Comment: playtank (Score 1) 403
Your boss is making a financial argument for outsourcing. The only way to counter this, if you want to counter it, is with another financial argument against outsourcing. Despite the great many technical reasons not to outsource (and a few possible reasons in favor, perhaps), the decision that was made was a financial one. So if you want to argue against is, you need to be arguing in the same domain.
Here's my financial argument in favor of not outsourcing.
When you outsourcing, you are paying an external company to grow the necessary knowledge, skills, and ability to ship a software product. You are accruing zero of these assets to your company. When you have completed the project, you have generated one tangible asset, and zero intangible assets. All of the intangible assets are now owned by the party that you used to create the product. Furthermore, you have increased the value of the vendor, and thus you have increased the rate which that company can charge. And you can bet that this will be passed on to you in future product negotiations.
Inversely, with an in-house staff, the so called "extra cost" of staffing and benefits, if your environment is healthy enough to lead to employee retention of a reasonable level, leads to the accrual of in house knowledge on a wide range of topics. These include, but are not limited to: software development methodologies, planning, user interface design, software quality assurance, scheduling, testing, source code control, building reusable components, and many more. As the team matures, future products cost less.
So, in economic terms, you can outsource and pay a vendor less for the current project, adding value to that vendor. This will result either in escalating costs over time with the same vendor, or the continued use of a new vendor, and each new product will bear the cost of being a version 1 product with no institutional knowledge or economies of scale. Or you can keep things in house, pay more up front as the team develops the initial products, but with proper management you'll have a team that will produce products faster, with more personal investment, and higher quality, with a much smaller incremental cost over time.