The difference between hiring inside developers vs. an external consulting firm.
We get the question a lot from clients on whether they should hire internal web or information technology professionals or hire external or consulting firms (like Switchbox) for their business or project. The struggle is if you look at what you can pay a web developer per year vs paying a consulting firm per week, obviously the consulting firm will be more expensive for the same amount of hours. But is it actually worth hiring someone for internal work vs. external? Let’s take a look at that.
There are benefits to both ways. Obviously in house, or internal, web developers allow you and your company to retain more control. If they are your employee, and work for you 40 hours a week, you can dictate their projects for the week. Whereas with a consulting firm, or external team, they may have other projects and dedications that they have to fulfill first, which means your project may not get attention that week.
If your company is large enough to justify a large IT team and web development, then it would make sense for you to go that route. But for most businesses, there may not be enough work to justify the expense of having an in house web developer all year long.
Redundancy and Longevity
Let’s say that you have hired two in house developers – a web developer and a dev ops or server person. If you lose one of those people – they quit, retire, or become ill – you have essentially lost 50% of the knowledge, process, and work capacity. But if you have hired an outside firm and you are paying for 40 hours a week, you are essentially having two dedicated developers on your project each week, even if one person would be out sick or quit.
Variety of Skill Sets
With your web developer and your dev ops/server person, that is the extent of their skill set for your company, unless you hired a larger team. With an external firm, you are essentially paying for their variety of skill sets with their different team members – whether that be a UI/UX developer, technical business analyst, or senior web developer. Trying to turn your internal team members into those roles and positions, just never end up working out correctly, and you’re more likely to waste more time and money having them learn new skill sets. With the external firm, you can have a senior level UI/UX person spend 2-3 hours on your project and be done with the user interface. This allows you to tap into the variety of skill sets without making a huge commitment to your business.
Misnomer of the Hourly Rate
You’ve hired a senior level developer, and are paying them for 40 hours per week, and you assume that you are getting 40 hours of work. When you hire an external firm, you’re expecting the same 40 hours of work each week, but we’ll explain why that is just not true. Any reputable external consulting firm will not guarantee you 40 hours of work from the developers, and any that are charging you a straight line item of 40 hours is probably just not being truthful.
At Switchbox, we have our staff at any given time of the year, that are getting paid for to get training, and that is something that the client does not pay for. We’re also paying them for internal company meetings, so if we have a 15 minute all staff meeting to talk about health benefits, none of our clients would be footing the bill for this. But if you have hired the internal senior developer at your company, and your HR department has to hold a 1 hour meeting to go over benefits, you are paying them for that hour and not getting any development benefits from it. You are also paying for that water cooler time, and are chit-chatting with their co-workers. While as the external firm, the developer or team member is only logging time when they are being productive and working on your project and task.
Here at Switchbox, we find that the true ratio is that for every one of our developers we’re only charging our clients for about 80% of their time, the remaining 20% is for internal company meetings and activities that are not charged to the client’s projects.
If you’ve hired the internal IT staff – they are only working on your project. Their knowledge is limited to only your company’s project, the app, website, or database. They are only ever learning in your own environment, and not able to diversify their knowledge. At Switchbox, we work on a minimum of 70 projects a year, which means a large pool of knowledge is getting passed around through our developers to learn and grow with. A developer is able to work on multiple projects at the same time, and when Client A’s project reaches a road block, they can take the knowledge from Client B’s project to trouble shoot and figure out a solution to their unique situation.
Thinking more about hiring Switchbox as your external consulting firm, Contact us to chat about it!