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Outsourcing vs. In-House Development: Cost Comparison for On-demand Taxi Apps

December 15th, 2023
Outsourcing vs. In-House Development.

Introduction

On-demand taxi apps are digital platforms that connect passengers with nearby drivers for immediate rides. These apps facilitate the process of booking, tracking, and paying for taxi services using smartphones or other mobile devices. They've revolutionized the traditional taxi industry by offering convenience, efficiency, and often cost-effectiveness to both passengers and drivers, not to mention the businesses. 

Hence, your decision to build an on-demand app for the taxi business is the right one; however, you have one more important decision to make. This is whether to opt to outsource the development process or hire a team of in-house developers. The cost factor often plays a significant role in the decision process however, it is also essential to consider other factors like quality and convenience. This article explains the pros and cons of each method and also describes how Tryko Technologies saved big by opting to outsource.

Factors To Consider To Develop On-Demand Taxi App

The cost to develop this type of app depends a great deal on the extent of the complexity. An app with fewer features and a simple interface is bound to cost less and take less time to develop. On the other hand, a decent mobile app with all the bells & whistles and an appealing interface will take longer and cost more as well. 

However, considering the highly competitive nature of this market, it is vital that you create a feature-rich application. An on-demand taxi app has several users like the passenger, driver and business administrator. Here are the main features of the taxi app:

  • Interactive interface

  • Real-time location tracking (GPS)

  • Ride booking & management

  • Fare estimation

  • Payment integration

  • Rating system

  • Passenger safety features

  • Administrator dashboard

  • Analytics & reporting

The cost to develop an app will depend on the development model you choose. If you opt to set up an in-house team, it also means investing in the infrastructure and hiring skillful professionals. Besides this, it also means paying a salary and providing other benefits like insurance, etc. This is different if you choose to outsource. 

It can take anywhere between 1500 to 3500 hours to develop an app like this based on the requirement. The average software development cost as per a report by GoodFirms :

  • United States: $150-$200 per hour

  • India and Ukraine: $25-$50 per hour

  • Australia and Germany: $200-$300 per hour

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Difference Between Outsourcing and In-house Software Development

Both approaches have their merits and depend on various factors such as project complexity, timeline, budget, required expertise, and long-term business goals. Companies often choose between these options based on their specific needs, resources, and the nature of the project or task at hand.

  • Initial Investment: Outsourcing can be cost-effective as it often involves accessing lower-cost labor markets or paying for services on a project-by-project basis. The same cannot be said for in-house development since it requires a large initial investment for the infrastructure and technical resources. It also means having to spend time and money recruiting a team of skilled developers and other overheads. 

  • Ongoing Operational Expenses: When you outsource, you only pay for the specific task or project. But with the in-house option, you need to worry about salary, insurance, maintenance of the infrastructure and resources, and much more.

  • Flexibility and Scalability: It is simpler to scale our business in the outsourcing model since it is the more flexible option. On the contrary, with the in-house option, you will end up paying more to scale your operations, and it is also less flexible. 

  • Quality and Expertise: In-house options allow you to hire the experts you need and ensure they deliver quality work. Outsourcing gives you access to a highly talented pool of professionals and an option to hire developers with special skills. This way, one usually pays for their desired level of quality.

  • Risk and Management Overheads: Keeping it in-house means greater control and direct oversight over the development process, allowing for immediate adjustments and maintaining the confidentiality of sensitive information. The advancements in technology have made it easy to manage a remote team as well. Thus, by hiring a remote team with good communication skills and technical knowledge one can benefit from outsourcing too.

  • Time to Market: It is best to select the outsourcing model to reduce the time to market. 

  • Hidden Costs and Contingencies: With your in-house team, you are always fully aware of costs like salary, software licenses, infrastructure, and resources. Remote agencies might spring unexpected charges at times. However, this can be avoided by opting to sign off on a well-planned contract.

  • Future Sustainability and Evolution: The future of outsourcing is looking bright, with more businesses opting for this every year. Besides this, it eliminates the need to invest and maintain an in-house team.

Budgeting For an On-Demand Mobile App

It is vital that you first create a budget for the on-demand taxi app. The development model you choose will impact this significantly, besides which it is also necessary to consider several other factors:

  • Research your competitors to get a better understanding of where you stand. 

  • The app you develop should ideally give you the upper edge. 

  • Always plan ahead since you are bound to need to update it with new features and incorporate new technologies.

  • Developing an MVP can help you gain a better understanding of the market.

  • It is vital that you create a next-generation mobile app, making it essential you hire highly skilled engineers. 

  • Opting to outsource means accounting for the cost of hiring skilled remote developers. 

  • If you choose to develop it in-house, you also need to deal with the overheads like the cost of infrastructure and other software resources. 

  • In-house development also means accounting for the maintenance of the infrastructure and resources.

  • It is best to make your app available for both the Android and iOS platforms. Develop the appropriate strategy for the type of app like a cross-platform app or special app for both platforms. 

  • In the case where you choose to outsource, you also have the flexibility to choose the engagement model like fixed cost, time & material, and dedicated developers. This decision will also affect the cost of the app.

  • Developing it in-house means you will have the freedom to experiment, reiterate, and explore other avenues since this means you have a dedicated team on your payroll. It also means shelling out more when it comes to budgeting.

  • Consider the costs for updating and maintaining the app as well as the marketing budget.

Benefits of Outsourcing

Benefits of Outsourcing.

One of the main benefits of outsourcing is that it costs considerably less to outsource. The cost-benefit isn't exclusively due to hiring the developers but is also due to the reduced overhead costs of development, like that of infrastructure and other resources. Businesses also have on the labor cost since it eliminates the need to pay a constant salary.

There are many other benefits of outsourcing the development of your on-demand app:

  • Access to Global Talent: It provides access to a diverse pool of skilled professionals worldwide, allowing companies to tap into specialized skills and expertise that might not be readily available in their local talent pool.

  • Focus on Core Activities: Delegating non-core functions to external experts allows companies to concentrate on their core competencies and strategic objectives, enhancing efficiency and productivity.

  • Scalability and Flexibility: Outsourcing offers scalability, enabling businesses to adjust resources based on fluctuating demands ensuring flexibility in operations.

  • Time Efficiency: With access to specialized expertise and streamlined processes, outsourcing can expedite project timelines, leading to faster product development and deployment.

  • Risk Mitigation: Sharing responsibilities with an outsourced partner can distribute risks. External experts often have experience handling various challenges, reducing the risk for the hiring company.

  • Operational Continuity: Depending on the location of the outsourcing partner, it may allow for 24/7 operations, ensuring tasks are being completed even when the primary company is offline.

  • Innovation and Best Practices: Collaborating with diverse teams can bring fresh perspectives and innovative ideas to the table. Outsourcing partners may introduce new technologies, methodologies, or best practices that improve business processes.

  • Cost Predictability: Fixed contracts or predetermined pricing models in outsourcing arrangements can provide cost predictability, allowing better budget planning and control.

  • Competitive Advantage: Outsourcing can help companies stay competitive by accessing top-notch talent and resources without substantial investments in infrastructure or hiring.

  • Larger talent pool: Hiring an expert development firm means gaining access to a highly talented pool of developers with a wide range of skills and plenty of resources. 

Here are a few statistics that suggest the same: 

  • IT outsourcing in 2022 was approximately $395 Billion. 

  • 74% of IT Businesses outsource business processes.

  • The global outsourcing market worth in 2019 was $92.5 Billion.

  • The global outsourcing worth in 2023 is expected to climb to $971.2 Billion.

(Source: https://www.statista.com, https://fortunly.com)

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How Tryko Saved 0.3 Million By Outsourcing

Tryo Technologies has big plans for its trike transportation service in the Philippines, and they wish to accomplish this by developing a cutting-edge mobile app for Android and iOS devices

Gain An Edge With Feature-Rich Taxi App.

What is the Tryko Project?

Tryko Technologies has outsourced its mobile app development requirements to Acquaint Softtech. Their basic aim is to make it easier and safer for passengers to travel in the Philippines. They believe taxis should be more accessible and faster and are fulfilling their goals with the help of their trike transportation business. However, in order to make it simpler, they are now developing a state-of-the-art mobile application with all the features you might expect a taxi booking app to have and more.  

Almost all of us are already familiar with how popular Uber is and how accessible their mobile app is. Tryko Technologies is also developing an on-demand taxi app solution to revolutionize trike transportation in the Philippines. They have several options for developing this solution but chose to hire a remote development agency. 

How Acquaint Softtech Acquired the Project?

They were in need of a next-generation solution and were unsure on how to go around developing it; however they did make the wise decision of deciding to outsource it instead of doing it in-house. Acquaint Softtech offered correct guidance into the benefits of hiring a software development firm with all the necessary resources and skillful professionals. 

It took some convincing; however, they liked what they saw at Acquaint Softtech (reviews, Portfolio) and hired us for this project. At Acquaint Softtech, we believe in making high-quality software solutions available to everyone. We provided Tryko Technologies with a cost-effective solution while assuring them of high quality at the same time. 

The Solution - Mobile App & Backend Support

The main technologies we implemented in this project were Laravel and React Native. This is a well-designed app with all the features one might expect a taxi booking app to have and more. Additional effort was spent on the user interface and design to ensure ease of use and visual appeal. Some of the features of this on-demand app:

outsourcing.
  • Quick sign up

  • Easy trike booking

  • Schedule ride

  • GPS tracking

  • Integrated payment options

  • Fare calculator

  • Notification

  • Driver tab

  • Administrator dashboard

Tryko's Business Decision Reduced Cost

Tryko made the important business decision to hire a professional software development agency. This was a strategic decision that helped them come about with the help of Acquaint Softtech. The expert consultants here guided Tryko Technologies with the correct advice, which helped them spend a lot less than what it would have cost to develop it in-house. 

Acquaint Softtech negotiated to develop the solution at highly competitive rates as compared to freelancers and other software development firms. They were in need of a team of approximately 14 professionals. As already mentioned earlier in this article, cost outsourcing is a great deal more cost-effective. We offered them highly skilled, dedicated developers at an affordable rate, thus allowing them to save close to 300,000 USD.

Outsource Software Project To Acquaint Softtech And Save

Outsource Software Project.

Acquaint Softtech is a well-established software development company with over 10 years of experience. We have a well-trained, skillful, and highly experienced team with expertise in several technologies like Laravel, Angular, Android, Bagisto, Django, React, Flutter, and PHP.

We offer custom software development services and provide the freedom to hire developers as is suitable to your business. This can be for frontend & backend development, eCommerce development, website, mobile app, and much more.

You too, can save by outsourcing your software development requirements to Acquaint Softtech. We develop top-notch custom software solutions that do not burn your pockets.

The Verdict - Outsourcing vs. In-House Development

The many benefits associated with outsourcing make it an attractive strategy for businesses looking to optimize costs, access specialized skills, and focus on core competencies while maintaining flexibility in operations.

In most cases, outsourcing works out as the more cost-effective solution for software development. There are several other benefits of outsourcing as well. However, businesses with a larger budget who can afford to spend more may opt for the in-house development approach. This is ideal for firms who wish to have complete control over their development process, be able to monitor it personally, and not trust outsourcing firms with secure data. 

At the end of the day, you know outsourcing is for you if you prefer to focus on your business process, keep costs low, and gain access to a global pool of talented individuals.

Develop your on-demand mobile app today!

Get the best of both worlds: high quality at low cost! Outsource your mobile app development for top-notch expertise without breaking the bank. Elevate your app's performance affordably!

FAQ

What are the cost considerations between outsourcing and in-house development for on-demand taxi apps?

Outsourcing: Generally offers cost savings due to access to lower-cost labor markets and payment on a project basis, reducing internal overheads. In-House Development: This may involve higher initial costs related to hiring, infrastructure, and ongoing management but can offer long-term stability and control.

Does outsourcing taxi app development ensure lower costs compared to in-house development?

Outsourcing: Often provides cost advantages due to lower labor costs, especially when partnering with countries with lower costs of living. In-House Development: This can incur higher costs initially due to infrastructure setup, hiring, and ongoing operational expenses.

Are there any hidden costs associated with outsourcing or in-house development for taxi apps?

Outsourcing: This may involve additional expenses such as communication tools, management overheads, or unexpected project scope changes, impacting overall costs. In-House Development: Hidden costs might arise from training, infrastructure upgrades, employee turnover, or unexpected technology investments.

How do scalability and flexibility differ in terms of cost impact between outsourcing and in-house development?

Outsourcing: Provides more scalability and flexibility with resources, enabling quick adjustments based on project needs, potentially affecting project costs accordingly. In-House Development: Scalability might involve additional hiring costs or training expenses, which could impact the overall project budget.

Which approach offers better cost predictability for developing on-demand taxi apps?

Outsourcing: Fixed contracts or predetermined pricing models in outsourcing arrangements provide better cost predictability for budget planning. In-House Development: Costs might be more variable and less predictable due to factors like unexpected internal changes, market fluctuations, or technological upgrades.

How does the time-to-market factor differ between outsourcing and in-house development in terms of cost implications?

Outsourcing: Often leads to faster time-to-market due to access to specialized expertise and streamlined processes, potentially impacting revenue generation positively despite initial costs.

Mukesh Ram

Founder and CEO, Acquaint Softtech

I love to make a difference. Thus, I started Acquaint Softtech with the vision of making developers easily accessible and affordable to all. Me and my beloved team have been fulfilling this vision for over 15 years now and will continue to get even bigger and better.

Table of Content
  • Introduction

  • Factors To Consider To Develop On-Demand Taxi App

  • Difference Between Outsourcing and In-house Software Development

  • Budgeting For an On-Demand Mobile App

  • Benefits of Outsourcing

  • How Tryko Saved 0.3 Million By Outsourcing

  • Outsource Software Project To Acquaint Softtech And Save

  • The Verdict - Outsourcing vs. In-House Development

  • FAQ

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