Software product development – should I hire a freelancer or outsource to an agency?

posted by >Admin, April 28 ,2017

Whether you are a start-up building your first dream software product or an Independent Software Vendor (ISV) managing a portfolio of products, at some point in time it is likely you will be faced with the need to hire an in-house developer, freelance the coding work, or outsource the development tasks to an offshore company. If you are strapped for cash but require a skilled resource, outsourcing to a freelancer or an offshore company are your most viable options. 

Some software product managers swear by outsourcing their work overseas to an established software development company, while others prefer to work with talented freelancers. So, what is your best option? Should you outsource the development part to a freelancer or to a software development company? 

Hiring a freelancer 
There are various networks – Matchist, Upwork, Freelancer, StackOverflow Careers – that make it easy for software product development managers to find and recruit talented programmers. Through such sites, you can find freelancers for a wide range of technologies. You can hire freelancers from your country, from a near-shore or offshore destination. 


  • Freelancers often agree to work at lower rates than the software development companies. As there’s no middleman, you could potentially get a great freelancer at the cost of an average developer. If you hire freelancers from an offshore destination, you can get a developer at significantly lower rates. 
  • A high-performing freelancer can potentially become a part of your in-house team – if the freelancer is based in or close to your location. 
  • For very short-term projects, or for once-in-a-while support, freelancers can often be the only logical option.


  • Finding and recruiting freelancers with the right talent and attitude takes major time and effort investment.
  • Freelancers, especially from foreign locations, can call it quits and leave your project at any moment – you do not have any real control.
  • You are highly dependent on a single individual – in case he or she falls sick or is faced with any circumstances that do not allow them to work for a few days or weeks, a part of your project can come to a grinding halt. 


Outsourcing to an offshore software development company 


  • The developers working on your project have the support of a complete team, including PMs, senior developers, business analysts and more. As a result, you get access to better project management skills. 
  • If you outsource to skill-rich countries like India, you can get experienced and talented developers at significantly lower rates, compared to in-house developers or on-shore freelancers.  Also, skilled developers in such countries prefer to work for a company as a full-time employee and not as a freelancer, which increases the chances of recruiting a good developer when you are dealing with a company. 
  • As long as you outsource to an established and reliable outsourcing firm, you do not have to worry about losing the developer. In case the developer is on a holiday or leaves the job, the company takes responsibility of knowledge transfer and finding the replacement. 
  • A reliable company will be happy to sign an SLA with you. This means that you have a high level of visibility over the work that is done for the money you are paying. 


  • The cost per dedicated developer or per hour is likely to be more than that of hiring a freelancer – when comparing hiring costs from the same location. 
  • If the software development company you outsource to doesn’t have a strong project management capability – or if you do not have very clearly defined requirements – there are chances that the outsourcing may not work well for you. 
  • You may work with developers for whom English is not the first language and who work in different time zones. If the developers do not have strong communication skills and are not flexible, it may be difficult to work closely with them as a part of your team. 

So, what the best option for your company? 
Whether you choose to hire a freelancer or outsource to a software development company in India, Philippines or China, the key is to hire a skilled developer that you can rely on. If you have great HR skills and have the time and resources to vet and find a freelancer that is a perfect fit for your team, going ahead with freelancing could be a marginally cheaper option. However, if you do not have strong HR department or skills and need more reliable development support, it may be best to go ahead with a software development outsourcing company.