What to prefer: own resources, purchase or outsourcing?

I am sure that we have all heard this question that has already been asked many times, but even now one can meet many business colleagues in various fields who continue to reflect on this long-standing question. Although many modern managers see the benefits of outsourcing development work abroad, there are those who steer clear of this practice because of unpleasant past experience. But the question remains - whether to entrust the development of an external IT company or is it better to attract resources and to do this within the organization?


The complexity of software solutions is that there are usually 3 different ways an organization can achieve its intended business goals.

1. Transfer of the development of the target product to the company-developer of software solutions.
2. Acquisition as a ready-made solution of a product available on the market, possessing most of the characteristics required by the business.
3. Or, the organization may decide to hire a team of specialists and create the target product on its own.
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A typical reason why most organizations reject item 2 of this list is that, as a rule, it is very difficult to find a product that meets most business requirements. Even options close to the desired solution require a lot of improvements and additional efforts, so their acquisition is often impractical for a business.

Thus, the choice between internal development and the outsourcing of an IT company remains. In this article, we will list 7 main reasons why most customers and organizations choose to outsource to implement their developments.

1) Reduced overhead costs

This is one of the main factors in favor of outsourcing, despite the skepticism. For customers from the United States, the United Kingdom, or even Australia, the internal costs of their own development team can be huge. Add to this the factor of uncertainty or lack of resources, operational efficiency and technical developments, and all this can be a pretty good reason to abandon the idea of ​​developing within the organization. On the other hand, outsourcing such development projects will help avoid exorbitant investments. In this case, client organizations pay only for product development and do not incur any other costs associated with operation, technology or training.

2) Reducing labor costs

Speaking of operating costs, labor arbitration is often considered the most obvious advantage of outsourcing. Many managers believe that if you can get more productivity for your money when the work is done elsewhere, there is no point in paying more to your own employees.

This approach is often criticized, but the fact remains that many third-party development companies offer IT outsourcing services only for a fraction of the cost of the same services within the company. However, it is always important to understand that, under certain conditions, development by a third-party supplier may require additional unforeseen expenses for management and transportation, with the result that the total cost of the project will be higher than originally expected. But this can be easily avoided by choosing a supplier of IT solutions with a good reputation for your needs, especially when a well-established and clear relationship is an important factor in your success.

3) Say goodbye to long-term commitments.

This is probably one of the most undervalued benefits of outsourcing. Most organizations choose to outsource because of the opportunity to hire a team of professionals for a project based on the “as consumption” model. This frees them from long-term liabilities and the need to pay any costs associated with them, such as medical insurance, premiums, annual bonuses, etc., often associated with hiring their own team.

4) Increased productivity due to wide geographical presence

While at first glance this may be ironic, many executives actually believe that outsourcing allows them to better manage their productivity. In a typical outsourcing project, the company's own team, as a rule, is located in a geographic area with a time difference compared with the location of the supplier abroad. This imposition of time zones is usually used by smart customer managers who coordinate non-business hours of a foreign branch with their working time in order to minimize the feedback loop during product development and thereby speed up production.

5) Freedom from license obligations

Today there are many software development tools that are available for free and do not need permission to distribute. However, there are many other tools and technologies with high licensing fees for use and distribution. When choosing outsourcing, an organization does not need to worry about acquiring the necessary tools and technologies for development and the associated licensing costs.

6) Freedom from infrastructure and maintenance issues

When your project is completed, sustaining development, internal infrastructure, and resources often become a heavy burden, both in terms of resources and costs. But this can be easily avoided when the company attracts an external IT team to implement the project.

7) Outsourcing saves time, money and resources

Although the management of the company always has the best intentions, in some cases, projects implemented on their own may lead to a delay in time, wasted efforts and money from sponsors. In such circumstances, companies often start to panic and try everything to correct the project, only exacerbating the situation. But all these uncertainties can be avoided by transferring the execution of the project using the pricing model based on the achieved indicators and goals.