development team for startup

Development team for startup: in-house or outsource – how to make the right decision

In order to launch your startup and make it work you need to build a strong development team, which would be able to put your idea into action. So, here come two most common options – hiring an in-house developer or outsourcing the project to a software development company. It is up to you which way to choose, but the decision will definitely be crucial for your business.

Main types of team: in-house or outsource

In general, building an in-house development means you are doing all the product development with your own staff within your organization. On the contrary, an outsourcing software development team implies contracting out your product development to another party – an outsourcing team. Each of these ways has its pros and cons, so it’s important to consider different factors, such as time, budget, experience, etc. before making the final decision.

So, let’s take a closer look at these approaches and reasons to use them.

Reasons for startups to outsource their software development

So, you have a startup and are ready to launch a development process. You are aware that hiring the development team as your own staff takes a lot of time and effort. If you want to get your software development done and are not willing to go into the development process details, you have to find the outsourcing company and assign this task to them.

Hiring employees and forming a team

When you hire an employee you never know how this person will work, even if he or she has appropriate knowledge and abilities. The employee may turn out to be unable to meet the deadline or cope with all the workload within the rules of your company. You need not just a person – you need a team, which would be totally devoted to the idea of the project and its aim as well as aware of all the technologies and methodologies required in order to make this project work.

Developers are not robots – they are real human beings with their own abilities to adjust, work, interact and reach, as well as with their own views. Meanwhile, creating an in-house development team means you have to hire all these people and make them work for the idea of the project. Unfortunately, there always is a possibility of cultural clashes or misunderstandings when a group of professionals starts working together.

When the project goes live

After the project goes live, you may not need all the members of your team working for you. There may be no use of them working full-time. So, keeping a good, yet irrelevant professional only not to lose the valuable employee in the future does not look like an option. So does firing employees after having launched a project and causing this huge negative social impact.

Looking for a simple way

There is a widespread belief that outsourcing is easier. It’s more simple way to get things done, since you don’t need to dive into all the technological process, hire new people, and form the team of developers to work on the project.

Instead of long process of searching the members for your development team, firing them if the project is over, and then hiring them again to start something new – you just find the company offering this option. You are not limited by geography, you don’t have to create a new team and check how they work together. Instead, you can outsource already built up team with relevant experience and good reputation.

Finding relevant experience

There are a lot of companies experienced in providing such services as outsourcing software development process, so they can easily evaluate the scope and costs of your project. Outsourcing software development will also allow you to concentrate on your main business goals and not to go into details of development technologies, meanwhile decreasing the burden on the staff of your company, especially on the IT department.

Choosing a cooperation model

Having decided to outsource your software development, you must choose a proper cooperation model, which would fit your requirements. Among the most popular options there are:

  • fixed price

  • time and material model

  • dedicated team.

Let’s take a look at them.

cooperation model for startup

Fixed price

This model usually works with small and medium level projects, which can be clearly defined from the start. This is the simplest type of all cooperation models with everything predefined: scope, timeframes, budget, and all the requirements. So, it’s not an option for startups with frequently changing requirements and scope. This model lacks flexibility and ongoing communication with a client, which eventually can lead to dissatisfaction with the final result.

Time and material model

Time and material model is applied to the projects that are not predictable from the start. Such model is definitely much more flexible and adjustable to changes than the previous one, which lowers the risk for both partners. It is used in complex projects with not very clear requirements. It also involves the client in the development process, giving the right to manage changes easily and implement some new technologies and ideas.

Of course, this model also has its disadvantages. The thing that the budget is not fixed from the beginning not only means flexibility of the model, but also the possibility of final price to be higher than expected. In addition, client’s involvement can require some time and human resources, which makes the process slower.

Dedicated team

Dedicated team usually works with long-term projects that have not so clear requirements and high level of flexibility. It is obvious from the name of this model that all members of the team are fully engaged in the working process, dedicated to it and have deep understanding of what client expects.

Nevertheless, there are some drawbacks. It will not be cost-effective to use this model if there’s not enough workload for every team member. Moreover, client has to be totally involved in the development process, which takes a lot of time and effort.

Reasons for having your own developers

Despite its advantages, outsourcing cannot be the solution for every startup.

Depending on the specification of your company

When it comes to pure tech companies, creating the in-house development team would be more effective, since technological innovation lies in the value of such companies. It is also relevant for creating some simple internal software applications, when the process is not very complicated and is easy manageable. Additionally, this way building in-house development team is cheaper in the long-term perspective.

Communication issues

development team for startup_communication issue

When you outsource product development, you don’t have to work on the entire development process but you need to pass your idea and vision to the outsourcing team. You have to control everything, communicating with this team a lot. Communication is not only describing your idea and requirements to the outsourcing team – it’s an ongoing process of explaining, discussing, pointing out, and just controlling the work to be done. So, when building an in-house team, you avoid all these problems and communication is much easier.

More control over the process

Doing it in-house gives you more control over the developing process and immediate access to what is going on. You can trace the progress and see everything with your own eyes, no third parties involved. Apparently, this means that the project management must be on the upper level, and if it is – system must work.

Fitting the requirements

When you build your own software development team, you know exactly what your company needs and you are trying to create a team the way it would meet those needs and fit the company structure. So, building up your own development team means it would be perfect for the business requirements of your company.

Takeaways on creating in-house team

If you finally decide on doing software development process in-house, there are some tips, which may come in handy:

Make sure you have proper knowledge about the development

You must be aware of the way the development process of your product is going to look like and what skills it will require in order to complete the project.

Define your software development strategy

It is almost impossible to execute the development process without a strategy. The strategy ties the iterations together, and sets the right direction for the team. The software development strategy must serve as a plan to achieve your software project’s objectives, which is why it’s crucial to develop it in the very beginning.

Find a project leader

What you need is the person who follows the vision of the project, is great in communication, and knows exactly what he or she wants to achieve. This person must be capable of organizing the whole process and finding personal approach to every member of the team.

Use regular meetings and track your goals

The team must know exactly what goals they have to achieve on a weekly basis. It will help you control the process, see what you can expect, how much work has been done, and how much work is still left. This will help to check your progress and show whether there are any variations of the original set of goals and your strategy.

Keep team spirit high

As it has been mentioned before, your software development team is not some bunch of robots, but a group of human beings, who need to be encouraged and appreciated all the time. That’s why it is of the utmost importance to keep the morale of team high and be able to motivate them to do their best.


Therefore, having a tech product idea without technical background puts you into a position, where you mainly have two options: building a development team in-house or turning to outsourcing. Each of these ways has its advantages and disadvantages.

The benefits of outsourcing:

  • you don’t have to build your development team from scratch

  • higher level of measurability, including time and price

  • there is no need to wait while a new team is getting manning

  • experience of the company will make the process faster and more qualified.

The drawbacks outsourcing has:

  • you have to rely on the outsourcing company which is not yours

  • limited control over the things happening there

  • you need to provide an ongoing communication process to the team with constant explanations.

Having chosen an outsourcing team, your next decision must concern choosing a cooperation model.
And here are three most popular options:
fixed price model – for small and medium level projects which can be clearly defined from the start;
dedicated team – for long-term projects with not very clear requirements and high level of flexibility;
time and material model – for the projects with dynamically changing requirements which are not that predictable in the beginning.
If you decide to create your software development team on your own, you should be aware of the following benefits and drawbacks you can face.

The benefits of doing it in-house:

  • it’s suitable for pure tech companies

  • it gives you control over the entire process

  • it’s easier to define what client requires, because you are the client

  • development team will be more suitable for the business requirements of your company.

Drawbacks of the in-house development:

  • building something from scratch is usually longer and more complex

  • the project and its requirements must be clearly defined

  • it can take more time and money than you expect

  • you need not only professionals, but also people who will adjust to your company’s conditions.

When building up your development team in-house, you have to make sure you have the proper knowledge about development in order to have the perfect mix of skills your company needs. You also have to define your software development strategy, find a project leader for your team as well as keep the morale of your team high, motivating them to do their best.

This way, building a strong and reliable development team is crucial for the future of a startup. It’s so important to consider the specialties your project has and the goals you want to achieve. Knowing this will lead you to making a decision better for your company – outsourcing a software development team or doing it in-house. I hope this article will help you to arrive at this important decision and make the process easier.