If you want a dream software or application for your business, you need top-notch programmers for your team. Traditionally, most companies have hired in-house developers for app development. In-house teams offer many benefits, including direct and constant communication and increased control over the software development lifecycle. Internal hires are also more likely to have a firm grasp of your business goals and company culture.
Unfortunately, hiring an in-house team can be expensive, especially if you're in the U.S. According to Glassdoor, the average San Francisco-based app developer earns a staggering $122,137 yearly. Thus, many startups have decided to hire remote developers to save costs, primarily because they charge lower rates than fully-embedded employees. Hiring remote developers also comes with other advantages, including access to a larger talent pool, decreased time to market, and increased flexibility.
Read on to learn more about the pros and cons of hiring in-house vs. remote developers. By the end of this guide, you'll know which hiring model is for you.
In-House vs. Remote Developers: How Do You Choose
Choosing between in-house development vs. outsourcing can be a challenge. Both models present advantages and disadvantages, so you need to consider the following to make the best decision:
What Is Your Budget?
If you have a small hiring budget, you may not be able to hire a full in-house development team, especially if you're in the U.S. According to Glassdoor, an average U.S. programmer earns over $90,000 annually. You also have to rent an office and buy workstations for your hires.
In contrast, remote developers — especially those from other nations, such as Chile, Cuba, and Venezuela — offer much lower rates without sacrificing quality. Moreover, you don't have to rent an office or buy equipment for them. As a result, remote development teams are usually the best option for companies with limited resources.
Without a doubt, an in-house team is an excellent choice for those with a high enough budget. However, other factors are in play here, such as how much time you're willing to devote to your project and what's important to you. For example, remote developers may be a better pick than an in-house team if you have a sufficient hiring budget but don't have enough time to manage your team. In the same vein, remote hiring may be preferable if you value having access to a deeper talent pool and lower overhead costs.
How Much Time Are You Willing to Devote to This Project?
Next, consider how much time you will devote to your project. If you have limited time for managing and communicating with your dev team, you should hire a remote team. In-house teams require regular meetings and get-togethers. Depending on your chosen project management or software development methodology, you may have to employ other staff to lead your devs, such as project managers. For example, if your company uses Scrum, you may have to hire a Scrum Master and a Product Owner to guide your team.
If you have enough time to manage and oversee your dev team and value having direct and constant communication with your team, you should consider hiring an in-person workforce. Since internal employees go to work every day, you can easily supervise the execution of your project.
What Is Important to You?
Lastly, you need to identify and prioritize what's important to you. If having direct and constant communication with your dev team is significant to you, an in-house team is your best bet. Similarly, you should hire an in-house team if you value having constant control and access to your team.
If you value a shorter time-to-market over having direct access and communication with your team, you may want to consider hiring remote workers. Remote devs may also be a better option if you appreciate having access to a broader talent pool and decreased overhead costs over direct access and communication.
Pros of Having an In-House Development Team
There are many pros to having an in-house development team, including:
Direct and Constant Communication With Your House Team
In-house teams are much easier to communicate with directly. Since they go to work in person at set times — for instance, 9 a.m. to 5 p.m. every day from Monday to Friday — you can easily meet with them to discuss project goals and milestones. It's also easier to arrange group activities like team meets, training sessions, and coding exercises for in-house teams.
On the other hand, remote developers can be much harder to communicate with daily. This is especially true if your remote team is located halfway around the world.
To illustrate, let's say your remote team is in the Philippines, and you're in the U.S. Since the Philippine Standard Time is 12 hours ahead of Eastern Standard Time, your developers are asleep when your U.S. team is working. As such, you won't be able to talk to your remote team in real-time. A significant time difference can lead to many communication gaps and delays, decreasing product quality and customer satisfaction.
More Control and Access to Your Team of Developers
You also have more control and access to an in-house team of software developers. Specifically, you have full command over their schedule, training, the use of workstations, the work approach, and more. If you have a question about the project, you can call your team for a meeting on the same day (if not an hour). You can also train in-house developers to ensure optimal compliance with your company's mission, software development methodology, and goals.
On the flip side, you don't have much control over remote hires. Even if they're in the same time zone, you don't get much say over their work process. For all you know, they could be surfing the internet while claiming to be working on your project.
Better Understanding of Your Company Culture and Business Goals
In-house software developers may have a deeper understanding of your company culture and business requirements. Unlike their remote counterparts, internal employees are always in the office and constantly in contact with other departments, including Human Resources (HR). Accordingly, they know how things work at your company, from operational practices to deadlines. Some of the things your internal developers may know over remote hires include:
- How to implement user interfaces (UIs) and user experiences (UXs) according to business goals
- How to create documentation for software according to company requirements
- How to follow your company's chosen project management or software development methodologies, such as Scrum or Kanban
- How to use your company's tech stack
- What soft skills to use when working with team leads
- Your definition of project failure
Meanwhile, remote staff may fail to understand your company culture and business goals. While HR can help you align remote staff with the rest of your team, results aren't guaranteed. Even after hours of training, remote hires may continue doing things their way.
For example, let's say you get your in-house Scrum Master to train remote hires on Scrum practices. After the training session, the dev team may slowly revert to using other software development methodologies, such as Waterfall. This is likely to happen when your remote team doesn't understand the relationship between Scrum and your company goals.
Cons of the In-House Model
While hiring in-house offers many advantages, there are also some drawbacks to keep in mind:
Hiring in-house comes with a lot of overhead costs. Also known as operating expenses, overhead costs refer to expenditures associated with running a company that aren't linked to product creation. In other words, overhead costs are the expenses you incur to stay in business. Typical examples include:
- Office rent
- Salaries that aren't product or job-specific, such as administrative staff salaries
- Legal fees
- Administrative costs, such as hiring an audit firm to ensure your company meets industry-specific regulations
- In-house employee perks, such as gym discounts, company retreats, and tuition reimbursement
Hiring remote developers lets you skip most of these costs. If your business is 100% remote, you may be able to save even more.
In-house hiring gives you more control over your staff, but that doesn't necessarily mean your employees will stay in the company. U.S. employee turnover rates are at an all-time high. According to Gartner, the annual employee voluntary turnover will jump by nearly 20% in 2022 compared to a pre-COVID average of 31.9 million to 37.4 million.
There are many reasons for high turnover rates, including:
- An overwhelming amount of work: If employees have too many duties, they will probably start looking for another opportunity. This is especially likely to happen if you're hiring an employee to fill multiple roles — for instance, a developer for software development, UI design, and quality assurance.
- Misalignment with company culture: In-house employees aren't always a perfect fit for your company — they're just more likely to align with company values, especially if they've been working at your company for years.
- Lack of recognition: Employees may leave if they don't get recognized for their contributions. The lack of bonuses and perks for the performed work also plays a role.
- Shortage of flexibility: Many employees are no longer satisfied with the typical nine to five workday — they now want flexible hours and remote working. So if you're not open to offering flexible options, your employees may start to look for other companies.
- Competition with other companies: Most employees will leave their job for a pay rise elsewhere. With so many large companies offering sky-high salaries and benefits, smaller companies naturally have a harder time keeping employees.
- Poor education and development opportunities: Employees want to learn more to advance in their chosen careers. Companies with few advancement and education opportunities will have difficulties retaining employees. Consider creating a long-term strategy for employee development and education to retain talent.
Finally, the in-house recruitment process can be a time sink. To hire local in-house employees, you need to:
- Write and post a compelling job description.
- Wait for candidates to respond to your job ad.
- Use an Applicant Tracking System (ATS) to create a list of candidates to interview.
- Conduct interviews to make an informed hiring decision.
- Onboard and train new hires.
- Set goals for new hires.
- Integrate new hires with your team.
Depending on your industry, project requirements, and talent pipeline, this can take weeks or even months. In comparison, hiring remote developers usually takes a few days, especially if you hire through talent marketplaces.
Pros of Working With Remote Workers
If hiring in-house doesn't seem like a feasible option for you, consider working with remote or dedicated teams. Remote development teams provide many unique advantages, including:
Access to a Vast Talent Pool
When hiring in-house, you only get to choose from a talent pool that already lives in your city or is willing to relocate. If you live in a town with limited tech personnel, you will have a tough time building your dream dev team. Even if you live in a tech hub like Silicon Valley, the odds of attracting top-notch talent are not in your favor, especially if you're a small company with a limited hiring budget.
Fortunately, there's a way to bypass geographic limitations — by hiring remote workers through a dedicated team model. Job sites and talent marketplaces connect you with FAANG-caliber developers from countries with budget-friendly rates, such as:
A dedicated team model can also reduce the average time-to-market. Unlike in-house staff, remote teams require a much simpler hiring process. When you partner with the right talent marketplace, onboarding of remote teams takes just a few days. All you have to do is:
- Give the talent marketplace your requirements: Fill in a short form to tell your partner what you're looking for and schedule a call.
- Wait to get matched with the best developers: The platform will send you a list of vetted candidates in a few days.
- Meet your candidates: Interview and pick the developers you want.
Some talent marketplaces may also help you with onboarding and HR tasks. Revelo, for instance, provides remote hires with first-rate support and benefits so they can produce their best work for you, including:
- Gym memberships
- Subsidized dental and medical insurance
- Global access to co-working spaces like WeWork
- Payroll in any currency, including crypto
Long Term and Short Term Options
Remote developers usually charge by project or hour, so you can easily hire them for short and long projects. In case of any change in the project timeline, you can simply run an update. For example, if you thought your project would take a month, but it only lasts three weeks, you can update your remote teams' invoices to reflect the change.
In contrast, you need to pay in-house employees for the duration of their contract regardless of how much work they do. For instance, if your in-house developer's salary is $90,000 a year, you must pay them $7,500 a month even if they aren't actively working from May to August. Accordingly, you can waste a lot of money if you don't have enough work for your in-house developers.
Cons of Remote Teams
Like with in-house teams, hiring remote developers brings some disadvantages, including:
Your in-house developers and remote teams may have some difficulties in communication because of cultural differences. All nations have unique working cultures, and although that is not necessarily a negative thing, your globally dispersed teams may take time to adjust to a uniform working culture.
Luckily, you get to reduce the risk of miscommunication when you employ remote workers from countries with similar work cultures. For example, if you're in the U.S., you can hire remote teams from Latin America. Many Latin American nations are culturally comparable to the U.S., especially Panama, Puerto Rico, and the Dominican Republic.
Time Zone Difference
Many companies hire remote devs from countries in vastly different time zones without any issues. However, not all businesses can afford to have a remote team six to 15 hours ahead or behind their time zones. Depending on the industry and the work scope, you may want to share at least a part of your working hours with your remote workers. That way, you have a time opening to schedule potentially necessary meetings instead of relying solely on emails and texts.
You can bypass the different-time-zone disadvantage by hiring from countries in the same or similar time zones. For instance, if you live in the U.S., you can near-source software development to Latin America.
Open Up Your Development Process To Remote Workers
Hiring in-house developers brings many advantages, including increased employee loyalty, seamless communication, and higher control over the work process. However, there are also more than a few disadvantages, starting with sky-high overhead costs, turnover, and time constraints.
Meanwhile, hiring remote workers gives you access to a vast talent pool and decreases time-to-market, allowing for higher efficiency on long and short-term projects. Although managing remote workers has its fair share of disadvantages, such as potential communication issues, the good thing is that you can easily avoid them. As long as you hire remote developers from countries near you, the chances of cultural or working difficulties are minimal.
If you're in the U.S. and looking for remote developers, consider hiring Latin American talent for better business results. Contact us today to learn more about the Latin American workforce and your options to access it.
Alternative to In-House Recruiting for IT Staffing