Let’s say you’ve got a great idea for a product, but aren’t sure how to go about developing it.

With the Internet giving you access to unlimited resources and skilled professionals, there are many paths to choose from when building your dream application: you can go with an in-house team, hire a freelancer, or even outsource the whole thing to a software agency.

In this article, we’ll describe different development paths for your product, taking into account your timeframe, expectations, budget, and goals.

Below, you’ll find three software development scenarios resulting from three different approaches to development. Let’s get to it!

In-House Development Team

Having an expert in-house team to build your product is a great long-term solution. Unfortunately, it’s not a readily available option for many organizations. This scenario is a viable approach for business owners who already have a thriving company and can afford having an in-house team of experienced devs to do the job right.

The costs of assembling such a team can be prohibitive. Recruiting and onboarding new hires can also be incredibly time-consuming. On the flip side, you have sole control over the whole process of product development. In case of emergency, you can quickly contain the situation. And, of course, the risk of intellectual property theft is kept to a minimum as all the work stays inside the company.

Building an MVP in a short time usually requires a bigger team in the early stages of the development process, but once the product is launched, you probably won’t need all those hands on deck, and you will need to scale down on people you put so much effort into hiring. This, however, is rarely an issue for software development companies, which can easily reduce the number of team members with no problem (and no hard feelings).

It’s a good option for :

big enterprises with low risk of failure, i.e., backed up by other successful products

projects of all sizes depending on the budget

Pros

full control of the development process

real-time fixes and upgrades

output control based on assigned project scope per developer

Cons

lengthy onboarding process

hiring costs and overhead

possible productivity drop with the traditional employment scheme

it can be costly

Freelancers

The rule of thumb with hiring freelancers is that they’re a good choice when it comes to small projects, product fixes, or minor upgrades. And by freelancers we mean remote independent contractors rather than regular employees working remotely.

While freelance developers can have vast expertise in niche fields and technologies, and their experience can thus be used for specific problems during software development, it’s very unlikely that the contractor you have in mind is experienced enough to take on complex projects involving many technologies on their own or handle both development and design. In the case of a more complex project, you will need at least two people (for frontend and backend development) and probably a PM to coordinate their work. Also, even if you hire a productive freelancer, if they get sick or go on leave, your work will screech to a halt.

It’s a good option for :

all companies regardless of size

small projects with only a few technologies and features involved

expert consultations (e.g., cybersecurity audits)

Pros

low costs and small overhead

timely delivery of small projects

Cons

possible periods of unavailability and stalled work

increased TTM (time-to-market) with bigger projects

limited expertise for endeavors involving multiple technologies

risk of unreliability

in case of larger, more complex projects, more people will be needed down the line

Software Development Company

A software development company or agency usually offers a good middle ground between standing up your own in-house team and taking a risk and working with a freelancer. With software development companies you’re not limited to project size—a dedicated team can take on all kinds of projects, ranging from routine maintenance and upgrades to building full-fledged platforms catering to thousands of users.

There’s also the added benefit of access to new technologies and tools as well as professional expertise from analysts, security engineers, testers, designers, or data scientists. Partnering up with a software development company means hiring not only experienced developers, but also support personnel, like QA engineers, PMs, business analysts, senior developers for peer code reviews, etc. Hire all those professionals for your in-house team would ultimately prove a very costly undertaking.

Startups specifically might find software agencies appealing. A software development company can build an MVP very fast, allowing a startup to gauge the profitability of a product. After gathering customer feedback, additional features can then be implemented in a timely fashion, because the team is already familiar with the product.

Software development companies prefer building lasting business relationships with clients, so they are determined to provide high-quality services.

It’s a good option for :

any company size, especially startups

all project sizes and complexities

Pros

convenience (no onboarding, hiring costs, etc.)

access to specialists and niche technologies

availability (workloads of developers on sick leave are immediately picked up by other developers, the work always moves forward)

faster TTM: more manpower, faster output

you hire a full team of developers, PM, QA engineers, and senior devs who review the code.

can be costly depending on project scope, size, duration, and also the location of the software house

over-dependence in case of emergency

risk of communication issues due to time zone differences

Cons

Knowing all three ways of going about product development, is there one best way to make an informed decision? Let’s list the aspects to take into consideration before you settle on one product development approach.

Determining Project Scope

It verges on the impossible to decide the correct product development approach without first doing a thorough assessment of it. So before deciding on the right approach to development, you should start by making a rough estimation of what needs to be done, or determine the product scope if you wish.

Project Size

Obviously, the less complex the project, the fewer resources and developers you’ll need to bring it to fruition. Likewise, with bigger projects, say, a complex SaaS product designed for thousands of users, you’ll need much more resources and an experienced team.

When thinking about a team of developers, you should also consider hiring a project manager to coordinate the whole process, as well as experts who will take responsibility for various parts of the app (e.g., designers, testers).

Companies embracing good project management practices (“champions” in the table) observe higher success rates, consistently meeting their core objectives of time, budget, and goals. Source: PMI

Project Scope

Ask yourself how many necessary elements you already have and how much of the product you still have to get developed. Past experiences, technological expertise, and availability of your team are crucial ingredients here.

If you find it challenging to list the project specifications yourself, you might use external support to determine the requirements of building your future product. Consulting a software development company can help you narrow down the list of necessary features as well as evaluate the product idea to test its viability.

Project Duration

Project duration often goes hand in hand with project size. With a small app, e.g., a simple company website, you’ll only need a developer for a month or so to get the website up and going. A designer can be optional, depending on branding demands.

Conversely, big projects with custom features and post-deployment maintenance require long-term assistance. The addition of new features to respond to growth needs will also have to be taken into consideration in deciding whether to stand up your own in-house team or hire a software agency.

Available Budget

Budget estimations require closer inspection, especially when it comes to complex and lengthy projects. To find a solution that’s feasible to implement within your available budget, you will have to analyze a bevy of variables.

For in-house hires, these variables include possible training, office space, equipment, taxes, required software licenses, etc. With that in mind, for a project spanning several months and longer, you’ll have to estimate which of the approaches (along with their respective expenses) is ultimately more budget-friendly.

When hiring a software development company, all expenses (e.g., equipment, technologies, and additional expertise) are included in the price. A software agency will also usually be able to give you a relatively accurate project estimation that reflects long-term cooperation.

Work Following MVP Release

A Minimum Viable Product is a release of your software that is fitted with only the must-have features. While MVPs are a great way of easing your product into the market to receive customer feedback, there’s still plenty of work to be done to turn an MVP into a full-fledged application.

One big question many companies have to answer at that stage of a product’s lifecycle is whether to start building an in-house team to complete and maintain the application or stay with a software agency to finish the job. And the choice is rarely easy.

When you continue the development with a software house, you have a certainty that the team knows the product inside out and you’re already familiar with how they operate. In other words, you know what to expect.

Building an app with an in-house team, however, will take time, as will the team’s familiarization with the project. One possible solution is to let a software development company finish the product and then build an in-house team that will pick up from there. Such a strategy gives you time to see how your product is received by the users and how you should invest in its growth strategy.

Time-to-Market

If you’re after a quick turnaround, that’s one thing that is virtually impossible to achieve with freelancers. I mean, unless they’re AI developers, you shouldn’t expect them to work 24/7 for the whole duration of a project to deliver it on time or faster. And while hiring a software development company with a team of developers will indeed let you get much more work done in a day, such a solution naturally comes at a price.

Security

Top-notch security is important for every online asset, and in some industries industries securing every possible attack surface against intrusion is absolutely paramount.

The diagram shows patched and unpatched website vulnerabilities for the Financial Times’ top 500 companies in the US and EU. Source: ImmuniWeb

Given that, it’s absolutely crucial to know what security measures are being implemented during product development, and whether the product is being developed using best practices that significantly decrease the risk of a data breach. A software development agency with experience in developing for high-risk industries will already have vast expertise eliminating possible vulnerabilities and securing your product.

Development Approach Depends on Your Project Needs

As you can see, there is no one best approach to developing a software product—the decision hinges on a plethora of aspects and criteria. For relatively small and easy projects, choosing between a freelancer, a dedicated team, or in-house devs essentially boils down to the size of your budget and the timeframe you’re working with.

Bigger projects, however, require a thorough analysis to identify the long- and short-term pros and cons of hiring in-house developers vs. going with a software development company.

If you’re building an MVP, consider what kind of team you’ll be needing to add more features as your product grows and you start catering to wider audiences. If your core operations will depend on the product down the line, you might be better off with an in-house team in the long run.