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Picture this: your business is booming, your team is expanding, and now you’re thinking about the next steps for your company’s future. One of these issues may involve internal departments. This is what I often encounter with the business leaders I mentor.
Throughout my career, I’ve started a successful business that has grown into 150 franchises nationwide. I currently run a full stack technology company and am a consultant to other technology businesses while mentoring various founders. What is unique about my experience is that I have led companies with core technical capabilities and companies without core competencies. When I’m asked about building a tech team in-house, I suggest you ask a few questions when considering your decision:
1. What is the scale of your spending?
It’s critical to assess how much you’re spending on technology teams outside your organization compared to the cost of bringing it in-house. As a general rule of thumb, if you spend over a million dollars a year on an outside tech team, now is the time to start making these apples-to-apples comparisons. For roughly the same price, you might have a team of 2-4 software developers and a strategy lead. Are your expenses getting enough value?
Related: Demand for tech talent forces IT leaders to adjust hiring strategies
2. Is this the core of your business?
Please consider your core competencies and personal expertise before making this decision. Do you need to have an in-house tech team if you run a business that isn’t focused on technology? If you are not an expert yourself, who will oversee the nuances of technical decisions? Of course, if you’re a low-level technology company that needs a unique interface to run your business, that decision may tend to bring someone in-house faster.
Related: How Software Developer Freelancers Can Fill Skill Gaps
3. Where are your freelancers?
Many tech teams rely on freelancers overseas for most of their output. While I have had success with overseas partners, I have also encountered some key issues. There’s often a disconnect with time zones — forcing you to meet after business hours — plus communication disruptions and quality control issues. You never want to rely on unreliable people to ensure the success of your business.
4. What will the in-house technology department look like?
Once you think you’re ready to create that in-house tech department, you’ll need to plan and budget for some additional considerations. I explain this by telling my clients to imagine they are building a house. You don’t hire a general maintenance person to do all the necessary work. Of course, you will need electricians, plumbers, builders, architects, etc. The same thought process applies to technical teams. You will need a professionally proficient specialist to meet your exact needs. Unless you’re budgeting for all the experts you need, that’s what you get with an outside freelance team.
Let’s go a step further and assume you’re hiring for this internal department. Software developers are notoriously professional nomads. This is not an insult. You can’t blame them for jumping from job to job. Often, if they do well, they’ll get a multiplier salary opportunity in just a few years.
Typically, developers take four to six months to become proficient with your technical needs, and then leave after an average of 18 months. This means you only have a year to see their full potential. When you have to hire someone, you usually pay a recruiting fee, which can be a significant portion of an employee’s salary. On the other hand, if they leave, you can keep your developers happy by matching their salary potential, but it’s also expensive. It’s not a cheap game, but the benefits may outweigh the costs if they focus on your technique and sound.
5. Do you need it “all or nothing”?
There is a simple answer: no! Many companies find success in having a balance of internal and external technical teams. Perhaps, you bring 70-80% of the work in-house and leave some features and solutions to external teams to work on. The answer doesn’t need to be all or nothing, it doesn’t matter!
Whether your answer to bringing in a tech team in-house is yes, no, or both, it’s always best to do what works for your business. This means weighing the pros and cons and the cost analysis before making such a big decision. Even discuss with your network what works for them. Your greatest asset is your employees, so make sure you have the right employees to maximize your company’s potential.
Related: Will a remote tech team work for your startup?
