Web development - Outsource or go in-house?

All,

A non-coder friend of mine based in India is considering developing a portal for his startup. His is a web-based idea and the portal will be his source of revenues.

Since he can't code, he's looking to weigh up his options - outsource or in-house - before taking a call. He wanted my help around the list of criteria he should look at to make an informed decision. And with my limited non-tech knowledge, I came up with the list below. It would be great if you could draw from your experiences (good and bad with both outsourcing and in-housing options). Also, please assume that irrespective of outsourced or in-house, the team will be based in India.

• Time to ramp up the first usable production
• Communication issues (around business goals and the tweaks required here and there)
• Evolution (Ideas that require to be incorporated in the website once the first production is live)
• Costs around dev
• Costs around maintenance
• Cost of failure (time and money in hiring an in-house team that fails later on vs. time and money in an outsourced team that fails later on)
• Legal protection (in terms of non-disclosure, non-compete etc.)
• Probability of delivery quality
• Depth of expertise (in-house 2 member team doing such a project probably for the first time in their lives vs. outsourced team having done such projects before many a time)
• Code handover (Outsourced team developing now and handing over to a in-house team vs. in-house team led by a guy handing over after that guy quits).. Essentially documentation
• Ease of hiring (hiring an outsourced team vs. an in-house team)
• In-house team's decreased sense of ownership later on if we go for outsourced team right now?

Thanks!

Technically I would be wary - if that portal is your product, thnen outsourcing means you dont know what you do (i.e. you keep all the product knowledge outside of the company). This would be different if the portal would be a side service (extranet for a consulting company or something).

Also, you seem to hae a problem with your people.

•Depth of expertise (in-house 2 member team doing such a project probably for the first time
in their lives

•Probability of delivery quality

In terms of cost, they said that Outsourcing has lower cost.
about the hiring, it's hassle free to find an outsourcing company so that they can help you provide individuals that is suitable for the task.

Well that's all my idea. I hope it help you.

Here is my help as well to make a decision. As far as Indian to India outsourcing is concerned -

Time to ramp up the first usable production -- In house and outsource India - India does not make much difference. How ever, in case of outsourcing, it pains a bit more, since in hous CTC + hidden cost pinch less than invoice payment to service provider. But If you have funds, your capacity to go live is much higheer with a development partner. They can ramp up and down so easily and quickly.

• [Communication issues (around business goals and the tweaks required here and there)] There is alwasy some delay and loss due to communciation and lack of understandinmg in In house and and other city or state. you will need to make monthly visits to make it synch.
• [Evolution (Ideas that require to be incorporated in the website once the first production is live)] It will be same in both.
• [Costs around dev] Same at both. Though in house cost perceives to be less. You do not factor in space, power, internet, facilities, Cab, software tools and management time and focus cost. to make it simple, let us say you pay 50000 PM to a senior developer. Service provider will charge 1.25 Lac per month for same let say. It will feel to you that they are charging more.
• [Costs around maintenance] Same.
• [Cost of failure (time and money in hiring an in-house team that fails later on vs. time and money in an outsourced team that fails later on)] COurse correction are easier in outsourced. you tend to live more with internal failures.
• [Legal protection (in terms of non-disclosure, non-compete etc.)] that is same in both. If you contract to any software dev company of 50-100 FTE size, they will be in no interest to get in to your business. Do not take any individual and freelancers.
• [Probability of delivery quality] It will not be much different. It will only depend on quality and exp of people you hire or the company that you contract provides. You need to specify that you need 4 year exp 2-3 develoeprs.
• [Depth of expertise (in-house 2 member team doing such a project probably for the first time in their lives vs. outsourced team having done such projects before many a time)] This will not work at all. It is impossible to get production class code from freshers. I represent a software dev company and i know that for sure. We do not have any fresher in any billing assignments for any client.
• [Code handover (Outsourced team developing now and handing over to a in-house team vs. in-house team led by a guy handing over after that guy quits).. Essentially documentation] You get better documentation when you get it done via ouside. Since it becomes a neccessity in situation and it becomes by product.
• [Ease of hiring (hiring an outsourced team vs. an in-house team)] We can get a team in 1 week - 3 week for 5 FTE for example. 1-2 developers can be set up any time.
• [In-house team's decreased sense of ownership later on if we go for outsourced team right now?] Yes. It will happen. But one big factor you did not discover is that most of the good developers prefer working for dev service companies, so it is highly unlikely that your friend will get a solid team for his idea in situation right now.