So why would you go with an outsourcing company or software development shop if you can hire great people yourself?

I sometimes wonder about this myself. It is just so better to hire your own employees and rule over them with an iron fist, retain tribal knowledge, or just brag about the number of your troops to your friends in the bar. All nice and valid features anyone can enjoy. 😂

Seriously though, there are reasons. Some obvious ones:

1. Turns out you can’t hire great people (du-uh). Maybe you are a small startup with no big name behind you or big salaries.

2. You can hire great people, but you can’t retain them. People are just leaving or being poached after 6–12 months by Facebooks and alike.

3. You can do all the above but not fast enough.

There is another, I think less obvious reason. Hiring is just so expensive if you factor all hidden costs into it. It is not just salaries, which are outrageously high for great tech talent. Additionally, you will have to:

1. Pay your HRs/recruiters

2. Distract your people for interviews, given an average of 3 rounds per candidate and 1 hour per interview plus 30 minutes for writing feedback, and you just spent 4.5 hours of your best developer’s time. And given on average, you will hire at best 20% of all interviewed candidates, this number can be multiplied by 5 for each hire, so it is really around 23 hours per hire. OF YOUR DEVELOPERS TIME.

4. Buy new hardware for this person

5. Pay for onboarding. Hard to calculate, but optimistically say for 2 weeks this new person will not be productive and will require 2 hours a day of mentoring, so it is like another 120 hours you paid for down the drain.

This list goes on but just think about it. You will spend around 160 hrs, or 1 MONTH of your current DEVELOPERS time per hire. This is an optimistic estimate. I’m not even talking about recruiters, hrs, admins, and so on. And now imagine this person leaves you in a year, because it is a decent person and not a, say, less decent person (aka jerk 😆), that leaves just after 3–6 months. You’ll have to start this whole process all over again.

The right vendor will solve most of the above problems. It has the ability to hire people you can’t otherwise reach. It can usually retain people much better in offshore locations and handle interviews, onboarding, and replacement transitions. Not all vendors do all those things, but good ones do.