The lowdown on outsourcing and insourcing your product development, the benefits and disadvantages of each, why it’s always smarter to invest in both and how to get the best software outsourcing to complement your in-house team
Should you outsource or try build your own team? It’s a hot topic in the software and dev space, which is why we covered it recently in our post on how to build a development team.
But if you go and Google a bit around outsourcing and insourcing, you’ll notice a definite “either/or” sentiment online. It’s as if everyone pits the two against each other; most results point to “outsourcing VS insourcing”. As if they’re competing ideas.
But aren’t they really just two sides of the same coin?
There’s a lot of reason to believe that it’s never a case of having just an in-house team. Even Facebook (Meta) and Google (Alphabet) outsource. Ditto Twitter, Microsoft, Apple – everyone.
Why? Software devs are in huge demand, so they tend to move jobs a lot.
And locally in SA, it’s much the same. In fact, 30% of developers said they’re planning to change roles in the next 12 months, according to OfferZen’s 2023 State of the Software Developer Nation report.
So let’s just unpack the idea of topping up your internal team a bit…
One of the key success factors of a business is building that internal team, so no matter what you’re always going to be insourcing and developing internally. But, considering all the risk factors, there are compelling reasons to go for a dual approach and strengthen your internal team with outsourced expertise.
Remember how we said 30% of SA’s devs intend on changing jobs in the next 12 months? Well, it goes further – 60% of devs have almost no interest in staying somewhere for much longer than 2 years (less than 30% want the stability of a 5-year tenure).
This means your dream team devs are definitely out there somewhere, it’s just so much harder to find them. And you’ll probably have quite a few heartbreaks on the way to getting them. Not to mention, it costs quite a bit for every new hire…
Something very few businesses talk about is the actual cost of replacing an employee. It’s not just the loss of productivity (estimated to cost companies over $1.8 trillion per year in the US alone) when someone quits, but the costs of advertising, sourcing, interviewing and shortlisting (usually with HR) – not to mention the time it takes away from managers, department heads and sometimes even senior management (which costs millions, surely!) to comment and approve new hires.
In fact, the Society for Human Resource Management (SHRM) says it probably costs you 6 to 9 months of an employee's salary in hidden costs to replace them. So, to replace a senior dev earning R60k per month probably costs you between R360k and half a million Rand to replace.
That’s why it’s important to keep outsourcing a part of the mix. See how to outsource app development successfully.
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