Greg Micek
July 7, 2022
Buy vs. Build: Outsource Software Development OR Hire Internally?

You have an amazing idea for an app, you have your monetization strategy down, and you’re so excited that you want to tell everyone. You cannot wait to release this app and start profiting from it. There is just one problem; you need engineers. Should you outsource software development or hire in house?

Finding engineers should be easy, right? The tech industry is a growing field, so you would assume you can find some people to build your idea within a couple weeks. However, you start looking for engineers and you hear all about outsourced development, in house development, staff augmentation, and managed engineering teams. You are unsure which is right for the job and are completely lost on which one to pick for your product. This is completely normal – to clear up some of the confusion, lets take a look at the differences and similarities are between these different options

Outsource Software Development

What does it mean to outsource software development? Assuming you are not familiar with the term ‘outsourced’ – outsourced is a good or a service obtained from an outside or foreign supplier. Outsourcing software development can be hiring a freelance engineer from a different country, or it could be hiring an offshore development company. Let’s take a look at some pros and cons of outsourced development.

Cost Effective

One benefit of choosing to outsource software development is that it is very cost effective. Many outsourced development companies/developers operate in foreign countries that have a lower cost of living, as a result, charging less for their services.

Communication Restrictions

While outsourcing doesn’t necessarily mean hiring someone offshore; many outsourced development companies are. When working with anyone outside of your country, there are going to be some restrictions and barriers when it comes to communication. An outsourced development team’s working hours may be your sleeping hours – this could result in having to communicate with them in the middle of the night.

Over-Promise and Under-Deliver

When you outsource software development, many times you will be promised everything under the moon. When the first release hits, the product is not what you expected at all. While you paid a good price, you are unsure if the finished product was even worth the amount you paid for.

Intellectual Property Issues

Many times, entrepreneurs and product innovators will outsource engineering work in hopes of having a great software product they can keep and monetize how they want. If there is not a clear definition of product ownership written down and signed by both parties prior to development, this can cause serious issues.

In House Engineering Team

In house engineering teams are another popular option, this is when you are building a team that is centered around internal development. Many big tech companies such as Google, Facebook, Amazon, and many others hire engineers internally. However, keep in mind that these large tech companies have an extraordinary budget, which gives them cushion when it comes to the price that can be associated with this. Here are some things to keep in mind when choosing to hire engineers in house.

Great Team Culture

When hiring an engineering team in house, you have the opportunity to create a great team culture. With a great team culture, comes an even greater passion for the company and the work you do.


Hiring internally can be very expensive. Take a look at the median annual cost for an entire engineering team

  • CTO: $260K/year
  • DevOps: $115K/year
  • FE: $100K/year
  • BE: $100K/year
  • QA: $80K/year
  • PM: $120K/year
  • Total: $775K/year

On top of these salaries that must be paid, the cost of turnover is very high. Builtin ran a survey and found that losing an employee can cost a company 1.5-2 times the employees salary. Replacing an employee can also cost a lot of money with paying for onboarding, interviewing, among other things.

This option may be good for large enterprise corporations that have the money to afford it.

Managed Engineering Teams

Managed engineering teams is another popular option, specifically for developing quality software with cost effective best practices. These teams operate as a full self-operating engineering team. With UI/UX designers, product managers, software architects, dev ops engineers, and frontend and backend engineers, you have the ability to plug and play where you see fit for your use case. Let’s take a look at what they can offer.

Cost Effective

Utilizing a managed engineering team is the most cost-effective option mentioned in this article. You are able to hire a team while picking and choosing what and when you need it. Managed engineering teams can operate on a fractional/part-time or full-time basis, depending on your needs. These teams are also very experienced and provide high quality work at a fraction of the cost of other options.

Completely Autonomous

As an ambitious entrepreneur, playing product manager is the last thing you want to do. Managed engineering teams solve this problem by being completely autonomous, meaning they are completely self-managed. This allows for the engineering ‘pod’ to take over a product and launch it. You tell the team what you want, and they take control and launch a high quality software product.

Highly Experienced

Managed engineering teams consist of highly experienced software professionals who have loads of experience developing high quality software products

Buy vs. Build?

The answer to the question, “buy vs. build”, is very different for different cases. For a large corporation, building and hiring in house may be the best option, as cost isn’t too big of a factor.

When it comes to startups or early-stage entrepreneurs, buying would most likely be the best option. A solution such as managed engineering teams would be recommended, as they are cost effective and are known for developing high quality software products.

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