Outsourcing Product Development

Outsourcing development activities has become an essential component of any successful business strategy these days. As the global competitive market is gradually changing, product based companies are going against established norms following the trend of outsourcing activities. This article discusses about the logic behind outsourcing product development, elaborates on its benefits and discusses the other aspects to be considered when outsourcing product development. What is Outsourced Product Development? The outsourcing of specific activities or all activities related to the development and maintenance of a product is known as Outsourced Product Development. Outsourcing enables product companies to get access into an untapped product-building expertise and global talent pools available with service providers. This helps in exchange of technology and varied work-process. Why Outsource Product Development? Every decision making panel of an organization stumbles upon a vital question—whether to develop a product in-house or outsource the same to a third-party expertise. The product development market is becoming more competitive and mature. As the competition intensifies, product companies are under immense pressure to periodically release new versions in the market. Being an intensive activity, product development requires a lot of attention. The top management can’t afford to put all the emphasis on one activity, while overlooking the other phases of product development. It will end up affecting the profitability of the company. When to outsource product development? A typical product lifecycle involves the following activities: product development, product reengineering and migration, product maintenance, product implementation, and product testing. A product based company can choose to outsource one or more of these activities or it can outsource the entire string related to a particular product to a service providing firm. The question, however remains as to when outsource an activity. There are several factors to be taken into account before outsourcing product development. It varies with company to company. Sometimes it is even seasonal and based on current marketing trends. Some factor can be summarized like this: Benefits of outsourcing product development OPD has many benefits. A product owner need not worry about the outcome or excess expenditure if the activity is in right hands. Correct and well planned outsourcing saves a product company time, expenditure on systems and manpower, legal hassles. The best part is exchange of domain knowledge between the product company and the OPD, something that ensures better output in the future.