Starting an online marketplace: in-house development vs outsourcing

In-house development vs outsourcing

Building an online marketplace is a challenging task which not every entrepreneur is up for. Making the right decision in the early stages of your project can significantly impact your road and velocity towards success.

You must ask yourself: How do you want to proceed? Do you want to outsource your online marketplace or have your in-house team build it?

Below, you will find everything there is to know about the advantages and disadvantages of outsourcing, hiring in-house developers, the pitfalls to avoid, and, most importantly, the cost of each option.

Pros and cons of outsourcing an online marketplace

There are many factors to take into account if you do decide to outsource, such as communication delays due to time zones differences, the quality of the product, and much more.

First things first. Let’s point out the advantages of outsourcing software development.

Outsourcing benefits

Cost It is not a secret that in some countries, you can hire a cheap development team. More often than not, however, this avenue puts you at risk for poor project quality.

Don’t get discouraged. There are countries where cost and quality meet in the middle–you just need to think strategically.

Undoubtedly, software development costs depend on location. For instance, in Europe, the average developer cost per hour is quite budget-friendly and varies from $25 to $50.

One of the most prominent countries for IT domain is Ukraine, where prices and quality are quite balanced.

Studies show that the average rate of a developer in Ukraine is $35–much cheaper than in the Baltics, Scandinavia, Central and Western Europe. Hourly rates start from $105 in the USA.

ExpertiseChances are, you are looking not simply for a team of developers, but for a team with collectively honed expertise in marketplace development.

In order to find out whether an outsourced team is experienced, you must follow these steps:

  • check out their case studies to find out how many of their developed marketplaces are up and running,
  • look through their website to determine exactly what kind of services they offer and whether they meet your requirements,
  • get in touch with their previous clients to get feedback on them.
  • and finally, talk to the team. The best thing that you can do for your startup is to discover as much as possible about the company and the team before selecting them

Please be aware that your marketplace will struggle to breathe if it is built without domain expertise. An outsourced team that has never built a marketplace, will not even remotely understand or foresee potentially hidden problems and challenges. It would be like asking a dentist to perform spinal surgery. An expert team will find more simple and cost-efficient solutions.

What I’m trying to say is that there are companies out there that possess the expertise and skills in developing online marketplaces, from both technical and business perspectives.

TimelineBuilding a software development team from scratch IS time-consuming.

No one says that finding an outsourced team is easy. It’s not! But it is easier.

With an outsourcing team, you don’t have to waste time thinking about how to find a good software developer. You already have one, or even better – a whole bunch of them working in a team.

Also, since you are the boss here, you have the power to set your own deadlines and estimated costs. You can find a new company anytime you want if the first one wasn’t able to deliver the right product.

Offshore outsourcing pitfalls

It is painfully obvious that outsourcing comes from risks. You never know if the company does shady business or is simply untrustworthy, but here we will share some tricks that will help you avoid these pitfalls.

SecurityIt’s sad to say, but fraud is everywhere. The risks of outsourcing here are that your intellectual property or data may be stolen by the other company or person.

How can you avoid it?

The most important thing is securing your intellectual property. Before starting work with an outsourcing company, make sure to draw up an NDA with your lawyer and cover every little aspect of confidential obligations. This agreement will be your safety net that will provide a level of trust for both parties.

Deadlines – It is no secret that there is a tendency for some outsourcing teams not to follow deadlines. Well, it is a common issue with such companies.

How can you avoid it?

If you are too busy to keep tabs on your project, our advice is to hire a CTO who will be in charge of the technical part on your project, plus they will make sure that the whole team is not behind the schedule.

Snowball effect – There are cases of outsourcing when the project ends up costing more than originally expected. The most relevant problem is that marketplace features were not properly prioritized. The hired company can see that you are a bit green in the IT industry so they may take advantage of the opportunity.

How can you avoid it?

As previously stated, if you are not the real deal, you will be conned. So the solution is to have a technical expert by your side who will interact with the team.

Advantages of in-house development

Total controlYou are the one whos in charge of the pay grade, hiring developers, setting the deadlines and many more things. That’s definitely a plus since you also have live communication with your team and can track their progress.

Thorough estimation – If you have your in-house team, nothing will go past you. You will be able to set rules and check how well the tasks are done and whether a particular employee does their job.

Disadvantages of insourcing

Cost Truth be told, hiring a team of developers is pricey, especially when you want to start your online marketplace in the USA. If the price of an outsourcing team is the same as an in-house one then the choice is obvious, but in other cases, it is not reasonable to have your marketplace built by expensive in-house developers that probably won’t pay off in the short run.

Technical background – As a founder, you need to have a technical background in order to hire qualified developers. If you don’t, then you should hire a CTO. The downside here is that you still need to hire a Technical Officer without real knowledge of a technical language on your part.

Building a team – Forming a team can be quite challenging since they will work closely together and you can’t predict how one or another will act. Without teamwork, your project will be doomed needless to say, each of them will try to hog the covers sometime during the development. With outsourcing you won’t have to mull over how to build a software development team, you will have a ready-made team.

Time – Finding a suitable developer takes time. Are you ready to put your project on hold when someone gets ill or decides to quit their job? There are many complications that you can’t quite possibly predict, but with an outsourcing team, you will be sure that they will deliver since without a customer there is no money.

To sum up when starting an online marketplace basically you have two options: insourcing vs outsourcing. The in-house team is a great choice for a long-term commitment, but the prices can be a bit tricky.

Whereas outsourcing offers you something more than the basic software development, it can offer you expertise in building marketplaces that is so important in the early stages of its development. That’s why Sloboda Studio is here to help you with any challenges that may arise.

 

get free consultation
Yaroslav Titenok

Yaroslav Titenok

COO

Subscribe to our blog