Dedicated development vs. an in-house team: which one is better?

11 min read
August 17, 2022

If you haven’t considered outsourcing yet, you might be missing out.

According to recent statistics, over 37% of small businesses outsource at least one process, and 92% of the Forbes Global 2000 Companies all outsource IT operations.

Indeed, outsourcing is so prevalent that it could hit $731 trillion in 2023.

It’s the same trend in app development.

The traditional approach of an in-house team isn’t the norm anymore. Nowadays, the dedicated team model is picking up steam, with top apps like WhatsApp and Skype adopting it.

So, what is a dedicated team, and why should you pick it over in-house development?

What is a dedicated development team?

In the dedicated development model, you outsource an entire project to an external remote team.

A dedicated software team is an outsourced group that functions just like an in house development team except that they are a third party service provider screenshot

Source: Altamira

Unlike an in-house team, dedicated team members aren’t your employees. Instead, they’re considered third-party contractors, much like getting a freelancer or part-time consultant.

But unlike freelancers, dedicated teams work on an entire project from start to finish. In contrast, freelancers are often brought in to work on only one aspect of it.

Dedicated teams are cross-functional, which means they have a mix of relevant skills.

Indeed, they’re often customized specifically for the project they’re working on, which is their biggest advantage.

Cross functional team

Source: Uptech

For instance, if you’re creating a fintech app, then a dedicated team will likely have a banking expert, compliance consultant, and cybersecurity professional.

This adaptability makes dedicated teams ideal if you’re entering an app niche for the first time.

This is how a dedicated team at DECODE managed to create a mobile banking app for Asseco SEE.

We drew on a talent pool to build a dev team with the appropriate fintech experience and expertise.

What is an in-house development team?

An in-house development team is where you hire team members directly as employees. You can hire them on-demand or source them from your existing workforce.

One of the biggest reasons companies hire an in-house team is to control the project better.

Such teams are easier to manage and collaborate with since you don’t need to onboard them into your workflow or culture.

Of course, you’ll be responsible for hiring individual members of an in-house team.

You also need to cover the onboarding, equipment, and consistent skills training to make them highly effective. For some companies, this might not be ideal.

If you prefer an in-house team but don’t want to go through the hiring process, onsite outsourcing is a good alternative.

Team goes Onsite

Source: DECODE

This is where you contract a third-party development team to work at your location.

They still function as an in-house team for all intents and purposes, except that you don’t need to worry about hiring costs and issues.

No doubt you’re wondering now whether an in-house or dedicated team is right for you. To help you decide, let’s look at the key differences between the two.

Dedicated vs. in-house team: key differences

The biggest difference between in-house and dedicated teams is how you hire them.

An in-house team, as expected, goes through a normal hiring process just like any other staff.

You’re responsible for finding, evaluating, interviewing, and onboarding developers. You also need to hire the exact skills required depending on the project.

This isn’t always ideal. In fact, it can be a big hindrance. The SHRM State of the Workplace 2021-2022 revealed that 84% of companies had trouble recruiting talent due to labor shortages.

84 of companies had trouble recruiting talent due to labor shortages

Source: SHRM

In contrast, when you want to build a dedicated team, you talk with an agency or service provider.

The agency is the one that would handle the recruitment and hiring process based on your requirements. In some cases (like DECODE), they would already have a ready pool of talent.

This is the best-case scenario since they can assemble your dedicated team much faster.

Nevertheless, a dedicated team is generally much faster to put together than an in-house one. Just look at the comparison below:

dedicated team is generally much faster to put together than an in house one comparison table

Source: Belitsoft

A dedicated team is also more cost-effective than an in-house team—studies have shown that it can cut development expenses by 40%.

If you opt for this model, you also don’t have to deal with administrative and HR issues, which allows you to focus on more pressing tasks.

When to choose a dedicated development team

Many people view dedicated teams as a more flexible and cost-efficient way to develop apps.

However, you also need to know that it’s not for everyone.

One of the biggest drawbacks of the dedicated team model is communication.

Time zone differences, the inability to see your developers face to face, and the language barrier are some of the challenges of a remote setup.

In fact, communication is the number one struggle of most remote workers, although there are other downsides, too:

What struggles do you have with working remotely

Source: Buffer

But a dedicated team model can be a fantastic approach if you’re aware of the obstacles and are ready to compensate for them. Here are some situations where it can be ideal.

When you have long-term projects

Remember that a dedicated team is assembled specifically to tackle an entire project.

Therefore, a dedicated team might be just the thing if you have a long-term project (around a year or more of development time).

Assuming you partner with a reputable agency, you can count on the team to finish your app regardless of how long it takes.

This is true even if the project has challenging or vague requirements.

why hire dedicated team

Source: Uptech

If team members drop due to an emergency or resignation, that’s not a problem with a dedicated team. The service provider can just source a replacement for you immediately.

Hiring an in-house replacement, in contrast, takes more time and effort on your end. This can lead to project delays, which can lengthen your development time.

Moreover, a dedicated development team can benefit even short-term projects (around three to six months).

That’s because you can build the team much faster, which is crucial to meeting the tight deadlines of short-term projects.

When you need access to additional top talent

A dedicated team is also best if you want to hire specialized talent for your team. That’s because you have a global workforce to tap into.

This is crucial if you’re entering a niche that requires expertise in which you don’t have any experience. For example, success in fintech involves more than just having programming skills:

fintech skills

Source: University of New South Wales

Let’s say you’re based in Asia and want to develop a trading app. Ideally, you want the best financial expert you can consult on your project.

But the problem might be that no one in your area is qualified enough.

With the dedicated team approach, you can bring in someone from another country to fill the role. This is a better route than hiring that role in-house.

Not only will it be more expensive, but you might not need a specialist’s expertise all the time.

When you want to save money

Dedicated teams are generally more cost-efficient than hiring in-house. And that’s because a dedicated team often operates on a pay-as-you-go scheme.

When you hire an in-house developer, you’re paying them a monthly salary even if they’re not doing anything.

During lean months or between projects, they can be idle resources that only gobble up your funds.

With a dedicated team, you only pay for their time spent working on a project. Once the app project is done, you simply end your contract with them.

Also, the pricing scheme of a dedicated team is fairer for all involved, especially if you choose the time and materials model.

time and materials graph

Source: Bay Tech Consulting

In this setup, you pay the total hours the dedicated team spent on your project.

It’s a good approach because the budget accounts for apps with changing requirements (which happens most of the time).

Alternatively, if you’re 100% sure of the requirements or it’s just a simple app, you can opt for a fixed-price model.

fixed price graph

Source: Bay Tech Consulting

In this payment scheme, you agree on a set price at the beginning of the project. This is a preferred approach if your app has a strict budget that you can’t go over.

When to choose an in-house team

Hiring in-house is the traditional way of developing software, and for a good reason. It gives plenty of benefits, such as easier management and tighter communication.

However, you also need to be aware of the cons. And as we mentioned before, the biggest is cost.

That’s because the salary is just one part of employee compensation. You also need to pay for taxes, onboarding, and skills training.

You also typically need to cover benefits like health and life insurance.

Overall, this makes the true cost of employment up to 1.4 times higher than the employee’s salary, according to the Small Business Administration.

compensation costs vs true employment costs

Source: Upwork

Ultimately, your decision to hire in-house should come down to the project’s needs. To give you an idea, here are some situations where direct hiring might be a better option.

When you want to build your company culture

Company culture might seem like an overused buzzword, but it’s important for successful app development.

And because members of an in-house team are essentially your employees, it’s natural for them to embody that culture.

One of the top benefits of the right company culture is better team engagement.

That means members care much more about the company and the project because they feel they’re important contributors, not just another cog in the machine.

Development teams with a strong culture tend to give their full effort and thus deliver the best output.

Indeed, a survey showed that 55% of managers believe a lack of culture can be a significant source of project delays.

importance of corporate culture

Source: Techicy

If company culture is working well for you, and you want your development team to be tightly integrated with it, hiring in-house is preferable.

When you prefer tighter communication

As we mentioned, communication is one of the biggest challenges of outsourcing projects to a remote team.

And it’s not just the time zone or language differences (although those can be significant factors).

The major threat to virtual collaboration is a bad cultural fit. Statistically, 60% of projects fail because of it.

outsourcing app communication

Source: Accenture / Santex

Hiring in-house can solve or minimize these problems. If you’re hiring staff onsite, chances are they’re from the same country and therefore share the same language and culture as you.

But beyond that, it’s the everyday face-to-face interactions that help make collaboration easy. Over time, your team learns about each other’s strengths, weaknesses, and work habits.

This helps form a tight bond that will improve their teamwork and workflow.

When you strive for easier management

Outsourcing might be convenient, but nothing beats an in-house team if you want easier management.

This is vital if you have a complex app project with many moving parts that need to work together seamlessly.

It’s why some big-name apps like Amazon, Salesforce, and Paypal prefer in-house teams.

Because everyone works in the same physical space, collaboration and problem-solving are easy.

If one of your developers has an urgent concern, they can just approach the relevant person. This can help speed up your development and deliver a higher-quality app.

In fact, managing an in-house team is better at avoiding these leadership challenges.

Leadership challenges in software teams

Source: Hubstaff

Most of these concerns, like developer burnout, managing remote work, and developer turnover, can be solved by catching team issues early on.

And that can be difficult to do if you’re not always present with your team.

Need an award-winning dedicated team?

As you can see, both in-house and dedicated teams have their pros and cons. However, what they have in common is that they are capable of creating great apps.

It just depends on the developers and agency that you partner with.

You must ensure they have the expertise, experience, and work ethic to tackle your app project. The team must also have excellent communication and collaboration skills.

And with our long list of successful app launches in various niches, we believe DECODE has what it takes to be your next dedicated development team!

Interested? Get in touch today, and let’s talk about your project.

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Written by

Natasa Opalic

Business Development Representative

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