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Why an In-House Tech Team is a Bad Idea for Small Business

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“Focus on your core-competencies, outsource the rest” – this is advice you will often hear in business circles.

But do you really know what your core competencies are? Depending on your business and industry, this distinction is often fuzzy. 

Take the example of a small business offering warehouse management to clients. This requires a lot of back-end inventory optimization techniques where tech plays a critical part. Many times, the algorithm you use to manage inventory is part of your selling point.

In this case, is the technology running your warehouses part of your core competency or not? Should you handle it in-house or is outsourcing better for your business?

Get the smartest people to work on your product

How do you beat competition? By building a product or service that is the best in the market. You do that by hiring the smartest people to work on your business. 

The problem as a small town business owner is this – oftentimes, you do not really have the fiscal bandwidth to hire the best and the smartest. This is especially true in the case of tech where the smartest people flock to tech hubs like Silicon Valley.

The better alternative would be to hire a remote development team to work on your project. Here’s why – an agency that specializes in web development is more likely to hire top quality coders than what your small business can afford to. By outsourcing your project, not only do you work with a smart tech team, but you also get all this done at a fraction of the cost compared to a full-time in-house dev.

Don’t reinvent the wheel

When you split your business activities into small tasks, you may notice that each of these components can be effectively managed by a third party tool.

Let’s take the example of Human Resources. The productivity of your HR team can be improved with use of technology that can organize and handle your employee and partner database better.

However, building a solution in-house is wasteful since there are sophisticated third party HRIS tools that can do a better job of employee management at a fraction of the cost.

A lot of these third party SaaS tools also seamlessly integrate with other business applications like apps for CRM, accounting and marketing. This allows you to mesh all the various applications together to build a technology back-end that can do a vastly superior job than what an in-house team could achieve. 

Managing tech can be a nightmare

There are hundreds of different programming languages, tech stacks and frameworks that one can build a software product in. As a non-tech business owner, it can be intimidating to understand the pros and cons of each of these offerings and make a decision. You need a consultant for that. 

In large corporations, this role is handled by a team of the CTO, business analysts and IT Managers. As a small business owner who can afford to hire one developer, leaving this decision solely to the developer you have hired can be a costly mistake. Hiring a manager solely for the purpose of overseeing your tech development can also be expensive.

Outsourcing your project to a full-fledged third party development team is better for a couple of reasons. Firstly, such an agency has a team of professionals working across different platforms and tech stacks and will thus be a good judge of what is better for your product.

Also, a sufficiently large agency will have hierarchies in place to oversee projects and correct courses on a regular basis. This is much more efficient from a business perspective. 

In conclusion, this is a key decision for any small business owner to take. While there are definitely pros to having an in-house tech team, the cons of it far outweigh them for any non-tech small business.

What are your thoughts? Please share in the comments.

Published: June 8, 2020

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