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Picture this: your business is booming, your team is growing, and you’re now thinking about the next steps for the future of your business. One of these issues may involve taking departments in-house. This is the scenario I encounter with the business leaders I regularly advise.
Throughout my career, I started a successful business that grew into 150 franchises nationwide. I currently run a full tech company and advise other tech companies while mentoring various founders. What’s unique about my experience is that I’ve run businesses with a basic technology competency and others without. When asked to bring in an in-house technical team, there are a few questions I recommend when considering your decision:
1. How big are your expenses?
It’s critical to assess how much you’re spending on a technical team outside of your organization versus what it would cost to bring them in-house. Typically, if you’re spending over a million dollars a year on an outside tech team, now is the time to start making those apple-to-apple comparisons. For around the same price, you could probably have a team of 2-4 software developers and a strategy manager. Are you getting enough value for your overhead?
Related: Demand for Tech Talent Forces IT Managers to Adjust Hiring Strategies
2. Is this the core of your business?
Consider your core skills and personal expertise before making this decision. If you run a non-tech business, do you need an in-house tech team? Who will oversee the nuances of technology decisions if you are not an expert yourself? Of course, if you’re an underlying tech company that needs a single interface to run the business, that decision may be an incentive to bring someone in-house sooner.
Related: How Independent Software Developers Fill the Skills Gap
3. Where are your freelancers?
Many technical teams rely on foreign freelancers for a significant portion of their production. Although I have had success with foreign partners, I have also encountered critical problems. There is often a disconnect with time zones – forcing you to take meetings well after business hours – coupled with communication breakdowns and quality control issues. You never want to rely on someone who is unreliable to ensure the success of your business.
4. What would an in-house technical department look like?
Once you think you’re ready to build this in-house technology department, you need to plan and budget for some additional considerations. I explain this by telling my clients to imagine that they are building a house. You wouldn’t hire a general maintenance person to do all the necessary work. Of course, you would want an electrician, a plumber, a builder, an architect, etc. The same thought process applies to a technology team. You will need qualified specialists in specialties to meet your exact needs. That’s the advantage you get with an independent team unless you budget for all the specialists that would be needed.
Let’s take it a step further and assume you are hiring for this internal department. Software developers are notoriously career nomads. This is not an insult; you can’t blame them for jumping from job to job. Typically, if they’re good, they get exponentially greater salary opportunities in just a few years.
Usually it takes four to six months for the developer to master your technology needs, then on average they leave after 18 months. This means you only have one solid year to see their full potential. When you need to hire someone, you often pay recruitment fees which can be a significant percentage of the employee’s salary. On the other hand, you can keep your developer happy by matching their salary potential if they leave, but that also costs a lot. It’s not a cheap game, but the benefits can outweigh the costs if they focus on your tech and sound.
5. Do you need it “all or nothing”?
This one has a simple answer: no! Many companies find success in balancing the presence of internal and external technology teams. Maybe you bring 70-80% in-house and let some features and solutions be solved by an external team. The answer doesn’t have to be all or nothing, which is fine!
Whether your answer to integrating an in-house tech team is yes, no, or some combination, it’s always best to do what’s right for your business. This means weighing the pros and cons and analyzing the costs before making such an important decision. Maybe even talk to your network about what has worked for them. Your greatest asset is your people, so make sure you have the right ones to keep your business running at its full potential.
Related: Would a remote tech team work for your startup?