What has been already discussed many times is if it's worth to outsource contractors or to employ your own full-time developers. So if you stick to outsourcing, this article will make you think about several issues that always follow the process.

Let's think wide, the fact that you use staff from outside your company allows you to reduce your costs for monthly salaries, social benefits, and taxes, insurance, rent payments etc. Those are the payments you should process permanently despite the possible fact that the company is out of stable contracts and it doesn't generate revenue during several months. You should be really confident that you can provide the company with permanent work to be in green.

On the other side, hiring contractors for each particular project can make you think that that costs too much for you. Really, you can think, 'I pay my developers a sum that's similar or less than the one I pay to contractors'. However, don't miss the fact mentioned above. You don't pay taxes, rent and other additional costs. Those are paid by a contractor company. That is why, it is always strange to hear statements like, 'I do not want to pay your office, and your electricity expenses etc. I hire programmers. So they are what I'm going to pay for.'

Right. Those are the terms that small groups of developers can afford. So being stuck to this issue you always risk to get into a trap of unreliable services. I think you agree that a freelancer takes care about his reputation much less than a company. At least the company has invested a lot of money (in addition to other efforts) to build it. And reputation means reliability here.

So what's about cost effectiveness is:

1. Outsourcing reduces your costs; that's the fact.

2. But don't expect to get extremely cheap services, anyway.

3. At least, the more expensive (in a certain range) they are, the more reliable the company is.

4. It's always up to you if you are going to risk deadlines and quality for a lower price, or not.

What can really make you be in red is a wrong choice. You must always keep in mind that since you have hired a contractor, you can influence only a part of the project, i.e. you become dependent on another company. Should anything go wrong with them, it will consequently go wrong with you. That's the key point for you to think about when remaining your company in green by means of software development contractors.