When it comes to developing software, businesses have two main options: hiring a software development company or building an in-house development team. Each approach has its own set of advantages and disadvantages, and the right choice will depend on the specific needs and goals of the business.

Advantages of hiring a software development company:

  1. Expertise and specialization: One of the main advantages of hiring a software development company is the expertise and specialization that they bring to the table. Software development companies often have a team of experts with a wide range of skills and expertise, which can be a significant advantage when working on complex or specialized projects. This can help ensure that the software is developed to the highest standards and meets the specific needs of the business.
  2. Cost-effective: Hiring a software development company can be a cost-effective, predictable, and budget-friendly option, as it eliminates the need to pay salaries and benefits for in-house team members.
  3. Flexibility and scalability: Another advantage of hiring a software development company is the flexibility and scalability it provides. This allows businesses to rapidly bring in additional resources as needed. This can be particularly useful for businesses that need to scale up or down quickly or that have fluctuating workloads.
  4. Access to a wider pool of talent: Hiring a software development company allows businesses to tap into a wider pool of talent, as they typically have a team of experts with a range of skills and expertise. This can be particularly beneficial for businesses that need specialized skills or that are working on complex projects.

Disadvantages of hiring a software development company:

  1. Potential loss of control: One of the main drawbacks of hiring a software development company is the loss of control that it can involve. Businesses may need to relinquish some control to the development team, which can be a concern for businesses that have specific requirements or that need to maintain a high level of security. This issue can be mitigated contractually and by following set security standards between the software development agency and the client.
  2. Communication and collaboration: Another potential disadvantage of hiring a software development company is the potential for communication and collaboration issues. This can be particularly problematic for businesses that require frequent communication and collaboration with the development team, as it may be more difficult to maintain close working relationships with an external team especially if constrained by time zone differences.
  3. Potential for misalignment: There is also the potential for misalignment between the goals and priorities of the business and the software development company. This can lead to delays and setbacks in the development process.

Advantages of building an in-house development team:

  1. Control and ownership: Building an in-house development team allows businesses to have more control and ownership over the development process and the resulting software. This can be particularly important for businesses that have specific requirements or need to maintain a high level of security.
  2. Better communication and collaboration: Building an in-house development team can also facilitate better communication and collaboration, as team members are typically more closely aligned with the goals and priorities of the business. This can lead to more efficient and effective development and can help ensure that the final product meets the needs of the business.

Disadvantages of building an in-house development team:

  1. Higher cost: One of the main drawbacks of building an in-house development team is the higher cost involved. This includes the cost of hiring and training team members, as well as the ongoing cost of salaries and benefits. This can make it more expensive for small or short-term projects, as compared to hiring a software development company.
  2. Time and resources: Building an in-house development team can also be a time-consuming and resource-intensive process, as it involves recruiting, hiring, and training team members. This can be particularly challenging for businesses with limited resources or that need to scale up or down quickly.
  3. Scale-down issues: if the in-house team needs to be scaled down, then the company needs to find some other work for the in-house team member or let him go.
    Letting people go breaks cohesion and "well-being" and can initiate a wave of other team members to go work elsewhere.

Overall, both hiring a software development company and building an in-house development team have their own set of advantages and disadvantages. The right choice will depend on the specific needs and goals of the business, as well as factors such as cost, expertise and specialization, flexibility and scalability, and control and ownership.

One approach that we often see is companies having a core, in-house development team that maintains business "mission-critical" functionality and contractors working on outer layers.