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What's better: building an in-house team or outsourcing IT?

Any company betting on resilient growth uses a variety of IT solutions. The question arises, is it worth hiring specialists and building an in-house IT team, or use the so-called outsourcing? You can find out what outsourcing is and which solution is better in today's post.

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DevsPower

4th February 2022

Companies, regardless of size and industry, cannot do without technological tools: computers, mobile devices, office, financial and communications software. For a company to function well, it is necessary for all these systems to function smoothly. This means hiring an IT specialist. Larger organizations build their own team of IT specialists, which means considerable costs. For many companies, the need to have their own IT department seems to have no alternative. More often than not, they start from the assumption that the tools on which the company depends should be under its control. This is, of course, a valid reasoning, but as it turns out, in many companies this is more of a problem than a solution. Building, maintaining and developing an in-house IT department is a task that requires proper planning, a fixed budget and competent people. Creating an in-house IT team therefore requires a lot of experience. Securing funding for its operations will keep management up at night, and finding and attracting competent employees from the market can be a real challenge. So what could be the alternative? Instead of pursuing the construction or maintenance of an extensive IT department at all costs, one can opt for outsourcing, that is, entrusting some tasks or projects to external companies. Almost 100 years ago, Henry Ford, the genius of industrialization, stated: "If there is something we can't do more efficiently, more cheaply and better than our competitors, there is no point in us doing it, and we should hire someone to do the job better than we can."

What exactly is IT outsourcing?

Outsourcing itself is a business practice that involves contracting outside companies to perform tasks that you don't want to handle internally. In the context of this blog post, therefore, we are talking about hiring programmers. Such hiring can take many forms. Often its types are divided depending on how the relationship between the client (the company hiring other developers) and the outsourcer (the company providing such services) is to be: ✅ Expansion of the team - in this case, the responsibility for the project rests with the client, and the role of the hired specialists is primarily to support the core team. ✅ Hiring a team - responsibility for the project is distributed more or less equally between the client and the outsourcer. Both parties need to determine exactly what they are working on. ✅ Outsourcing the project - most of the responsibility here lies with the outsourcing provider, who practically starts and finishes the project on his own.

What advantages does IT outsourcing bring?

This model is very flexible. We don't have to check every employee for suitability for the project. This service works best for companies that are growing rapidly and have an excess of orders. It is useful when we are building some IT system, but we cannot afford to postpone the start of the project for several months just because of a protracted recruitment. In addition, we can purchase a support service only for a slice of infrastructure where our employees lack competence or do not have time to deal with that slice of infrastructure. The unquestionable advantage represented by IT outsourcing is cost reduction. The company does not need to invest in training or technical facilities, as IT support is the responsibility of an external partner. If we compare the cost of a full-time IT specialist with extensive knowledge in all areas of IT with the cost of outsourcing, it is more cost-effective for the company. In addition, we gain a guarantee of service performance and the experience of the entire company that undertakes outsourcing services. Let's not forget that the price of the service is 100% of the cost of doing business. Another advantage is the reduction of personnel problems. If the company has only one IT specialist, then his absence even temporarily is definitely undesirable. The outsourcing contract transfers all responsibility for providing services to the outsourcer. We don't have to worry if the outsourcing employee is sick or unavailable at the moment. By choosing to outsource, we gain access to knowledge of new technologies. Professional outsourcing companies are constantly developing the competence of their employees. In this situation, the company does not have to spend additional money on training, but can benefit from the experience of the outsourcing partner. This can reduce the time of implementations, services and involve the internal team less.

So when is it a good idea to decide to hire programmers?

Before you decide to use outsourcing, you should be sure that actually such a solution will be cost-effective. Here are some factors that can weigh in on whether IT outsourcing is a good option. ✅ Lack of time for development work. Software development can sometimes be very time-consuming. If we have an in-house development team, it probably has many important tasks. Numerous projects require a quick response (e.g. a malfunctioning e-commerce platform). In such situations, outsourcing programmers seems to be a better solution. ✅ Lack of experience in a given technology. If you care about the quality of execution of a given programming project, and it is difficult to find suitable specialists, using external services will be a good choice. By hiring experts, you will reduce the costs associated with rapid and intensive retraining of your team, as well as potentially gain a better quality solution. ✅ Financial issues. In many cases, outsourcing development tasks is much more beneficial financially. In the case of hiring developers, we don't have to take into account such additional costs as insurance, sick leave, vacation or training. All these factors contribute greatly to the high cost of maintaining in-house specialists. Thus, IT outsourcing is especially recommended when we care about time and fast and efficient implementation of the project.

What are the disadvantages of this model?

As an argument for "no", we can include the amount of work we have to put in to make the choice of a suitable outsourcing partner. We need to take the time to check competence, market reputation and customer relations. We should also remember that failure to supervise an outsourcing company can cause irreparable damage both financially and in terms of image for the outsourcing company.

But when should you consider an in-house IT department?

Building an in-house IT department is a solution for the biggest players. If our business requires constant IT support, and we want to implement new, fully personalized solutions, we may need our own IT department. It will certainly be a good solution when we plan large projects with a time frame of several years. An in-house team will give 100% of its attention exclusively to our company. However, an in-house IT department does not fully exclude outsourcing. First of all, we can still outsource individual areas that do not require as much commitment. For example, one can have an in-house administrator at the company's headquarters to oversee the work done by the outsourcing company.

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