Building an enterprise software – should you outsource or set up an in-house team?

Building enterprise software is always a challenging task as it spans various functionalities available in the organization. Not only does it require expertise in terms of the technology stack that’s used, but also needs a detailed understanding of various business functions being implemented in the solution.

To start with the project, the choice would be between outsourcing the work against building an in-house team to build the software. Looking at the sustainability of the software in long run – we should be able to cater to future requirements like enhancements, new features, maintenance. Keep that in mind. Outsourcing the development work usually proves to be cost-effective. But it carries risks by creating dependency on the vendors for such critical software, giving an edge to the vendors in any negotiations on their contracts. Complete in-house team – though beneficial during peak team size – would add to the overheads eventually after the software is rolled out. Maintaining such a large in-house team might be a challenge for the long run as the volume of work reduces multi-fold and usually, not many large changes would be made to the software.

Having a mix of outsourcing and in-house team usually comes in handy. Having a core team in the house for mission-critical roles like Business analysts, Technical architects, and a few development team members ensures knowledge of the software from multiple aspects stays with the organization whereas the outsourcing helps us onboarding a big team on a need basis and ensure bandwidth availability during the peak period of the development cycle. Even though the outsourced team is offboarded once the rollouts are completed, the in-house core team will definitely be in the right position to continue supporting the applications for enhancements and maintenance. Thereon – the outsourcing can be done on need bases like for maintenance work or sizeable enhancements/features.

Unlike enterprise software, the products have a possibility of exponential growth, where the risk of creating an in-house team might make sense. But as enterprise software has a defined set of end-users, possible customizations for the organization, the risk of building a complete in-house team might be a significant risk.

What’s your take on this? Do you prefer outsourcing or are more comfortable in relying on your own team instead?