Build In-House vs. AI Development Company: Which is Better?

AI is changing industries, customer experiences, and processes much faster than any other tech. If you're looking to build AI solutions, the question often comes down to: should you build your own AI systems internally, or should you partner with an AI company?

This is a huge decision that always has long-lasting effects on your business. Let's break it down to help you decide what's best.

Building AI In-House

It might seem like the natural choice for businesses with strong internal teams that want to maintain full control over their AI development process. Many big companies, like Google, Amazon, and Microsoft, have massive internal AI development teams, that's why they opt for building AI solutions internally.

Some of the perks of the in-house approach are:

1. Complete control over the project. When you develop AI yourself, you own the entire process, meaning you make quick decisions, pivot if necessary, and ensure that your AI solution looks exactly the way you want it.
2. Security and confidentiality. If you work with sensitive data or intellectual property, keeping AI development in-house reduces the risk of information leaks or data breaches. Since there’s no third party involved, fewer people will have access to your confidential data.
3. Customization. If your business needs groundbreaking AI solutions, building in-house can give you the freedom to create something unique. Your team can bring niche expertise to the process and make the final product follow your vision instead of the market trends.

However, the in-house approach isn't always the best choice, and you can stumble upon something like:

1. High costs. Building an AI system means hiring AI experts, data scientists, and engineers, which is expensive, and keeping them on staff long-term will drain your budget. The average salary of a data scientist in the U.S. is around $156,790 per year. The costs don’t stop at salaries, though, as there are also expenses for training, software, and infrastructure.
2. Time-consuming process. Developing AI solutions takes time, too. You need to gather and clean data, train models, test them, and refine them. This could take months or even years, depending on the complexity of your project and your internal skill set. If you're working with an in-house team, they’ll be focused solely on your project, which can delay other initiatives.
3. Limited expertise in tech. Even if you have a talented team and niche expertise, there’s a risk of lacking AI skills, which are getting more versatile every year. AI is a broad field, and sometimes it takes an expert in a specific area of AI, like natural language processing (NLP) or machine learning (ML), to create a solution. In these cases, you might find that your team can’t build the solution you need on their own.

That's why many companies choose to go the other way, and partner with skilled professionals.

AI Development Company Approach

On the other hand, working with an AI firm offers a different set of perks. An AI development company brings a team of specialists with the skills and experience for fast AI implementation. These firms help businesses integrate AI solutions without the need to develop everything from scratch in-house.

Why Partner with an AI Development Company?

Going for the ready-made team is worth it for many reasons:

You Get Access to Top AI Experts

AI firms employ experts who have experience with many industries and AI technologies. If you need a specific solution, like predictive analytics for sales forecasting or an AI-powered chatbot, these AI experts jump right in and bring that exact knowledge to the table. Their deep expertise saves you years of time and effort.

Let's say you run a healthcare organization and you need an AI-powered chatbot to handle patient inquiries. Instead of starting from scratch, you can partner with AI experts who have experience deploying similar solutions in the medical field. They’ve worked with healthcare providers and:

• Understand medical terminology
• Follow HIPAA regulations
• Know the relevant medical data sources

Simply, they already know the pain points and have the tech and know-how to deploy the system faster.

They Ensure a Faster Time to Market

AI teams implement AI solutions faster because they’ve done it before. They already have the infrastructure, frameworks, and tools in place. So, working with a firm could help your business take advantage of these opportunities without the delay that comes with building AI in-house.

Compare this to building the system in-house. Your team might need time to select the right frameworks, set up databases, clean the data, and develop models from scratch. This could take months, or even longer, while your business faces the risk of downtime.

It's More Cost-Effective Than In-House Development

Yes, working with an AI team still needs an investment, but it’s often more affordable than hiring a full team. Instead of paying for salaries, benefits, and infrastructure, you only pay for the project’s scope. You can also scale your engagement up or down depending on the changing needs of the project.

Here's the approximate breakdown of how in-house vs. AI development company work looks like cost-wise:

‍

You Get Expert Guidance on Best Practices

Since AI firms have experience in building solutions across industries, they know what works and what doesn’t and how to make your AI systems meet industry standards. They can help you avoid common pitfalls, such as poor data management or inadequate system testing.

For example, many businesses dive into AI without fully understanding the importance of data quality. An AI team with expertise in retail might advise you that your product sales data needs cleaning and organizing in a very specific way for your machine learning model to work as it should.

Without that guidance, you might make the mistake of training the model on incomplete or inaccurate data, which would lead to unreliable results and wasted effort.

If you think partnering with AI experts sounds like a good idea for your project, here are a few things to keep in mind before the start.

What to Know Before Partnering with an AI Development Company

Generally, you're about to work with another organization, and this requires an understanding of opportunities and limitations. Like any other partnership, collaboration with AI experts thrives on rich communication, documentation, and planning.

If you've decided to pursue this way, make sure you are ready to:

1. Have less control over the process. When you partner with a firm, you’ll be relying on them to drive the AI project. Of course, you will collaborate and give feedback, but you might not have as much influence over the day-to-day decisions compared to an in-house team.
2. Tackle confidentiality concerns. Depending on the nature of your business, sharing sensitive information with an external firm could be a concern. Most consulting firms have non-disclosure agreements (NDAs) in place, so make sure it aligns with everything regarding your privacy.
3. Overcommunicate. When you work with a partner, it's important to make sure that their vision aligns with yours. If the firm doesn’t fully understand your business or its unique challenges, the solutions they propose might not be the best fit. Usually, teams start their projects with in-depth discovery phases that include strong project planning. It's best not to neglect this step and participate in thorough planning at every stage.

Sometimes, the best approach isn’t choosing one over the other but using both! You could have your own team handle things like project management, in-house consulting, and basic integration, and team up with an AI development company for more advanced things, like building machine learning models or deep learning systems.

Finding the Right Balance: In-House vs. AI Company

Let's take a real-world example, like managing an online store and improving your customer service. Your in-house team could manage things like setting up the website and integrating a basic chatbot. But when it comes to creating a smart chatbot that understands customer needs and improves over time, you might want to work with an AI firm.

This way, you keep control over the parts you’re comfortable with and get help from experts for the tricky, technical tasks.

Which Approach Is Right for You?

Choosing whether to build in-house or partner with an AI team of experts depends on your budget, expertise, timeline, and more. Feel free to refer to this cheat sheet whenever you’re stuck in the decision-making process:

‍

So, whether you choose to build AI in-house or partner with an AI company, both options have their advantages. First, understand your unique needs, resources, and goals to make the best decision for your business.

If you're still unsure which path you choose, feel free to reach out. At Akveo, we work with the latest AI tech across industries, and can advise you on what's best for your case!