Building your own team gives you the deepest product knowledge. The engineers learn the business domain over time, and this context sits with you. The price comes in the form of time and rigidity: filling a senior role routinely takes several months, onboarding adds more time, and the payroll keeps running whether the roadmap is full or empty.
Handing a project to a vendor means an external team owns the outcome: they staff the project, the partner manages the process, and the provider carries the risk of missing the date. The model works when the work is a defined project and your side has an available product owner. It breaks down when nobody on your side owns the product, since an external team is not able to invent your business automation software development rules.
Hiring individual contractors sits between the two: you add engineers and keep the management in-house. It is fast — a suitable engineer can join far sooner than a new hire — and it scales down as easily as it scales up. The catch remains that your technical leaders need the capacity to direct the work. If that capacity is missing, you end up paying hourly custom software development for government uncoordinated work.
Most of the time, companies blend them. A common pattern holds the critical decisions and the core system inside the company, while a partner handles peaks, well-defined modules or platform work. The principle is easy to state: hold on to what differentiates you, and outsource anything a competent team can specify and deliver.
Three questions resolve most of these debates. First: is the system a core competitive asset, or a supporting tool? Then: how long does the work continue — months or years? Last: who owns it once the vendor leaves? Answer those honestly and the right arrangement is normally clear.