I have been working within the IT industry for many years, so I do know that companies that want to develop their products can be divided into two categories. The first one consists of the advocates of employing their own in-house team. The idea behind it is simple - they want to have everything under control at their own office. The second approach regards cooperation with an external software development company. I think the proportions are equal - 50/50.
At Codest, we specialize in building software products for clients around the world. Still, if you expect me to write that the best solution is cooperation with a company like ours - you are wrong. I think that if you are building a product for a small number of users and you do not intend to further develop it, then perhaps hiring an in-house team may be a good solution. However, if you have ambitious goals, want to scale your business, need the help of professionals with broad competences and care about effective budget management – choosing a software house will definitely be a good move.
To the point. Now, I would like to show you why hiring an in-house team is not as profitable as you might think. If you are considering such a move, think about the important facts:
1. Costs of hiring in-house developers
The average salary per hour of developer work in the US is about $88,000. In the Scandinavian countries, it can be even more - $50 to $174. Fortunately, these amounts are slightly lower in other parts of Europe. In Central and Western Europe, you have to pay $68- $99, and in Baltics $35 - $49. A lot, right?
Therefore, you must be aware that in terms of costs, starting the cooperation with a software development company may be more profitable for you in many cases.
Apart from paying for developers' working hours, you also invest your time in recruitment. First, you need to find the right professionals, and this takes time. If you don't have a specialized HR team, the whole process can be difficult and problematic. In addition, you waste your time that could be well spent on other activities.
Also, consider the fact that recruiting an experienced developer is not easy. There are not many real professionals on the market and it is another obstacle. You don't have to worry about recruitment when it comes to a software house. Just explain your needs and the project can start!
3. Maintenance of the developers
On average, developers change their workplaces every year. These are the realities of today. The demand for their skills is very high, which is why the competition is doing everything they can to bring real professionals to their side. So you have to take into account that cooperation with in-house developers may not be that easy. They sometimes require additional benefits from the employer, which you will have to meet so as not to lose them.
In addition, take into account that you incur the cost of maintaining the developer, which includes his holidays, holiday breaks and sick leave.
4. Knowledge and experience
It may also turn out that your project requires a broad knowledge of several technologies. In this situation, the skills and competences of your developer may be insufficient. It's good to have a wide team that complements each other’s knowledge. What does this mean in reality? More costs. Yes, check your Excel again.
5. Need a Project Manager?
To ensure the efficiency of each project, the best solution is to have a Project Leader or a Project Manager. This is your next cost. It is also good to plan the developer’s career path. A mentor would be useful for that. More costs.
6. Other costs of hiring in-house developer
Remember that your total cost of employing a developer also includes expenses such as: office space, equipment, onboarding and much, much more.
What is the answer? In-house team or external software development company?
You have to decide for yourself. I hope this article has helped you realize that hiring an in-house developers team may not always be cost-effective, easy and fun. If you are hesitating whether the cooperation with an external software development company makes sense for your business, remember that you can always trial a cooperation. All you have to do is ask the software house to run a test period. During this time you will be able to see if this solution works for you and if it really generates real benefits.