Software Development for Fintech in 2024: In-House vs Outsourcing

Development always starts with choosing the right approach, and in-house vs outsourcing development is one of the very first considerations here. 

The global IT services outsourcing market size was estimated at $342.6 billion in 2023, and it is expected to hit around $770,98 billion by 2032. So, the huge popularity of outsourcing is obvious. But does it make the outsourcing collaborating model a better pick over in-house development?

In this post, you’ll discover the key specificities of outsourcing vs in house collaboration models, including their advantages and limitations. Besides, you’ll review their comparison by a range of crucial factors and will get to know how to choose the best-suited model for your project with ease. 

Outsourcing Fintech Software Development: Overview

Outsourcing fintech software development is a collaboration practice where fintech companies partner with external service providers or development teams to build, enhance, or maintain their technology solutions. 

Deloitte reveals that 59% of businesses outsource to reduce costs, while 57% do it to focus on core functions and improve efficiency.

Statistics only prove that non-tech businesses often choose to outsource because they want to improve cost-efficiency or face the lack of necessary labor resources or expertise to conduct development themselves. At the same time, tech companies may not prioritize particular development tasks or may need flexible scaling. Either reason makes them use outsourcing services as well. Basically, outsourcing is an incredibly widespread practice, offering substantial advantages, given that a tech partner is chosen wisely.

Pros and Cons of Outsourcing Fintech Software Development 

Here are the best advantages of outsourcing in fintech:

• Access to global talent: Outsourcing developers enables businesses to tap into a diverse talent pool beyond what’s offered on the local labor market.
• Cost efficiency: Companies can reduce expenses significantly compared to in-house development, as labor costs vary across regions.
• Scalability: An outsourced development team allows businesses to easily scale up or down depending on project requirements.
• Flexibility: Outsourcing advantages include adapting to different time zones and skills for continuous development.
• Reduced time-to-market: Leveraging outsourced development speeds up delivery by providing around-the-clock progress.

As with any other collaboration frameworks, outsourcing has some limitations to keep in mind: 

• Less control over the entire development process: Outsourcing disadvantages involve having limited oversight over day-to-day operations compared to in-house management. However, a low need for personal involvement may be an advantage for some decision-makers. Besides, if suitable management processes are agreed on and established with the service provider, this risk can be notably minimized. 
• Communication challenges: Differences in time zones and cultures can lead to miscommunication in an outsourced team setup.
• Reliance on third-party vendors: With outsourcing, businesses may become dependent on external teams, leading to difficulty operating without this particular service provider’s team involvement. 

With outsourced software development pros and cons as well as this collaboration model’s specificities in mind, let’s move to reviewing in-house development. 

You may be interested in exploring our blog post, where we provide the best countries to outsource software development. 

In-House Fintech Software Development: Overview

In-house fintech software development is building and managing a dedicated team within the organization to create and maintain technology solutions tailored specifically to the company’s needs. 

Most tech companies build development teams to support their daily operations or core development projects. The in-house model is strictly a long-term one, so it’s normally utilized when a company expects a constant inflow of new projects or just needs day-to-day dev assistance. 

Pros and Cons of In-House Fintech Software Development 

Sticking with in-house development, you reap the following benefits:

• Full control over the process. In-house development ensures complete oversight of project management and decision-making.
• Streamlined communication and collaboration. Being onsite enhances team alignment and reduces communication challenges often faced in outsourced development.
• Aligned company culture. An in-house development team is more likely to share the company’s values and vision, leading to cohesive work.
• Long-term investment in specialized expertise. Building an internal dedicated team creates valuable expertise that benefits future projects, unlike relying on third-party vendors.

Unfortunately, with in-house development, the number of limitations outnumbers benefits: 

• Higher operational costs. In-house development can be expensive due to salaries, benefits, and overhead expenses compared to outsourcing.
• Limited talent pool. Access to specialized skills may be restricted to the local area, unlike the global reach possible with outsourcing developers.
• Slower scaling. Expanding an in-house team can be time-consuming compared to the flexibility of scaling with outsourced development teams.
• Hiring risks. Recruiting talent comes with uncertainties, and the wrong hire can set back timelines and resources.
• Increased overhead management. Managing an internal team adds layers of administrative and operational complexity.
• Potential difficulty recruiting. Finding skilled developers locally can be challenging, limiting options compared to outsourcing vs in-house alternatives.

Note: You may choose a hybrid software development model. It means that while having a smaller-sizer in-house team you hire an outsourcing software development provider to assist your team with expertise and execution. This way, you have a fully-managed dev core, while preserving a certain degree of flexibility. 

Comparing In House vs Outsourcing Fintech Software Development

Organizations often employ outsourced IT services to save resources and streamline processes. But that’s just the tip of the iceberg. Let’s explore the key in-house vs outsourcing differences across several critical factors:

Outsourcing vs In House: How to Choose the Right Collaboration Model

With the key house vs outsourcing advantages, disadvantages, and differences in mind, I provide for your review my main insights for choosing the right model for your project and respective scenarios: 

#1 Project complexity: For high-complexity projects needing specialized skills, outsourcing can provide access to the global talent pool, while in house is a better pick when you expect to launch more of similar projects. 

Scenario 1: When dealing with an unfamiliar technology or software type, it’s expensive and time-consuming to get a dedicated in-house team up and running. Besides, there are also hiring risks since decision-makers may not be fully aware of the knowledge and exact skills they need. 

Scenario 2: The best thing about in house is that it allows for particular expertise to stay within the team. Knowledge sharing is how new team members pick up exactly the qualifications you need, instead of you overpaying for outsourcing providers having such expertise. 

#2 Cost control: In-house teams may lead to higher fixed costs. Outsourcing often offers flexible pricing, ideal for managing budgets.

Scenario 1: When running a flexible project where the workload may change rapidly, cost optimization may be difficult. Outsourcing helps alleviate such issues due to flexible hiring procedure and tailored terms of contract, while in-house models suits mostly established projects with a predictable workload.

Scenario 2: Given a consistent workload, in house appears to be a better pick due to generally cheaper team maintenance long-term, since rates of in-house members are typically a bit lower than outsourcing specialists. Still, experts like QA or BA are almost always a more cost-effective option when outsourced since their workload is naturally flexible rather than consistent. 

#3 Time to market: If speed is crucial, outsourcing software development may accelerate delivery with pre-established development frameworks and specialized expertise. 

Scenario 1: If the digital product in question must be released as soon as possible, the best format of work is a hybrid one, with an established in-house team and a range of outsourcing specialists covering a flexible workload. Alternatively, it’s possible to outsource most of the development or even the entire product to an outsourcing partner and let them streamline the project. 

Scenario 2: While gathering an in-house team from scratch is never a more streamlined approach compared to outsourcing, an already gathered and well-established core dev team, under the right conditions, may offer a faster time to market. Still, the involvement of a number of outsourcing specialists may be needed. 

#4 Control and communication: In-house teams allow for direct supervision and seamless communication while outsourcing software development requires establishing clear communication channels.

Scenario 1: If you are willing to delegate some or probably even most of the decision-making to a trusted provider, then outsourcing collaboration approach would suit you better. 

Scenario 2: On the contrary, when your collaboration model shows a great level of centralization, with you and your management team orchestrating the project themselves, the in-house model should be your choice. 

#5 Scalability: Outsourcing provides the flexibility to scale up or down as needed without the commitment of long-term hires. However, a company may need to scale their in-house resources as well if they intends to create a development core for long-term objectives. 

Scenario 1: In both the development and post-release stages, an urgent need for additional expertise or workforce may arise. Outsourcing offers to cover this need quickly, so you can upscale or downscale without much effort, while the in-house model is more rigid. It’s beneficial for continuous upscaling. 

Scenario 2: Assuming that a company expects a constant increase in workload, for example, when there’s a need to start developing several new products, scaling the in-house team is the right call. In-house scales best under non-urgent, well-defined conditions.

Well, the mentioned should cover most of the cases and help you define for yourself whether in house vs outsource should be your choice for your particular project. 

You may additionally be interested in software development services for startups provided by DashDevs expert development team. 

Achieving success with a project, whether it’s run under an outsource or in-house model, is only possible if you work with experienced and trustworthy developers. Should you need outsourcing assistance — don’t hesitate to reach out to DashDevs. You may discover more about us and explore our success stories to ensure that we are an ideal fit for your project. 

Serving as an outsourcing service provider, we were helpful to our customers in multiple ways, aside from software development execution. Here are a few examples of how we addressed specific project needs and showed niche-relevant expertise:

• Fast MVP launch. With our FintechCore, we managed to get started with several neobanking MVPs as fast as within 1 month each, with further scaling to a fully-fledged app within under 3 months each. 
• Undressing the understaffing issue in Saudi Arabia. Our customer from Saudi Arabia struggled with a high workload and needed to scale their dev resources fast. We successfully found dozens of suitable specialists in under 3 weeks, despite the specificities of their local market. 
• Implementing innovative tech combinations. In one of our cases, we combine a crypto wallet with a messenger to create a niche-specific, market-first product. 

Explore DashDevs IT outsourcing services

Final Take

Choosing between outsourcing and in-house development depends on your project’s complexity, budget, and timeline. Outsourcing offers flexibility, global talent access, and cost-efficiency, while in-house teams provide control and seamless communication. Evaluate your specific needs, risks, and goals carefully to determine the best collaboration model. Whether scaling fast or building long-term expertise, each approach has its place in achieving fintech success

Should you decide to outsource your need to a trusted tech vendor — the DashDevs team must be your primary choice. With more than 14 years of experience and over 500 projects under our belt, we can run software development for you with flying colors. 

Contact us