Do you need your own in-house developers?

20 Jan 2015

With the rise of consumer goods being largely rentable and as contractors are gaining popularity as people go into business for themselves, what does this mean for technology? How do companies decide if they want to hire directly or find a contractor to be their full IT department?

Competitive Advantage

This question was posed to us recently by a new client. Normally, we are used to solving an individual problem with software and growing from there. A client came to us and proposed the idea of making us the go-to option for software development. We were going to be their contracted IT department, but how do you even start this process?

It all really starts by knowing what each company's skills are. Because our skills are in helping solve problems and building great software and their skills are more focused in their chosen industry, it made sense to combine skill sets to increase potential. Just because we didn't want to hire directly, it wasn't enough of an obstacle because we were both focused on the potential instead of semantics.

In order to figure out what skill sets you want to have in-house, you have to know what your priorities are. Are you a technology company, in which case you might really want someone in-house. If you don't really do technology but have it as a way to support your main offering, does the digital revolution affect how you approach this? We cover that in more detail below.

Get Rid of Bubble Space

Even if it's a direct hire, if you are going to be successful in working with a CTO contractor, you need to be in sync. This is often just as big a problem if the CTO is working directly for you as when they are a contractor. People have their own goals and often fail to communicate carefully in order to bring goals together, which is why lots of amazing technology is never implemented correctly and goals don't get accomplished despite the best of intentions.

This issue is deeply rooted in company culture. If the trend and expectation is to work together openly because people are incentivized to grow the company instead of their own benefits, the response will likely increase connectivity. Once both parties agree that information needs to be shared equally to reach the desired potential, the teams will work together.

What is your Opportunity Cost?

I mentioned above that some companies wish to hire directly simply because it's the way things have always been done. This prevents them from taking advantage of valuable opportunities. There may also be legal issues, but I am mainly referencing the cultural and semantic issues that shouldn't present true obstacles. Once companies decide they absolutely have to hire directly, they may find someone who isn't as good but willing to work solely for them. This may increase the skills of the new employee, but it could be a mistake for the company.

It all comes back to culture. With a culture of openness and focusing on company growth instead of personal benefit and growth, opportunities are taken that may otherwise have been ignored. A company that is committed to reaching its full potential stays on top of trends and looks out for non-traditional opportunities.

What about the Digital Revolution?

If everything is going digital, how do you justify not moving your technology team in-house? A lot of the issues with moving in-house stem from wanting more control. Bigger companies might need to increase their control becuase they can also afford to hire a full team and keep them busy. Their are two issues left out by this rationale:

  1. How do smaller companies take advantage of this strategy?
  2. Do big companies take care of their ongoing development in-house?

Smaller companies can really take advantage of working with a contractor. By nature, they are able to partner and work closely with other small companies because they aren't as top-heavy and encumbered by policies that big companies usually have. This allows them to find contractors that let them harness the same growth advantage without the additional burden.

Bigger companies who already have technology maintenance and some growth taken care of can still benefit from this. If they have some "pipe dream" projects that their in-house team will never have time for that could make a big impact on savings, hiring a contractor CTO to spot and implement solutions to these issues is a real bonus.

How do you decide?

It depends on what your goal and growth strategy is as a company. Bigger companies may be able to do both. They have an in-house team for everyday projects and hire out for exploratory projects that their main team would never have time to handle. Smaller companies get the benefit of a full-time development team without the cost of hiring directly.