Outsource Product Development – An Overview

Outsourcing nowadays has become a trend for companies. Successful companies outsource specific project activities or entire project development to an agency or third-party outsourcing partner.   

Statista says, “Nearly 60% of tech companies outsource their product development projects to an outsourced development partner”. Here is a take on what KPMG says about outsourcing – 85% of the software development projects go beyond their schedule.   

This blog offers a detailed overview of outsourced product development and why companies are searching for outsourced product development partners.   

Overview of Product development   

Product development means transforming a product idea into a live product. Product development encompasses the entire product journey. Companies identify the market gaps by conducting market research and invest their hard-earned money in developing new products.   

When we are talking about product development, it comprises of 2 things –  

  • Developing a new product from scratch or   
  • Upgrading existing features/ adding new features to the product   

Consider the example of the company Einstein Box. Einstein box conducted market research and found a gap in the market. They figured out that toddlers could not find the right toys for themselves. The company developed an innovative idea of launching customized products for kids as per their age group.    

To sum up, Product development covers everything from managing products to its marketing. Product development covers-  

  • Brainstorming product ideas   
  • Doing the market research   
  • Developing a product   
  • Launching the product to the market   

What is outsourcing?  

Outsourcing means organizations outsource their services to an outsourcing partner either on a contract or on an ongoing basis. Organizations adopt outsourcing models to take advantage of top-notch experts, improve the efficiency and productivity of the business, get continuous tech support or take help from them in entire product development.  

If you have loads of work but need to focus on all the business areas, it’s the right time to outsource the work to somebody else who might be the perfect match for your business requirements.   

Let’s take an example of google –  


Google has both in-house employees and remote employees. Google believe that outsourcing is the best practice to stay ahead of your competitors. Google outsources various business activities ranging from IT development to getting e-mail support for AdWords.  

 Google itself believes that outsourcing is the best model to get exceptional results.   

Let’s consider another instance of Wise.   


Wise, as you already know, is an international payment service that makes it easier for customers to send payments abroad at an affordable price. Wise outsourced a bunch of product designers to increase its business growth.  

Outsourcing for Wise is about more than just hiring someone who falls within their budget. It is about finding the right employees who can deliver top-notch service.  

When successful brands think of outsourcing their work to an outsourcing partner, why can’t you feel about it?    

What is Outsourced product development?  

What outsourced product development

 Outsourced product development means hiring an external vendor or an outsourced partner for software development tasks to handle the entire project of a company. Businesses collaborate with an outsourced product development partner to develop, maintain, and upgrade the products.   

 Outsourced product development is a good initiative to start when businesses have a product idea and want to convert it into a live app. Outsourcing product development helps you to create a competitive edge in the market.   

You lose business opportunities if you fail to launch a product at the right time in the market.  

For example – The CEO and founder of Mailburn (Daniel Pavlyuchkov) says, “Outsourcing product development is the best way to get involved with the remote employees for IOS development, and he was happy as he got remarkable results by outsourcing the team of developers.   

Why do you need outsourced product development?  

There are various reasons why businesses need outsourced product development. Here are some of the reasons mentioned below –  

  • The Inhouse team does not have the requisite skills or competencies to perform a specific task  
  • When an organization is running out of time to complete the project and in the verge of meeting deadlines   
  • When you don’t have the technical expertise to develop a product, and you feel that development is not a cup of tea  
  • You are searching for creative talent who can infuse new ideas into your project   
  • When you can’t hire an employee because they demand more than your expected budget   

Process of outsourced product development   

Here is the 5-step guide to outsourced product development –  

5 steps to outsource product development

1. Define goals   

The first step in outsourced product development is to be specific about your requirements. You must be clear about what you are looking for. Some organizations are searching for personnel who have expertise in building an app. On the contrary, other organizations are looking for someone who is proficient in upgrading an existing app.   

2. Time to select the right outsourcing partner   

As you already know, you can find many outsourced product development partners. Selecting the relevant one that matches your requirements should be taken care of. When hunting for outsourced product development agencies/startups, you can check out their previous work or ask them to show their testimonials.  

3. Choose the right outsourcing model.   

 It’s high time for you to choose the right outsourcing model. You need to maintain a tradeoff between risk and reward. There are 3 kinds of product development outsourcing models –  

Fixed-cost outsourcing model   

The Fixed cost outsourcing model has a defined scope of work and requirements. These models are a perfect fit for long-term collaboration. This model has a fixed cost regardless of

Fixed cost outstanding model

Hiring an outsourced product development team is more cost-effective than hiring an in-house development team. When collaborating with an outsourced product partner, you need not worry about paying a fixed salary to the full-time developer.   

According to the survey conducted by Deloitte in 2020, experienced full-time employees demand higher salaries compared to product outsourcing.   

Designing the prototype and development of product costs hundreds and thousands of dollars. So, outsourcing product development services is a lucrative option for you  

1. A speedy way to market the product   

If the organization wants to launch the product within a short period, then product outsourcing is the profitable option. Under product outsourcing, you only pay for the services you need. The product could be made available to the customer in a faster turnaround time (TAT).    

2. Comparatively faster than the traditional approach   

The product outsourcing approach is 10x faster than relying on in house development team. It can take a couple of months for in-house experts to develop the product. Then, the ideal solution would be to hire a product outsourcing company that can save your hours by setting up a prototype of a product within 2-4 weeks  

3. Provides easier scalability   

flexibility in work

Product outsourcing allows organizations to scale up or down the team members as per the project requirements. Scaling up or down the outsourced professionals without compromising quality is easy.   

Wrapping up   

If you will ask us, “which is the best product outsourcing model,” then there is no specific answer to this. Whether you need to hire an in-house developer or think of product outsourcing, it differs from business to business. Every model has its pros and cons.   

Need help in growing your business by 3x? Talk to our experts now to discuss product outsourcing requirements.   


Q1. What are the benefits of product development outsourcing?  

Here are the benefits you can get by hiring product development outsourcing –  
Cost-effective solution   
It is better to outsource product development partners because you pay for those services you need. You can save precious dollars on finalizing payroll and managing other infrastructure expenses. Businesses can also hire outsourced product partners from different countries at different rates.   
Provides quick delivery   
Outsourced product development team delivers projects quickly. The time required for developing projects entirely depends on the size and complexity of the project. Outsourced product developers can save you time by delivering regular projects.   
Access to top-notch experts   
Product outsourcing allows you to access highly experienced product developers with years of experience managing multiple projects.

Q2. How to select the right partner for outsourced product development?  

Before deciding to hire an outsourced product development team, these are the factors you need to take care of –  
Check out the caliber of your team   
Define business objectives  
Check whether the outsourced product development team can deliver a scalable product   
Assess the performance of the project   
Ask them whether the outsourcing product partner provides continuous support and maintenance   

Q3. What should every startup know about outsourcing product development?  

Here are the 6 things that every startup should know before hiring an outsourced product development team –  
* Conduct thorough research to find the perfect outsourced partner for the project   
* Ensure the outsourced product development team does not compromise with the technology standards.   
* Choose to work with a product outsourcing partner who can do regular communication.   
* Consider intellectual property rights. You don’t expect pirated software from the outsourced product development team. It’s better to sign a non-disclosure agreement (NDA)    
* Whether the outsourced product development team has the available tech or not   
* Don’t go with a cheaper partner. Assess the quality of deliverables before choosing an outsourced product development team   

Q4. Which successful software development companies start with outsourcing product development?  

1. Zomato  
2. Urban sitter   
3. Google   
4. Alibaba   
5. Skype 
6. GitHub 
7. Careem: In fact, Big oh helped them a lot in their successful journey of becoming unicorn 

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