In house development vs staff auhmentation

In-house Development Team vs Staff Augmentation – Which is the Smartest Choice for Startups, Small and Medium-Sized Businesses

Small and mid-sized businesses are the unsung heroes of the economy, often overlooked by big corporations and tech giants. Did you know that in the US alone, there are a whopping 33.2 million small businesses, making up 99.9% of all businesses in the country? That’s a huge number! (SBA, 2022).

When it comes to developing software, smaller businesses have different needs compared to big companies. They rely on their developers to be super skilled at research and problem-solving.

Now, the big question for these smaller businesses is whether they should hire their own specialized software development team or outsource the job.


This article dives into the differences between having an in-house software team and using staff augmentation. We’ll compare these approaches in terms of how they plan and execute software projects to figure out which is better suited for small or mid-sized businesses.


Here’s what you’ll discover in this article:


  • The pros and cons of having your own in-house software team
  • Understanding the potential of staff augmentation
  • Key things to think about when deciding between in-house development and staff augmentation
  • What do the facts and research say about these options?
  • Real-life success stories of companies using staff augmentation
  • How to analyze your startup’s needs and make the smartest choice
  • Why is staff augmentation becoming more popular?
  • This article breaks down the complex world of software development into understandable bits, helping small businesses make informed decisions about how to approach their software needs.
Table of contents

Benefits and Challenges of In-house Software Development Teams

Most small and mid-sized companies don’t have specialized in-house teams to create software. It’s crucial to understand the pros and cons of using an in-house development approach for these businesses.

Advantages of Having an In-House Development Team

Advantages of Having an In-House Development Team

There are several significant benefits to having your own in-house development team:


  • Complete control over the team: When a business has its own team, it’s easier to keep track of progress and oversee projects. Training the in-house developers aligns them perfectly with the company’s goals and values.


  • Better communication: In-house developers allow for more direct and face-to-face communication. This helps in quicker project execution, faster adjustments, and reduces misunderstandings.


  • Understanding the company culture: In-house developers are regular employees, so they’re familiar with the company’s culture and needs. They’re more dedicated to the project and promote better communication among team members.


  • Coordinated team: An internal team tends to be more invested in the company’s success. Although it takes time to hire skilled developers, building a team internally provides long-term benefits and control over the entire project.


In essence, having an in-house team offers more control, better communication, and alignment with the company’s culture, which can be advantageous for small and mid-sized businesses in the long run.

Challenges of Having an In-House Development Team

Challenges of Having an In-House Development Team
  • Increased hiring costs: Maintaining an in-house development team can get expensive. Beyond salaries, businesses need to cover additional expenses like benefits, bonuses, and more. This cost can quickly surpass the benefits, especially for smaller businesses with limited resources.


  • Need for specialized software and tools: Creating professional software often requires specific tools and technology. In-house teams might need extra training or tools, adding complexity and cost to the process. Outsourcing can relieve this burden as the hired company typically manages the necessary tools.


  • Limited talent pool: Finding and hiring skilled developers can be tough for smaller companies. The competition for talented individuals is high, making it challenging to assemble a strong in-house team.


  • Longer recruitment time: The process of hiring a new developer involves background checks and finding someone who fits the company culture. This extended process incurs additional costs and delays in getting new team members up to speed.

In summary, while having an in-house team offers advantages, such as control and alignment with company culture, it also comes with challenges like increased costs, the need for specialized tools, difficulty in finding talent, and longer recruitment times, especially for smaller businesses.

What is the Potential of Staff Augmentation?

When businesses need immediate help to finish IT projects, they often turn to staff augmentation. This means bringing in temporary workers to fill short-term job openings within the company.

Benefits of IT Staff Augmentation

  • Fill skill gaps: One of the key benefits is being able to quickly hire skilled individuals as needed. Sometimes, a company’s IT team might lack specific skills or expertise for a particular project. Instead of hiring a full-time employee, staff augmentation allows the company to bring in temporary tech professionals with the required skills for short or long-term projects.

  • Save time on hiring: Using IT staff augmentation services helps businesses save a lot of time that would otherwise be spent on the lengthy process of hiring employees. Posting job openings, conducting interviews, and dealing with all the paperwork for new hires can be time-consuming. With staff augmentation, the process is streamlined, making it quicker and simpler to find the right people to work on IT projects.

  •  Pay for specific services: With IT staff augmentation, companies only pay for the services they need. This approach allows quick access to skilled IT specialists who can step in temporarily, providing expertise without the long-term commitment of hiring full-time employees.

  • Maintain control:  Even when tasks are outsourced to an external company, IT staff augmentation allows business owners to retain control over their workforce. Companies can choose the contract employees they want to work with, retain authority over project leadership, and dictate task priorities.

  • Simplified exit strategy: Hiring in-house software development personnel can create challenges when ending the employer-employee relationship. IT staff augmentation offers a more straightforward way to manage temporary staffing without the complexities involved in separating from permanent employees.

In essence, IT staff augmentation enables companies to quickly address skill gaps in their teams and efficiently complete projects without going through the extended process of hiring full-time employees.

Challenges of IT Staff Augmentation

  • Finding the right talent: It’s tough to find skilled workers due to high competition in the tech sector. Companies might need to search outside their local area or consider remote employees to locate the needed talent.


  • Managing team dynamics: Integrating augmented staff with the existing team can disrupt team dynamics, causing conflicts and communication issues. Regular meetings and clear roles help in smoother integration.


  • Ensuring quality of work: Supervising remote teams or outsourcing partners can be challenging, affecting work quality. Using performance metrics and project management tools helps maintain quality.


  • Knowledge transfer: Difficulty in sharing knowledge among team members might lead to missed deadlines and quality issues. Investing in technologies for effective communication and skill sharing is vital.


  • Security and compliance: Working with remote teams may pose security risks and compliance issues. Using security solutions and monitoring tools helps ensure compliance.

Factors to Consider when Choosing In-House Development or Staff Augmentation

  • Cost-effectiveness: Evaluate the costs involved in hiring in-house staff versus using staff augmentation services.


  • Skill availability: Assess if the needed skills are available locally or require outsourcing to find the right talent.


  • Project requirements: Consider the nature and duration of the project to determine which approach suits the project timeline and goals better.


  • Team integration: Think about how well the augmented team will integrate with the existing workforce and company culture.


  • Security needs: Determine the level of security required for the project and how it aligns with both in-house and outsourced options.


Choosing between in-house development and staff augmentation for small or mid-sized businesses involves considering various factors like cost-effectiveness, skill availability, project requirements, team integration, and security needs to make the best decision for the specific project or business.

How to Choose the Right Staff Augmentation Pricing Model for Your Business

The comparison between in-house development and staff augmentation considering factors like cost, speed of development, flexibility, expertise, and security:

Cost of Development

In-house Development: 

Costs include salaries of software engineers, office expenses, software tools, and more. Additional expenses may nearly double the base salary due to office-related costs.

Staff Augmentation Development:

Remote developers charge between $40 to $130 per hour, varying by location. Budget depends on the software’s significance; higher expenses may justify themselves if software is foundational to the business.

Speed of Development

In-house Development:

Takes around 40 days to hire a full-time developer. Development pauses until the hiring process is completed.

Staff Augmentation Development:

Finding an augmented team might take 1-4 weeks. Agile methods allow for swift team formation, leading to faster development.

Flexibility and Scalability

In-house Development:

Adjusting team size based on project needs can be challenging. Permanent employees remain despite project completion.

Staff Augmentation Development:

Offers scalability based on project requirements. Provides flexibility in team size and composition.

Expertise and Experience

In-house Development:

Hiring based on specific skills and industry experience. Targeting an expert with relevant industry experience.

Staff Augmentation Development:

Outsourcing firm with a track record similar to your project. Firms should understand business needs for successful execution.


In-house Development:

Offers more control over the development process and data security.

Staff Augmentation Development:

Third-party involvement might pose risks unless under a secure partnership contract. Software development firms often offer non-disclosure agreements for data security.


In conclusion, in-house development offers more control but involves higher costs and hiring times. Staff augmentation provides flexibility, faster team setup, and access to expertise, but necessitates careful consideration regarding security and control over the development process when involving third-party partners. The choice between in-house development and staff augmentation depends on factors like project significance, timelines, flexibility needs, and security concerns.