EDG Grant - To outsource or develop in-house?
Very often, the next topic that we come to after discussing about Product Development using the EDG Grant, is who should be the one to develop the product? Should you develop it in-house? or outsource it to a technology vendor? This will not be an article to tell you what to choose, but it will weigh the pros and cons of each, factors that we have observed in many past cases.
When you decide to undertake the development in-house, the responsibility to deliver the project falls upon you. From product architecture, to project management, to development and implementation. As the EDG Grant has to be a fixed development timeframe, eg 6 - 10 months, so, you will feel the pressure to complete the full development successfully and on schedule. There are 2 dangers here:
(a) severe project delays can lead to the grant being withdrawn.
(b) if the product is not developed successfully according to the grant submission, ESG reserves the right to withdraw the grant as well.
Lastly, if you were to develop the product in-house, then the way that the EDG Grant calculates the subsidy will be by subsidizing the salaries of the employees involved. For example, if you used 2 of your developers to develop the product for 10 months, then the salaries of these 2 developers will be subsidized. However, not the full 10 months of their salaries will be covered. Usually, only between 20-50% of their salaries will be subsidized.
This option may cost more than developing in-house, but the pressure will be on the vendor to deliver successfully and on-time. This approach also often tends to receive higher grant subsidies of up to 80% of the whole project cost. Therefore, this is usually the more popular option.
However, it is important to note that you will not be able to outsource the development directly to an overseas company. This is hugely discouraged. Instead, outsourcing to local companies is most favourable.
At the end of the day, depending on your needs, you may also choose a combination of both in-house development and outsourcing for parts of the project. However, bare in mind the types of subsidies that you can expect for each.