In-house vs outsourced SR&ED
Outsourcing trades a share of the credit for someone else's expertise and time. Preparing in-house keeps the credit and the knowledge, and asks your team for the work. The right answer usually changes as a company grows — here's how to think about it.
| In-house (with software) | Outsourced | |
|---|---|---|
| Cost model | A flat software cost plus your team's time. Predictable, and it doesn't grow with the size of the credit. | Usually a contingency fee — a share of the credit — so the cost scales with the claim. Little upfront risk, larger cost on big claims. |
| Technical depth | The people who did the R&D describe it. That's an advantage if they can write, a bottleneck if they can't. | A specialist frames the uncertainty and advancement — valuable when your team can't, or won't. |
| Control & records | You own the process, the evidence and the workflow, and you can run it again next year without starting over. | The firm owns much of the process. Convenient, but the institutional knowledge leaves when the engagement ends. |
| Audit exposure | You hold the traceability, so a review is answered from your own organized records. | The firm typically represents you, which helps — provided the evidence they built on was solid. |
| As you grow | Marginal cost per claim falls; a repeatable in-house process compounds. | Contingency fees keep scaling with each year's credit, which is why many firms eventually bring it in-house. |
Making the call
Is in-house SR&ED preparation risky?
The risk is thin documentation, not the model itself. In-house works when the evidence is organized and the narratives are grounded — which is precisely what purpose-built software is for. A poorly documented outsourced claim is just as exposed.
When does outsourcing make more sense?
For a first claim, a very complex one, or when there's genuinely no one in-house to describe the technical work. Bringing in expertise for those cases is a reasonable call.
Can we start outsourced and move in-house?
That's a common path. Many companies outsource the first year or two, learn what a strong claim looks like, then bring it in-house with software once the process is understood and the volume justifies it.
Does SREDlog handle the in-house model?
Yes — that's what it's built for: keeping evidence organized, drafting the narratives and forms, and producing an audit-ready binder, so an in-house team can prepare a defensible claim without a dedicated specialist. It prepares and organizes; your team decides eligibility and files.
Related: Software vs a consultant · SR&ED for CFOs
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