Software development consulting: when to outsource and when to build in-house

Many businesses reach a point where spreadsheets and manual processes stop being fit for purpose. Files crash, reports take too long to generate, and teams spend more time collating data than acting on it. Sometimes, extra admin staff are required just to keep things moving.

At that point, senior leadership teams face a familiar dilemma: should we hire developers in-house or work with a consultancy?

Both approaches have clear advantages, but each also comes with hidden challenges. Over the past 20 years, working with organisations such as Mitsubishi Electric, Black Rainbow, and Pharmacy2U, we have seen both the pitfalls and the successes.

The instinct to hire in-house

When operational challenges arise, leadership teams often default to hiring internal developers. It feels like the safest option. Someone embedded in the business will understand the nuances, respond quickly, and be immediately available.

This instinct is understandable. Dedicated employees feel like control. Decisions can be made fast. Knowledge stays in-house.

But hiring comes with hidden costs. Recruitment, onboarding, training, and retention are expensive and time-consuming. Even experienced staff often cannot cover the full range of skills required. Many teams underestimate how complex building reliable, scalable software really is. One or two hires rarely cover everything.

Where in-house often breaks down

Software development is rarely one-dimensional. The skills required go far beyond coding. Architecture, UX, UI, front-end, back-end, deployment, testing, and debugging all demand distinct expertise. Expecting a small internal team to cover all these areas sets projects up for delays and quality issues.

Without sufficient depth, features may be inconsistent, interfaces lack polish, and backend logic can be error-prone. Deployment and support processes may be fragile.

Even strong developers will have gaps. Keeping pace with evolving technology, best practices, and business needs at the same time is a challenge. Projects stall, costs increase, and the end result can be software that does not meet expectations.

When outsourcing works best

Outsourcing is not about handing over responsibility and stepping back. It works best when structured, collaborative, and phased.

From our experience, the key success factors include:

Clear scope and phased delivery – breaking a project into manageable stages allows progress to be visible and risks to be controlled.
Business-side champion – someone within the organisation to review demos, approve changes, and perform user acceptance testing is essential.
Existing process validation – spreadsheets, legacy systems, or existing workflows can be used to check calculations and ensure accuracy.
Handling complexity – even specialised calculations or logic can be managed reliably. For example, with Mitsubishi Electric, we transformed spreadsheet-based heat loss calculations for air source heat pumps into robust software, delivering accuracy and confidence.

When these conditions are met, outsourcing reduces risk, accelerates delivery, and provides access to skills that are difficult to hire internally.

kwiboo’s sweet spot

How we work depends on the size and needs of the business:

Larger organisations: we augment internal teams, providing expertise in design, UX, architecture, deployment, and testing. We unblock projects, accelerate delivery, and improve overall quality.
Smaller organisations: we take ownership of the product, manage phased delivery, and provide ongoing support under a contract.

Our clients illustrate this approach:

Mitsubishi Electric – we built the application, phased delivery, handled complex calculations, and provided ongoing support.
Black Rainbow – we augmented their internal team, bringing technical expertise to unblock delivery and ensure quality.
Pharmacy2U – we worked alongside their team to guide development, implement best practices, and deliver scalable software.

Flexibility is key. Whether owning a product or augmenting a team, the support level is always tailored to the organisation’s needs.

Pros and cons

In-house development

Pros: immediate access, deep understanding of business processes, long-term retention of knowledge.
Cons: difficult to cover all necessary skills, projects can stall, software may be sub-quality, hidden costs from recruitment, onboarding, and learning curves.

Outsourcing / consultancy

Pros: broad technical expertise, predictable phased delivery, ability to handle complex processes, flexible resourcing.
Cons: perceived distance from the business, reliance on an external team, requires strong collaboration with a business-side champion, ongoing communication effort.

Lessons learned for senior leadership

Based on our experience, here are some practical takeaways for leadership teams:

Do not underestimate the skills required – software is not just coding; it includes design, architecture, UX, testing, deployment, and maintenance.
Plan deliberately – define roles, responsibilities, and milestones upfront.
Phased delivery reduces risk – smaller increments allow validation, adjustment, and confidence in outcomes.
Collaboration is essential – outsourced teams need clear input, feedback, and a business-side champion to succeed.
Flexibility wins – combining internal expertise with external support often produces the best results.
Invest early in the right expertise – addressing gaps upfront is far cheaper than patching mistakes later.
Governance and prioritisation matter – clear decision-making and prioritising features ensures delivery meets business objectives.

Conclusion

There is no single correct answer. Both approaches can work, but only if they are planned deliberately. Leadership teams must consider business size, project complexity, and internal skills.

Outsourcing can deliver complex, smart, intuitive software quickly and reliably. Internal teams provide control, continuity, and deep domain knowledge. Often, the best results come from combining both approaches deliberately, using internal knowledge alongside external expertise.

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