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Discover Your TRIZAN PlanThe Comparison Everyone Gets Wrong Ask most founders how they compare the cost of outsourcing development versus hiring in-house, and you'll get some version of the same math: the outsourced developer costs $60 an hour, the in-house engineer costs $150,000 a year fully loaded, therefore outsourcing is cheaper. That comparison feels rigorous because it has numbers in it, but it's almost always incomplete, and the missing pieces are usually large enough to flip the conclusion entirely. What the Hourly Rate Doesn't Include An hourly rate is the price of code being written. It is not the price of the right code being written the first time, on a system that will still make sense to work with a year from now. Several real costs sit outside that rate entirely. The first is translation cost. Someone on your team has to convert business needs into a specification detailed enough for an external party to execute correctly. That's real time, usually from your most valuable people, and it happens on every single change request, not just the initial build. The second is rework cost. Specifications are never perfect, and outsourced teams — reasonably — build exactly what's specified, not what was intended. The gap between those two things gets caught in review, and closing that gap means another round trip through the vendor relationship, at additional cost and additional delay. The third is context cost, and it compounds over time. Every new contractor or agency that touches the codebase has to rebuild an understanding of decisions made by whoever came before them. Some of that understanding never fully transfers, which shows up later as bugs, regressions, or an inability to explain why a certain part of the system behaves the way it does. The fourth, and often the largest, is opportunity cost. Every week that a critical feature sits in an external vendor's queue is a week your business isn't capturing the value that feature would have created. In fast-moving markets, that delay is not a minor inconvenience — it can be the difference between capturing a customer and losing them to a competitor who shipped first. What In-House Hiring Doesn't Include Either To be fair, the in-house side of the comparison is often oversimplified too. The $150,000 salary figure ignores benefits, payroll taxes, equipment, office space if applicable, and the very real cost of a bad hire — someone who doesn't work out after six months, taking recruiting time, onboarding time, and lost productivity with them. It also ignores management overhead. A junior or mid-level engineer usually needs senior oversight to be productive, which means part of a senior engineer's time is now spent managing rather than building. And hiring itself is slow — a single strong engineering hire can take three to six months from job posting to productive contributor, time during which the business need that prompted the hire hasn't gone away. The Model Most Comparisons Miss: Embedded Teams The binary framing of "outsource vs. hire in-house" leaves out