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Outsourced Product Development: Empowering Your Business

Paul Kovalenko Paul Kovalenko | May 13, 2024 | 9 min

Outsourced product development is a savvy strategy for businesses aiming to quickly and cost-effectively bring new products to market. According to Deloitte, at least 45% of organizations already adopt this approach for their development projects, demonstrating its substantial presence in today’s software industry.

This article will closely examine the outsourced product development strategy to help you maintain a competitive edge. We’ll highlight its primary advantages and provide practical tips on leveraging this approach to stay ahead. Keep reading.

What Is Outsourced Product Development?

Outsourced product development (OPD) means leveraging external partners’ skills, technology, and resources to design and deliver software products instead of handling them internally. The demand for these services will hit $124.10bn by 2029.

When You Need To Outsource Product Development

Outsourcing software product development is ideal in the following scenarios.

Lack of Technical Experts

Your internal team might lack the necessary skills to handle all phases of the software development process. While they could manage certain stages, they might require external assistance to navigate further. Engaging with proficient professionals through outsourcing grants you access to invaluable expertise and insight your team may lack.

Internal HR Problems

Internal HR issues can also prompt outsourcing product development. Collaborating with an outsourcing provider can bridge the skills gap from ongoing talent scarcity. It provides specialists ready to work without the headache of hiring and training new employees.

Leverage Offshore Developers

Outsourcing is ideal when seeking to capitalize on offshore or nearshore software development. It allows you to work with teams operating across time zones, facilitating continuous development. These offshore developers also introduce fresh perspectives and ideas, fostering innovation and enhancing competitiveness.

Focus on Key Competencies

Consider outsourced software product development services to focus on your core strengths and leave technical details to experts. This will free up resources needed in core business areas, enabling you to invest in services that deliver value to customers.

Meet Tight Deadlines

Outsourced software product development is perfect for projects with tight deadlines. External teams are often more flexible, scaling up or down as needed to meet project goals. This flexibility suits projects with variable workloads or unpredictable timelines.

Benefits of Outsourcing Product Development

Outsourcing product development offers a range of advantages, making it a savvy move for companies. Let’s look at some of them.

Global Talent Access

Talent acquisition is a major problem for about 50% of U.S. companies, so it’s no wonder why outsourced product development is attractive to these companies. In addition to connecting firms with talent worldwide, OPD brings fresh perspectives and expertise to their projects. It fosters innovation and product quality beyond what an in-house team could achieve.

Enhanced Scalability

According to Deloitte, over 50% of executives have onboarded more workers in recent years. But it hasn’t been easy. Finding and keeping talent is a major challenge, resulting in a problematic skills gap. Leveraging the outsourcing approach is a game-changer. It enables companies to swiftly scale their development teams to match project requirements and size.

Faster Time to Market

Outsourcing product development can fast-track product development, slashing time to market. While external developers work on the software across different time zones, the in-house team can focus on other vital tasks like gathering requirements and analysis. This streamlined approach means quicker releases and staying ahead of the competition.

Better Price and Quality Ratio

Outsourced product development services offer a sweet spot: better price and quality. It delivers the potential for cost savings without skimping on quality, saving big. There are no overhead expenses, freeing up funds for other business needs and boosting the bottom line. According to 57% of executives, this benefit is a key driver for outsourcing.

Superior Product Quality

When you outsource software product development, you tap into expertise that can elevate your product quality. These remote developers are usually seasoned pros who will ensure your products meet top standards and deliver outstanding value to your customers. That means happier customers who keep returning, boosting your profits and overall success.

Disadvantages of Outsourcing Product Development

It’s crucial to weigh the downsides before starting outsourced product development. Here are the key ones.

Communication Challenges

Communication is one of the biggest challenges for software development across geographies. Time zone variations, linguistic obstacles, and cultural variances can cause misunderstandings, affecting project expectations. This can throw off your timeline and leave both parties dissatisfied.

Data Security Concerns

Data security is also an issue when outsourcing IT projects. Sharing sensitive information with an outside team can lead to data breaches and intellectual property theft. Without tight security measures, you risk the confidentiality of your proprietary data.

Pricing Problems

One big issue with outsourcing product development is that the pricing can sometimes be questionable. You might get a tempting quote upfront but then face surprise fees later. This lack of transparency makes budgeting tough and can result in unexpected costs popping up.

Poor Commitment

Your external developers could be juggling multiple projects at once, which might impact their dedication and commitment to delivering quality work promptly on your project. This divided attention can result in mediocre results, potentially damaging your company’s reputation.

Some Loss of Control

Outsourcing product development could mean some loss of control. There’s less oversight and hands-on involvement compared to an in-house team, making it harder to fix issues promptly. This can cause delays and dissatisfaction with the result.

Outsource to Langate for trouble-free product development.
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Product Development Outsourcing Models

There are three different approaches to outsourcing product development. Let’s discuss each one.

Dedicated Development Team Model

This model is all about flexibility. You get a team dedicated to your project only. You’re in charge of the project, controlling who’s on the team and where the project’s headed.

Benefits

  • Flexibility. You can handpick experts for your project, perfect for those tricky tasks.
  • Cost Efficiency. It’s often cheaper than hiring full-time staff since you only pay for the work.
  • Continuity. You maintain a steady workflow without the hassle of frequent training.

Time and Materials Model

Here, you pay based on hours worked and materials used. This method is great for projects with changing needs because you can adjust resources as you go.

Benefits

  • Adaptability. You can scale up or down as the project evolves, ensuring agility.
  • Cost Control. You only pay for actual work and materials, so there are no surprises.
  • Expertise Access. You tap into a diverse talent pool for specialized skills you might not have in-house.

Fixed Price Model

This one is pretty much straightforward. You agree on a price for the whole project. It works best for projects with clear goals and timelines.

Benefits

  • Predictability. You know the project’s total cost, making budgeting easier.
  • Control. You dictate the timeline and deliverables, ensuring they match your needs.
  • Risk Mitigation. Since the price is fixed, you’re protected from unexpected costs or delays.
Unsure of the model to choose? Our experts can help.
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Process of Outsourced Product Development

Let’s discuss some tips for outsourcing product development successfully.

Define Your Goals

Start by clearly defining your goals for product development outsourcing. What do you want to achieve? What’s the purpose of the product? Who is it for? What features do you need? Answering these questions will create a clear picture of your requirements.

Choose the Right Partner

Pick a reliable outsourcing partner. There are hundreds of outsourced product development companies, so looking for expertise, industry knowledge, and a good track record is vital. Also, look for language and cultural compatibility. 

Set Up Collaboration Rules

Next, lay down the ground rules. Define who does what, when, and how. Ensure everyone’s on the same page about timelines, deliverables, and more.

Nail Down Communication

Decide how you’ll keep in touch. Choose between email, video calls, project management tools, or various channels. Set expectations for response times and who to contact for what.

Seal the Deal

Lastly, formalize the partnership. Sign contracts and NDAs and sort out payment terms. Ensure everything’s clear about intellectual property and what happens if things don’t go as planned.

Typical Mistakes in Outsourced Product Development

Certain mistakes should be avoided when choosing the outsourced software product approach. Here’s what to know.

Unclear Project Scope

One major blunder companies commit is not clearly defining the project scope from the outset. This oversight can result in significant misunderstandings as the project progresses.

Misjudging Costs

Underestimating project costs is another frequent error in software product development outsourcing. Setting a realistic budget and considering all expenses, including potential additional costs during development, is crucial.

Poor Communication

Many companies neglect to establish clear communication methods and channels from the start. Setting up regular check-ins and defining channels for updates and feedback is essential for a smooth partnership.

Insufficient Vendor Research

Picking an outsourced product development provider without thorough research is a typical slip-up in product development. Going for a vendor without digging into their background, reputation, and experience can spell trouble later on.

Lack of Legal Safeguards

Another common mistake people make with this approach is failing to fully cover the legal aspects of the project—contracts and intellectual property rights—which can jeopardize project ownership. It’s important to clarify ownership and confidentiality agreements upfront.

Partnering with us at Langate can help you avoid these mistakes.
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Tips for Choosing the Right Outsourced Product Development Company

Ready to outsource product development? Here’s what’s important when choosing a vendor.

Outline Your Requirements Clearly

Start by clearly outlining your project requirements. This will help avoid misunderstandings and ensure everyone is on the same page.

Review Case Studies and Portfolio

Look at their portfolio and case studies to gauge if they’re a good match for your project. While exploring new companies is fine, application development demands expertise that comes with experience.

Assess Their Tech Stack

Ensure their technology stack aligns with your project requirements and standards to prevent compatibility issues.

Consider Geographical, Cultural, and Language Compatibility

Consider factors like time zone differences, cultural compatibility, and language proficiency. These factors are necessary to facilitate smooth collaboration.

Evaluate Communication Channels

Assess their communication methods and tools to ensure they work for you in terms of timely information and feedback exchange throughout the project.

Discuss Preferred Methodology

Discuss their development methodology (e.g., Agile, Waterfall). Be sure that it aligns with your project management approach for seamless cooperation.

Address Data Security

Prioritize data security by discussing their protocols, compliance standards, and measures to safeguard sensitive information.

Obtain Project Cost and Estimate

Obtain detailed cost breakdowns and estimates upfront to prevent budget overruns. Also, discuss financial transparency throughout the project lifecycle.

Why not leverage the expertise that comes with years of experience?
Partner with Langate for stress-free product development.

How Langate Can Help with Outsourced Product Development

Looking to bring your product to life? Langate has you covered! Whether you’re a startup with a revolutionary idea or an established company looking to innovate, the Langate team can turn your ideas into reality. With over 20 years in the industry, we guarantee top-tier software development services, guiding you from planning to launch and beyond.

In addition to our technical expertise, we provide strategic advice to guarantee that your product satisfies the highest requirements and succeeds.

Conclusion

Working with an outsourcing product development company can revolutionize your business. It takes the tech load off your plate. This gives you the freedom to run your business. Hopefully, this article can help you make the most of this approach. Now, you can leverage product development outsourcing to drive your business to new heights.

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