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Insourcing vs Outsourcing: Which is better?


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After the COVID-19 pandemic, outsourcing software development projects have gained momentum to a great extent. I mean why not since here you can receive desired outcomes delivered within relevant time and money. Also, here the scope of return on investment is pretty high. Now gone are the days when insourcing was the only relevant way to succeed.

Today, you have a plethora of ways to conduct a software development project but what’s more difficult is to pick the right option. The following post focuses on insourcing vs outsourcing. What are they, how are they beneficial and of course, how different are these two concepts?

Insourcing and Outsourcing – The Introduction

Well, I recently happened to stumble upon an interesting post that mentioned some of the most relevant and amazing stats. Take a look at the image below. 

You can see for yourself that post-COVID, the demand for outsourcing seems to have gained momentum like never before. Let’s go through the basics of both concepts. 

Insourcing is said when you hire or allocate a bunch of people within the existing IT team. This also means you have the liberty to relocate employees from different projects within the organization. Insourcing is done especially when you don’t have enough resources. What is the point in creating such a concept?

  • Well, when you insource or recruit new programmers, the control is still in your hands. You are the one in charge! 
  • Balance is the key here. By creating a particular balance between in-house and outsourcing activities, you can get an edge above competitors. 
  • More scope for mergers and acquisitions 

Insourcing is more about temporary filling in for the tasks which you don’t want to outsource. For example, let’s say you have a team of programmers who have designed some technical equipment. Now they are engineers, it cannot always be possible for them to write manuals for that development equipment. Also, it is not feasible for you as well as them to join any technical writing course. So what to do? Simply try recruiting more geeks who have the knack of writing such manuals. Many times, insourcing is being observed as an alternative to outsourcing which is definitely not the case. Here different professionals are hired to accomplish a particular task. 

Now if your company has a specific need. Let’s say you have opened a restaurant and you need more waiters where freelancers or outside people can help. So the objective is yours, you have full control, and you can change the waiters into other professionals such as Chef’s assistants or valet parking responsibilities. There is a specific contract period, once it is over you can ask them to leave on good terms. By doing so, you don’t have to don multiple hats all at once and focus on your competencies as well. So high-end efficiency, total control are some of the core benefits of considering insourcing. 

Further, I would like to mention other relevant benefits of considering insourcing. 

Top Benefits of Insourcing

#1 High-end flexibility

One of the obvious yet crucial benefits of considering insourcing is that it offers greater agility and high-end flexibility. When you commence a business, sooner or later it will expand – no two-ways about it! And for that one requires increased agility, flexibility and scalability. When you opt for insourcing, the company can complete the project maybe before a predetermined time. Also, if you don’t need so many people for a particular project, you always have this control of reallocating them to another project within your company. 

#2 Solutions according to your needs

Here you are bound to receive what you exactly crave for. You see in the case of outsourcing your services via a third-party there are fair chances of your project being slightly changed for better or worse. Whereas when it comes to insourcing, you are bound to receive what exactly you are expecting, nothing more and nothing less. So if you have any type of specific needs in mind, then simply choose insourcing and nothing else. 

#3 Enhanced communication

Communication is the key to the success of any project be it software development project or any other non-technical project. Now when you insource people, communication no longer works as a barrier. Instead, it becomes one of the most strengthening aspects for your project. And overcoming such an obstacle can speed up the entire project to a great extent. 

Now enough said about insourcing, time to focus on outsourcing. So what is outsourcing and how is it beneficial for businesses irrespective of their size and industry vertical in the longer run. 

Outsourcing is said when a business tends to hire professionals or a third-party provider services that could be conventionally performed within the business. Outsourcing is mainly done so that the business can focus well on its core competencies. Also, it turns out to be one of the most cost-effective ways to conduct a software development project especially after the COVID-19 pandemic. 

There was a time when outsourcing was considered by different businesses and companies to cut labor costs, including salaries for their personnel, overhead, equipment, and technology. More or less, they could spin off all those activities which were less important. The only issue back then was communication wasn’t pretty much up to the mark and due to which the desirable outcomes were not achieved. Fortunately, that’s not the case anymore! You can check the above image that shows how outsourcing is gaining momentum day in and day out. More and more businesses have started looking for software development companies offshore that have a proven track record of offering unrendered services to their valued clients. 

Types of Outsourcing

  • Onshoring – Choosing or hiring a third-party service provider within your country or region. 
  • Offshoring – Hiring a third-party service provider overseas or within another country. 
  • Nearshoring – Reallocating work to businesses or software development companies residing nearby.  

Wondering why? Well, one of the biggest reasons for outsourcing such services could be time and cost savings! When you try to outsource services from different countries, they tend to be pretty cost-effective and since there is a huge difference in the time zones, you are bound to receive a product that is less costly and of course, within the predetermined time. So if you are someone who values time more than money then you should definitely opt for outsourcing software development services.

Further below, I would like to mention some of the core benefits of considering outsourcing over insourcing. 

Top Benefits of Outsourcing

First and foremost you need to know that outsourcing is a business practice that seems to be gaining a lot of momentum day in and day out! So let’s get well-acquainted with the benefits offered by such services.

#1 Increased efficiency 

One of the obvious benefits of considering outsourcing services is that it offers increased efficiency. You see you are hiring third-party services so that you can concentrate on your core services. Definitely, outsourcing can assist well in regards to high-end productivity, amazing services and of course, great quality. 

#2 Cost Effective

The next benefit of considering outsourcing over insourcing is that it is pretty much cost effective. You see in insourcing you may have to hire people, recruit them, pay them more, whereas in outsourcing, all you have to do is provide one-shot payment and everything else can be well taken care of. Of course, software development is a crucial project but it’s not the only project that your business will undertake. So basically, outsourcing doesn’t cost an arm or leg. 

#3 Access to a wide Talent pool 

The next intimidating aspect about these outsourcing services is that here you get instant access to a global talent pool all at once. When you look for assistance within your region, you have a limited pool of professionals. Fortunately, when you choose to outsource services then you have a wide talent pool to consider. Just make sure you choose a reputable software development company that has experience of catering customers all around the globe. 

Insourcing vs Outsourcing – The Real Difference

FactorsInsourcing Outsourcing
When If you want an in-house team just because you are afraid of taking risks. If you aren’t sure how long things will work. Also, if you want to save a hell lot of time and money. 
ScalabilityWhen conducting long-term projectsWhen conducting short-term projects and want to hire external services
CostInsourcing is way more costly. When conducting short-term projects and wanting to hire external services

Final Words

Now you must be wondering why insourcing vs outsourcing? On all, both insourcing and outsourcing has its pros and cons. So you should choose depending on the situation. I hope the following post is useful. If so, feel free to share among your peers and help us in reaching out more and more readers. 

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