outsourced product development- a great step for startup

Outsourced product development is the process of planning, designing, developing, and maintaining a product with the help of the hired third-party vendor. Let’s break down the term for a better understanding of this business practice.   

Product Development- an Overview  

Product development is an end-to-end process of discovering, strategizing, designing and developing, launching, and maintaining a product. It is a process of embodying an idea in form of a product and taking it from concept to market delivery and beyond.   

Traditionally equated with the ‘building phase’ of the conventional product lifecycle process, the steps involved in product development have transformed over time. Most contemporary product teams follow a more iterative approach based on agile methodologies. The development process gets broken up into various sprints, customer feedback in the form of UAT (User Acceptance Testing) is incorporated early and frequently, work is released in a phased manner, and change requests are welcomed along the way. 

Product development process

Outsourcing – an Overview  

Contracting out tasks, operations handling or any other services to third-party vendors, outsourcing can affect a wide range of jobs, ranging from customer support to manufacturing to the back office. Outsourcing as a practice is usually undertaken as a cost-cutting measure or when a business needs to focus on core activities or aspects, outsourcing the less critical operations to outside organizations.   

According to a Forbes article, 74% of businesses (paywall) are outsourcing IT services, and 87% are expected “to maintain or increase their use of IT outsourcing”. Outsourcing services have taken over the marketplace and this practice is rapidly growing.  

What is Outsourced Product Development?   

Product development and outsourcing are two separate practices that have joined forces to assist businesses to achieve their goals, reducing business costs, and prioritizing crucial aspects along with benefitting from the expertise offered by the third-vendor company.  

Outsourced product development in simple terms is the outsourcing of specific or all activities centering on the development and maintenance of a product. This service enables product companies to draw on the product-building expertise and global talent pools offered by outsourced product development providers. 

What is outsourced product development?

In fact, according to research, the global market size of IT project outsourcing is projected to grow to $937.67 billion by 2027 and at a compound annual growth rate of 7.7% from 2020 to 2027. 

Companies that outsourced product development

While outsourcing product development has extensive benefits for all businesses, regardless of their size, the magnitude and nature of gains might differ for a different type of companies and organizations.  

This blog highlights how outsourcing product development proves to be an effective practice, especially for a startup, that needs initial agility and capability to adapt to the changing markets.  

Success stories of startups outsourcing its product development are all over the internet today.  

Fab, a US-based online e-commerce platform selling unique products and experiences, outsourced its initial product development to a company in India and optimized costs and the company went from scratch to $250 million in sales within just two years.  

Started back in 2013, Careem hired a Development firm Big Oh tech to turn their prototype into an attractive product within eight weeks. 


Start-ups And Outsourced Product Development – A Beneficial Partnership  

New to the competitive, ever-changing marketplace, startups need more delegation with their operations and product development. This allows them to pay attention to more core functions of a business. Furthermore, they could use the tech expertise and skill of a service provider and benefit from their proficiency and industry experience.   

While an in-house team offers more control, outsourced product development models help with keeping overhead low, reap gains from niches different from their own skill sets and allow startups to retain a lean team structure. 

Difference between outsourcing and in-house

Benefits That Startups Achieve Through Product Outsourcing:   

1. Access to domain expertise  

With an outsourced product development company comes multi-disciplinary expertise. Startups can leverage their experience, skilled IT professionals, and in-depth knowledge about the discipline, market trends, rules, compliances, etc.   

From assisting with product discovery and planning to work towards growth marketing for the product, outsourcing product development providers achieve all the milestones keeping your business objectives in mind. You tap into the vast and diverse talent pool, access tools, and streamlined processes of product outsourcing service providers.   

2. Expert advice  

Entering into the market, a startup has a lot on mind. From fundamentals to specific product requirements. Amidst all this, startups could use some solicited, additional pieces of advice, and ideas from industry experts.   

Outsourced product development providers also assist with new perspectives on the product roadmap that could greatly benefit the business. With in-house teams already multitasking, fresh ideas, diverse perceptive of experts, and single-minded focus of OPD providers can help a startup create a product that exceeds initial expectations.   

3. IT process optimization  

From product ideation to successful delivery and beyond, product development is a series of streamlined processes. Every step along the way carries weight and contributes to the successful working of an app.   

Startups are more likely to face a hard time working with newly hired developers and putting them into an untested workflow. Through outsourcing any software development is carried out by a well-coordinated team aware of the existing processes and best practices. Thus, outsourcing product development leads to the optimization of the IT process.   

4. Cost savings  

According to Deloitte Global Outsourcing Survey published in 2020, 70% of companies surveyed cited cost reduction as a major driver of motivation for outsourcing.   

Local software developers hired by large, already-developed companies would not hurt their pockets so much. On the other hand, a startup that has capital constraints has to allocate a budget in a way that marketing, operation, and other purposes, all are given the required weightage.   

Outsourcing product development proves to be a cost-efficient alternative to internally building an app while limiting financial expenditures to the allocated budget. Product outsourcing helps businesses save fixed salaries as well as other benefits provided to the in-house teams. Furthermore, variable costs incurred on the workspace, hardware, and software licenses are saved by outsourcing product development.  

5. Faster time to market   

Startups can develop, run tests, launch, and scale a product in a much faster way with the help of outsourcing product development. Time spent on hiring an in-house team, and evaluating its skills, is saved through outsourcing product development. Furthermore, you don’t have to worry about developer turnover during the product development process and the financial costs associated with it.  

Outsource Product Development

Points to Consider While Choosing an Outsourced Product Development Partner:

1. Tech as well as a product partner   

As the first and foremost step into product development, a business needs to establish its product mission and vision. Communicating the same to the third-party vendor is equally important. Furthermore, outsourcing product development providers should not only be tech proficient but also should have an effective product strategy and SPIN in sales.   

Contemplating the ‘whys’ and ‘how’ of product development? Big Oh is there to help you make an informed decision. With our IT and Technical consulting services, we are a one-stop destination for application development and product-related queries.    

2. Industry Experience and domain expertise    

Ascertain the percentage of completed projects followed by successful client journeys undertaken, case studies, and similar industry work.    

An outsourced product development company should have in-depth knowledge of the industry. This would enable them to give you optimal results and deliver maximum value. Along with domain expertise, interact and evaluate the team who is going to develop your product for you, their certifications, credentials, etc.   

Mobile app development companies with years of experience and expertise can be quick in comprehending business challenges. They act on it by developing relevant technical solutions, be it design, structure, or data security.    

3. Reviews and references    

Reviews and references of their existing and previous clients as well as recent client success stories provide a clearer picture of the effectiveness of the outsourcing product development services company.  

Read through reviews, feedback, testimonials, and view ratings to choose responsibly. You can also prioritize referrals from your network. Known people may have worked or still are working with some companies and so can recommend the best one for your needs.  

Clutch, LinkedIn, CIO Review, Ambition Box, Glassdoor, Google Review, and Quora are some of the websites that can be visited to read through the reviews and ratings of mobile app development companies.    

4. Understand product development companies’ workflows/processes    

It is important to know and understand the workflow or processes of the product development company you hoping to collaborate with. Along with great UI/UX designs and development methodologies, outsourced product development companies must follow some of the latest manual and automation QA and testing measures.  

Businesses should ensure that the outsourced product development provider uses SonarQube, a software that runs continuous inspection of code quality and detects bugs. Furthermore, check if the product outsourcing service provider follows DevOps practices such as Continuous Integration/Continuous Development (CI/CD) to improve code quality and code review process, all along the development process.   

Furthermore, take details from the third-party vendor about agile processes, sprint durations, and ceremonies. This would help you get a better idea about workflows and timelines.    

5. Data security provisions and compliance    

Right from the security of the app idea to data safety, a startup should ensure to choose a product development company that has a bullet-proof data security and confidentiality system. Check for data security certifications, breach prevention measures, and strong data protection policies on site.    

The right vendor should have a legal framework to safeguard your ideas and thereafter documents them in a non-disclosure agreement (NDA).    

6. Innovation capabilities    

Understand the tech companies’ potential to make products compatible with modern technologies, and languages. Check how proficient the potential vendor is with using and incorporating emerging technologies like AI/ML, Blockchain, WhatsApp bots and chatbots, AR/VR, IoT, etc.    

7. After development services    

Choose an outsourced product development company that provides constant maintenance and support services. Furthermore, choose a tech company that also assists with short notice and emergency support requests.    

Outsourcing product development is beneficial for startups in ways more than one. They draw on already established tech companies’ experience, expertise, talented pool of human resources, latest tools, and structured processes.   

While startups focus and develop their niche in the marketplace, outsourcing product development companies like Big Oh Tech take care of their IT needs. From consultation to product discovery, planning, and development to round-the-clock support services, Big Oh Tech supports businesses to develop reliable, scalable products.   

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Q1. What are the real reasons to use outsourced product development?  

Outsourced product development services could be availed for when businesses want to save the time and costs of hiring and maintaining an in-house team or focus on core functions of the business and contract out the less crucial aspects/tasks.  

Q2. Which is the best-outsourced product development company?  

The best-outsourced product development company is the one with significant experience and expertise, skilled human resources, good reviews, and high ratings, data security and compliance, capability to innovate, and after-development services.   

Q3. Why outsourced product development is a good step for startups?  

Outsourcing product development is beneficial for startups because they save the costs of hiring a complete in-house team. Further, they leverage the expertise and proficiency of the tech company for their product. 

Q4. What are some examples of successful startups that have outsourced their product development? 

Some startups that have successfully outsourced product development and gained from it are Carwale,  that availed for product design outsourcing, Careem benefited from product discovery outsourcing, Dollar Shave Club outsourced its Android app development and benefited from the service.

Q5. How do you decide whether to use outsourcing or staff augmentation model for your product

The Staff Augmentation model should be used when you want control over the process, technology, and deliverables but require assistance of an external team member or team to successfully complete the project. 
Product outsourcing, on the other hand, is appropriate for clients who want to focus on core competencies but lack technical expertise and are uneasy managing technical team deliverables. 

Q6. Is outsourcing an expensive operation for my company?

Outsourcing may or may not be an expensive operation depending upon expertise of your internal team. Outsourcing will work wonders if you or your team lack technical expertise because you are taking professional advice, consulting, and years of experience and avoiding expensive business mistakes. 
In essence, you scale quickly at the expense of other people’s learnings in order to save the cost of your failures. 

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June 2, 2023



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