Hiring a dedicated software development team VS building it in-house

Choosing between hiring a dedicated software development team or building it in-house can be a choice between making or breaking a startup. Let’s discuss the pros and cons of each approach!

A team of software developers is the backbone of any technology startup nowadays. It is the crucial business asset required to build an MVP. They also are essential for the ongoing product support and development, as well as for scaling the startup to the enterprise when the time comes.The other side of the coin is the high total cost of ownership (TCO) of such an asset, as employing a sufficiently large team of developers is a time-consuming, costly and laborious process.

Pros and cons of hiring a dedicated team of software engineers

This is why many startups opt for hiring a dedicated software development team from a managed services provider (MSP) instead. The benefits of this approach are the following:

• Greatly decreased TCO of a dedicated software development team. You pay only for the work hours spent and once the project is completed, the expenses stop;
• Structured workflows and ample hands-on experience. The team knows what to do and how to do it, providing transparent monitoring at the same time;
• Greater talent pool available at once. MSPs usually have scalable teams with specialists of all kinds that can begin working on your project from the day one;
• Established in-team collaboration ensuring correct task delegation and strong team spirit. The team members are used to working with each other, which lowers the risk of workplace conflicts that can be quite damaging for the project;
• Rapid replacement is possible if a team member takes a sick leave or quits the job.
• Detailed product documentation is provided to ensure quick onboarding of any new specialist to work on the product in the future.

There are more subtle benefits of hiring a dedicated team of developers, but they will be listed in a separate article. As for the drawbacks of choosing to hire dedicated software developers, there indeed is a couple:

• MSPs can support a broad range of products for a variety of customers, meaning the team’s time might be cramped with other tasks. Thus said, allow for slightly broader estimates, as finishing the product in the shortest time possible might be quite difficult.
• Working with a dedicated team of software developers requires a lot of remote control of the process. Be prepared to ask lots of questions aside from the Project Manager’s reports. This is your product, after all, and you should keep a close eye on its development.

Thus said, hiring a dedicated team of software developers can be a huge benefit for a startup. They will get the job done and help launch and support the product.

Nevertheless, the startup can hardly survive without building an in-house software development team. This is crucial to ensure business continuity and ongoing product evolution, so we must consider the benefits and drawbacks of this approach.

Building an in-house software development team: pros and cons

It goes without saying you must have an in-house team of IT specialists, both DevOps engineers and software developers. The question is, when do you have to start building it? We sincerely believe this process should begin ONLY when the product is launched and the startup passes the sustainability point. Only then you will be able to devote the significant resources (be it the next round of investments or product-generated revenues) to building an in-house software development team. Here is why:

• In-house specialists are on the payroll. Whether they have their hands full with bringing more value to the product or devote the minimum effort to ensuring the product’s stable performance at the moment — you have to pay them wages monthly.
• In-house software developers and DevOps engineers have to build the teams, the workflows, and the corporate culture as they go. It is a long process of utmost importance, as the errors there can cost you dearly.
• You have to hire the in-house software development team one by one, which is not an easy task. This means certain parts of the product (or its delivery pipeline) might be put on hold till the appropriate IT specialist is hired. The MSP can step in with the outstaffing assistance, yet eventually, all of the key team positions should be filled by in-house staff.
• As you will most likely hire a single specialist to cover each workflow part, if this employee goes on vacation, quits or even takes a sick leave, the corresponding part of the process comes to a halt. IT outstaffing can be a temporary solution, too, yet ensuring the redundancy by hiring at least a pair of IT specialists to cover each aspect of the workflow. This means paying 2 salaries, sure.

Nevertheless, building an in-house team of software developers is hugely beneficial for a startup for multiple reasons:

• Experience continuity an in-depth product knowledge. The team that works on your product day by day knows it better than any contractor and can assess the current state of affairs and the preferred direction of product evolution.
• Company culture and 24/7 availability. Your personnel develops respect and proper attitude towards the company if you treat them right. This makes working long hours and dealing with issues outside of work hours much easier, should such a need arise.
• Stockpiling skills means adding value. If your in-house team of software developers is properly motivated they pay sufficient attention to self-development, gain new skills and become more valuable as professionals. They tend to ask for bigger salaries then, yes, but having a proficient, skilled and motivated software development team on board is a huge benefit of its own. Such a team can both drive more value to your customers and increase the value of your startup in case of exit, merger or acquisition.

Thus said, it doesn’t mean you have to avoid hiring an in-house software development team. We only suggest you do so once you are able to support the team and scale the business quickly. Until then, hiring a dedicated team of IT engineers from any MSP should suffice.

Final thoughts on hiring a dedicated software development team VS building it in-house

As you can see, both hiring a dedicated software development team from a managed services provider or building an in-house team of software developers are viable choices for a startup. Being an MSP ourselves, IT Svit sincerely recommends hiring a dedicated team to deliver an MVP and release the product prior to building an in-house team to support and evolve the product further. The choice is up to a startup, of course, and if the startup decides to opt for the former approach, the only question left is how to hire a reliable team of developers from a trustworthy MSP. We cover this topic in one of the next articles of this series.

Do you have any questions or concerns on the topic? Did you have any remarkable personal experience dealing with the situations described above? Please share it in the comments below! Should you like to hire a dedicated team of developers from one of the top 15 Managed Services Providers worldwide — feel free to contact us, we will be glad to help you!

Initially, this story was posted on my company’s blog — https://itsvit.com/blog/hiring-dedicated-software-development-team-vs-building-house/