Outsourced Product Development Companies: Is It Right for You?

Scaling a software company is one of the most prominent challenges founders face. Developing a business idea into a usable product for an enthusiastic market takes more time and expertise than founders have alone. Furthermore, hiring can create financial risks that a growing company can’t afford. 

But there is an alternative for your business. You may benefit from working with outsourced product development companies. Research from Commit USA confirms this point, finding that more businesses are outsourcing software product development and predicting a 70% year-over-year increase in software development outsourcing in 2023. 

It may be the competitive edge your company needs.

This blog provides information on how to use outsourced product development services, the benefits of working with outsourced developers, and how to choose the right partner. You’ll also get a glimpse of a real-world success story and the role outsourced development played in the company’s ability to provide optimal user experience (UX). 

Let’s dive in!

What is outsourced product development (OPD)?

Outsourced product development uses external resources to prepare your product for the market. It can include working with an OPD vendor throughout the project, from design and planning to launch and marketing. Or a company can choose OPD for specific project parts such as product ideation, market research, prototyping, UI and UX design, and testing.  

For some companies, outsourcing software product development is the key to launching a product. Not all business leaders are skilled in every discipline necessary to design, develop, and market a solution. OPD gives them a practical way to close gaps, create a sellable product, and build a viable business. 

Outsourced product development services vs. in-house: Who gains more?

When weighing the pros and cons of outsourcing, it’s essential to set aside any preconceived notions. Your vision of the ideal team may comprise in-house resources with diverse skills and talents. However, building that team quickly enough to stay on track with your product roadmap may be difficult. 

On the other hand, outsourced product development can provide you with the expertise you need now. Your outsourced services provider may even offer you the project management services necessary for quality work and team oversight.

Also, remember that outsourcing and house development can be part of your strategy. You can make the most of your in-house resources’ skills while also taking advantage of your outsourced product development company’s expertise.  

Some of the largest enterprises in the software industry, including WhatsApp, Slack, Google, and Microsoft, have outsourced elements of software development. Their success is confirmation that the model can benefit your operations and contribute to excellent product quality. 

Benefits of working with outsourced product development companies

You'll benefit in several ways when you work with an outsourced product development company that provides the services you need. Take a look. 

Cost reduction and savings

When considering product outsourcing costs, remember to look at the big picture. Specialized companies offer a wide range of expertise, usually cheaper than hiring in-house resources. 

Additionally, founders need to consider those workloads will change after a product launch. If you hire all the resources necessary to develop your first version, you may have employees on your payroll that have idle time afterward. Outsourcing may be the more cost-effective, long-term solution. 

According to Deloitte research, cost efficiency is the most common driver of software developers working with outsourced teams. 

Access to specialized expertise 

The software development skills shortage persists. One survey found that nearly 40% of software companies believe they will have trouble finding resources, with DevOps engineers, data analytics developers, and security engineers as the most difficult positions to fill. 

Outsourced product development companies draw from a larger talent pool to find resources with a range of expertise, from mobile and cloud-native development to React, MySQL, and Kubernetes. Your outsourcing partner can also provide you with an experienced project manager or quality assurance team. 

Your in-house team may be small, but with OPD, you can have the advantage of a breadth of expertise, including the latest technologies. 

Accelerated development timelines 

Software business leaders wear many hats. You divide your time between meetings with investors, managing finances, marketing, brand building, and development work. 

Unfortunately, this can slow progress toward your product launch. However, by leveraging OPD, work on the product can progress even when your schedule is filled with other responsibilities. They’ll keep track of the timeline from start to finish. 

Scalability and flexibility

Markets can change quickly, and you need agility to capitalize on new opportunities. When outsourcing product development, you can scale your operation as needed to appropriately time launches and capture market share. 

How to determine if your product should be outsourced

Answer these six questions to help you decide if a partnership with an outsourced product development company is right for your business. 

1. What are your business goals?

Take a long view of your development project, your core business responsibilities, and how outsourcing can help you reach your goals. Evaluate how OPD could help you increase revenues, operate more profitably, enter new markets, or improve customer satisfaction. A skilled offshore team can provide new resources and capabilities to accelerate progress and position your business for sustained success.

2. Do you have the necessary in-house expertise? 

Assess your internal team’s technical expertise and determine if your in-house resources can develop your product without delay. If you identify gaps, consider whether it would be more practical to reach out to outsourced product development companies to find the skills you need versus beginning a search for job candidates with that expertise. By outsourcing the project to a dedicated team, there is an increased focus on building and a greater likelihood of meeting timelines.

3. What is your budget? 

Labor will likely be one of your budget's most considerable expenses. Decreasing those costs can improve the overall health of your business. 

Determine if outsourcing could help you successfully complete the project while keeping finances in line. You don’t want to run out of money halfway through. 

4. What is your timeline?

Count backward from your desired launch date to see how much work your team would need to perform to reach that goal. OPD can provide some breathing room—or accelerate your timeline to launch your product more quickly. 

5. What is the complexity of the product? 

For example, your vision may be to solve a complex problem, like managing a distributed enterprise team collecting and using large volumes of data from various sources. Or your business idea may be the next super app that gives consumers multiple features and enables one-click payments. 

If your product is complex and requires diverse development skills, it’s wise to consider outsourcing to gain the specialized expertise needed to complement in-house resources. 

6. What are the potential risks? 

Whether you are leaning toward in-house development or OPD, you need to consider the potential risks with your project. If you decide to outsource, ensure an experienced project manager can break down communication barriers and oversee a distributed team. Also, put effective quality assurance processes in place and make sure intellectual property and sensitive data are secure. 

While in-house development doesn’t present those challenges to the same degree, it can have its own challenges. For example, an internal team laser-focused on its work sometimes can’t see the forest through the trees. A fresh perspective from an outsourced partner may help you recognize pitfalls or have new ideas that result in product enhancements. 

It’s always a good idea to weigh risks against benefits to help determine the best route for your business. 

How to choose the right outsourced product development company

When you determine that outsourcing is the right choice for your business, the next step is choosing the best partner among outsourced product development companies. Consider these six factors to narrow it down. 

Company culture and values 

Your outsourced product development partner should align with how you do business and the principles you stand for. Your team and your partner’s team should harmonize, not create dissonance. With a collaborative and aligned team, you can achieve great things together.

Technical expertise and experience

To gain a better understanding of a company's capabilities, it is recommended to gather information on their expertise, successful projects, and references from previous clients. This will provide insight into their performance history and proficiency in various areas of work.

Customer research and validation capabilities

When looking for a partner to work with, it's important to seek out someone who has a track record of success and the necessary resources to validate concepts. This will help mitigate any potential risks and limit potential losses, while also laying the groundwork for effective marketing strategies.

Quality of work and portfolio 

To assess the capabilities and output quality of outsourced product development companies, it's important to review their work. Take a look at key development elements such as code quality, security, UI, UX, and the product's performance in the market. This will provide you with a clearer understanding of their abilities.

Communication and project management

Working with team members in different locations—or maybe even worldwide—depends on effective communication and project management. Interview your potential partners about how they handle communications, ensuring developers clearly understand their objectives and can coordinate across multiple time zones. This may be a new way of working for you, but it shouldn’t be for an experienced OPD project manager. 

Availability and responsiveness

When working with an OPD company, it's important to have a formal agreement that outlines the availability of your project manager or other contacts. This will help ensure you can receive timely updates and information throughout the development process, while also avoiding any miscommunications or delays that could negatively affect the success of your project.

How Patent 355 can help

We know firsthand how outsourcing offers value to software companies. We’ve worked with businesses like Yearly, a solution that enables marketing and fundraising leaders to design annual and impact reports. 

Yearly began to offer its platform for free to its community during the COVID-19 pandemic. That led to more traffic; however, it also led to friction for new users. As Yearly improved the tool, they realized they weren’t taking a big-picture view of how those changes impacted the platform and UX. 

They worked with the Patent 355 team, which began with an in-depth product assessment. Our research revealed information on Yearly’s primary users and used that data to create growth experiments. 

Then, we prototyped and tested those options so Yearly could make smart decisions about committing resources. We also provided them with a system to integrate qualitative customer research so they could validate new features before building in the future.

As a result, we’ve given Yearly a way to identify its customers’ business needs and determine what resonates. Our outsourced product development services have also empowered Yearly to spend more time growing its business rather than continually answering questions and addressing support tickets. 

Are you ready to expand your team? 

If you're releasing your initial software version or need assistance with new versions, outsourcing product development services can be advantageous for your business. By utilizing OPD companies, you can reduce expenses, address team deficiencies, apply a practical approach to growth, and speed up time to market. 

Consider these benefits of outsourced product development, and for more information, contact us.

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