with Scrum, large cross-distributed teams achieve the same outcomes as small local ones.

On the other hand, in-house developers have real advantages of their own. They believe in your business concept, have adopted your culture, and carry significant opportunity costs for working with you. They share your goals and define success the way you do — building a business that generates revenue and disrupts markets alongside your team. That process takes a long time.

Only an honest self-evaluation of your own situation will give you the right perspective. At Codonnier we make a strong outsourcing partner because we take a large portion of the planning and execution off your plate, so you can spend your effort on the work that genuinely needs you.

So Which Should You Go With?

Our general advice to companies looking for an answer is honest: it depends. Most real situations are a mash-up of both.

If you want to avoid the hassle of finding talented developers, add someone to your team who can work across a variety of projects, and do it at a much lower cost than a long-term hire — we recommend outsourcing.