The real cost of software development in Australia: In-house vs. Outsourcing

In this digital age, software is the backbone of nearly every industry, driving efficiency, innovation, and competitiveness. Software development has become pivotal in the operations and growth of companies worldwide – and Australian businesses are no exception. 

From small startups to large enterprises, Australian firms invest in software to streamline processes, enhance customer experiences, and stay ahead of the curve in dynamic markets. 

While it’s become a requirement, companies are always faced with the decision of whether to keep their software development in-house or outsource to experts. 

This article will break down the cost of software development in-house vs. outsourcing. Learn how Arcanys can support your development cycle to ensure you meet your software requirements. 

Significance of software development for Australian businesses

Statista foresees a compound annual growth rate (CAGR) of 4.35% from 2024 to 2028 in the Australian software industry, resulting in a market volume of $14.10 billion. 

This only proves that software development holds immense significance for Australian companies across various industries as it helps them with the following:

Boost operational efficiency

It enables them to enhance operational efficiency by automating repetitive tasks, streamlining workflows, and improving productivity. Efficiency boost translates to cost savings and enables companies to allocate resources more effectively.

Promote innovation

Software development facilitates innovation by allowing companies to create bespoke solutions tailored to their unique needs and challenges. 

It empowers Australian businesses to differentiate themselves in the market, gain a competitive edge, and respond quickly to changing consumer demands.

Digital transformation

Utilizing software allows firms to foster digital transformation, enabling them to adapt to evolving technologies and consumer behaviors. 

This adaptability is crucial in staying relevant and resilient in today’s rapidly changing business landscape.

Breakdown of software development costs: In-house vs. Outsourcing 

When considering software development, Australian companies often weigh the costs of in-house development versus outsourcing.

Evaluating both options thoroughly is essential to make an informed decision based on cost-effectiveness and alignment with business objectives.

Here’s a breakdown of expenses on in-house vs. outsourced development.

In-house software development

The costs associated with in-house software development include:

• Time and resource management – Firms must allocate time and resources for recruitment, onboarding, and managing the development team.
• Employee salaries – This includes salaries for software developers, project managers, and testers.
• Benefits and overheads – These refer to costs related to employee benefits, office space, equipment, utilities, and other overhead expenses.
• Training and development – These are expenses for ongoing training and skill development programs to keep the team updated with the latest technologies.
• Software and tools –  It includes costs for purchasing and maintaining software licenses, development tools, and infrastructure.
• Project delays – These are potential costs incurred due to project delays, including opportunity costs and potential revenue loss.

Businesses may choose to keep their software development in-house for control and confidentiality reasons. 

Outsourced software development 

Now here are the costs associated with outsourcing software development:

• Vendor fees. Outsourcing firms charge vendor fees for development services, typically based on software scope, complexity, and duration.
• Contractual obligations – These are the costs associated with contractual agreements, such as payment terms, milestones, and penalties for delays.
• Quality assurance – It involves fees for quality assurance and testing services provided by the outsourcing vendor.
• Currency exchange and international fees – These are additional costs due to currency conversion and international transaction fees.

Outsourcing software development to nearshore and offshore providers like Arcanys proves more cost-effective than hiring in-house due to lower labor and operational expenses.

In fact, according to The Daily MBA, firms that leverage IT-shared services achieve cost savings of 30-60%.

Delegate your software development needs to Arcanys

Arcanys is among the Philippines’ leading software development talent providers to multinational companies. It helps businesses, particularly Australian firms save over 50% to 60% of their overall costs. 

Arcanys’ excellent client reviews serve as a testament to its exceptional service quality and client satisfaction. To give you an example, here’s one client testimonial from Clutch:

“Arcanys delivers high value over cost in terms of quality and efficiency. They provide solid work, deliver on time, and we don’t have to micromanage them.”

– Founder & CEO, Duet Inc.

The Silicon Valley-based startup reached out to Arcanys since “engineering costs have been rising for the last few years” in the United States. They started with one engineer for a few months, then expanded to five.

Duet Inc.’s CEO values Arcanys not only as a staffing agency but also as a fully integrated technical partner. The partnership has enabled the company to scale effectively and concentrate on primary development tasks. 

In the complete review, he also highlighted the concrete advantages of Arcanys’ comprehensive support framework, which encompasses development, UX/UI design, QA, and project management.

Partnering with Arcanys means outsourcing smarter! Connect with Arcanys’ experts today to get started!