In-house vs. outsourcing: what is the best choice?

Whether you are starting your business, or expanding your team, it is essential to make decisions to build the product within the budget and quickly as possible without compromising quality. To do so, you can create or expand the team internally, hire an external company as a partner, or even choose a hybrid approach. In this article, I will outline the advantages and disadvantages of each method.

In-House: Advantages

Engagement and cultural fit

If you are starting your business, hiring in-house employees will allow you to create and shape your company’s culture. The team spirit, sense of ownership, and engagement in the product can positively influence the product’s result. Typically, an in-house team is more engaged with the product to achieve the best results and deliver value.

Direct communication

Working in the same office and timezone helps to save time, avoid misunderstandings related to product needs and position in the market, and increase productiveness.

Fully-dedicated team

When you have an in-house team, it’s faster to discuss product functionalities, problems, and possible solutions. There’s a 100% focus on the product and surrounding needs, meaning that potential problems are solved faster.

In-House: Disadvantages

Hiring and managing the team

By creating an in-house team, you get involved in the “never-ending” hiring process and people management tasks. New contracts, contract renewals, dismissals, performance reviews, and others can keep you busy and constantly distracted from your main goal: your product!

Higher costs

Building an in-house means costs that do not exist by hiring a vendor: office, salaries, taxes, software, hardware, benefits… you name it. If the product is in a stable stage where new functionalities aren’t needed, you’ll have to spend money on everything listed above nonetheless.

Employees turnover

In the tech area, employees tend to change the working place often, especially software engineers. The demand for talented engineers is high, and there’s continuously an ongoing “fight” for the best talent out there. Your product development speed might be negatively affected when an employee decides to leave the company.

Outsourcing: Advantages


By hiring a partner, you usually have access to a wide range of experts in different technologies, offering a different set of hard and soft skills. Besides, vendors don’t work only in one project, meaning that people who will work on your project will have access to other vendor employees’ know-how, which is a big plus.

Faster project delivery

By having a partner, you avoid all hiring and staff concerns, allowing you to focus on the product strategy. Also, by having a partner building your product right away, you shorten the time-to-market of it. Besides, the partner's team might have worked together in the past, making project progress to run smoothly.


When working with a partner, you can scale resources as needed. If you need to accelerate project development, you can request more support from the vendor. On the other hand, you can request fewer resources if you foresee less work for the upcoming months — all of this without internal concerns regarding people management.

Outsourcing: Disadvantages

Security risks

Sharing confidential data and project details with an external company can be dangerous to your business. A relationship of this kind should be based on trust, but if you are concerned about the possibility of your idea to be stolen, create a Non-Disclosure Agreement (NDA) contract to protect you.

Communication issues

Communication is another potential risk that comes from partnering with a company, potentially in an entirely different time zone. Different timezones can create delays in written and spoken communication, but an experienced company with proper communication processes should have this covered.


To a partner’s team, your product can be just one more, and
there may be little excitement around it. To avoid this, it’s essential to share your mission and values because the more the team knows about your product, the more engaged they will be, and more commitment will exist.

Summing up

Both approaches have advantages and disadvantages, and, depending on your situation, one or another might better fit your needs. It is fair to say that there are several topics to evaluate when deciding the path to go, and I hope this description provides you enough information to make the right decision. A mixed approach where you can have a team in-house and hire a partner to increase your team size or to help in certain features that your team may not have expertise is also a good possibility. I hope this article helps you to make the best decision for your product. 🤞

Pixelmatters has been working with clients worldwide as an integrated part of its client’s teams, having the total ownership of product development in some of them, like Abaca, or by extending existing teams as the partnership with Clearance Jobs.

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Tiago Coelho