Why IT Outsourced Product Development is Vital for Startups?

Weighing your options is never easy especially when you are willing to hire a software development company; here just flipping a coin to choose a relevant outsourcing partner won’t be a good idea. You have to be extra careful. Outsourced product development is a concept people especially non-techies often get fired up about. However, some of you guys love it while others loathe it. All this majorly depends on what do you understand by the word product development outsourcing. The following post unveils what is outsourcing and how it is important as well as relevant as per today’s scenario. 

1. What is IT Outsourcing?

Outsourcing or offshoring is a practice of using third party provider to handle work normally performed within an organization and is a familiar concept to many entrepreneurs. Fortunately, today you may come across several IT outsourcing consulting services ranging from custom software development solutions to dedicated development services, etc. These outsourcing companies feature a huge pool of talented resources, a faster turnaround time for software deliveries, and ensure to place extra focus on core competencies.  

Even today after COVID’s massive hit there are people who still argue against it until they’re blue in the face, outsourcing is incredibly important for virtually every business today. Of course, cost savings is the main benefit but that’s certainly not all, not the only reason to do it. Further, I would like to mention how outsourcing can provide long-term benefits. 

2. How is IT Outsourcing Beneficial? Why Outsourcing is Important For Startup Product Development?

What all can be outsourced, you may ask? Well, any business requirements which can be handled by an external offshore location vendor can be outsourced. Earlier, if someone asked about marketing then it was all about product development, product management and manpower management. Today, it’s not the same! With the rise of technology, eCommerce development business processes have become less cumbersome and easy to handle.

On and all, outsourcing has made life a way easier for businesses as now they can focus on the core activities of the business. Getting your business website done is one process that can be easily outsourced.  Now let’s put more light on the points below on the need for outsourcing and its importance. 

2.1 Cost Saving

Cost-cutting has and always will be a major concern for businesses irrespective of their size but that’s not the only reason here. Businesses often tend to outsource to realize cost savings or better cost control over the outsourced function. 

Technically speaking, through IT outsourcing, you can convert fixed costs into variable costs releases capital for investment elsewhere in your business, and allows to avoid large expenditures in the early stages of your business. 

The most crucial advantage here for your product development is everything is done at an extremely low cost. Now there is a major difference between wage patterns of different countries especially the developed and the developing countries. I am talking about countries like Vietnam, the Philippines, India. 

What happens is with developed countries like the US and UK, the skilled and proficient labour available in these countries is very expensive according to the minimum wage policies available with them. This also means processes like marketing, sales, web development etc they started outsourcing to the developing countries like India where they could find good quality skilled labour with very fewer wages which tend to save on their capitals and make them invest in core activities.

2.2 Dimension of Scalability

Do you think project requirements do vary while your development process is progressing? Of course, yes! And that’s the reason why startups tend to keep factors like scalability and flexibility into account while choosing an IT outsourcing partner. Also, when working with an in-house product development team, one may not be able to change the size of the team as and when required.  You can always change your outsourced team size according to their  technical expertise and project’s scope.

Now there are times when you don’t have enough work for the entire team and still you have to pay them as a whole. Whereas other times, you might need a large pool of resources on an immediate basis. Additionally, there come occasions when a key member of your existing opts to quit the company with short notice. There remain the concerns of accidents, health issues, etc. as well, of the team members.

With outsourcing for your product development, you don’t have to worry about all such issues. You have the complete freedom to reduce your team size, increase it, or keep it constant. Needless is to say that it’s a major benefit that every start-up thrives for.

2.3 Competitive and Efficient

Technology is changing in a rapid space, agree? And since outsourcing is already cost-effective, scalable and flexible now it’s time to uncover the third advantage. Outsourcing with the right set of tools and technologies could make you go competitive and efficient. This will also enable you to market more quickly and stay competitive in your industry.

Outsourcing helps you develop high-quality and efficient products faster. With outsourced IT, your business can focus on truly important projects and meaningful business strategies that give you a competitive edge.

2.4 Can Reach The Most Promising Techies

Like I said before, with IT outsourcing your product development you can move across geolocation boundaries without much hassle. Earlier, it was just near spaces and now you have an entire world to choose from at your service. Each time you think of developing software, your options are just endless. 

Now no two projects can be the same then how could your service provider be the same. Hence, the team and the technology used to develop your product must also be specific to your business idea. Your primary criteria for selecting a product development team must be their professionalism and technical knowledge. There are several countries like India, China, the Philippines, and many others which are renowned as the best technology innovators  in the IT industry.

2.5 More Time for Important Tasks

I have come across several business owners who tend to complain that due to excess workload they are unable to focus on their core business aspects. The outsourcing development process can also be beneficial in saving an adequate amount of time, especially so that you can accomplish all the high-priority tasks. When you have a team hired for your product development, it is evident that you will have more time for other important activities, which would make your development process easier. 

Since you have a team of experts hired to look after your important tasks, it is easy to save up time to complete other important tasks. Since they are doing your work, you can invest your valuable time in completing other activities for a growing and profitable business. In simple words, you have more time to focus on activities that grow your business.

So now you know why the software outsourcing sector is booming worldwide. 

3. Key Steps to Effectively Outsource Product Development

If you are willing to order a cake then you may think of ordering it as an answer. In simple words, outsourcing! The concept is so right that you can never go wrong but by addressing these below-mentioned tips and tricks your business will definitely stand out from the rest. 

Now product outsourcing does require a different approach than any normal circumstances. I read this somewhere – custom software development is more like writing a drug prescription. Whatever’s good for somebody’s heartburn, may provide no cure for your snuffles. Similarly, this happens in business as well as they do vary in regards to size, product offerings, industry specifics and across a range of other criteria, etc. 

Down below I would like to elaborate the segment by mentioning certain crucial tips to keep in mind while outsourcing product development. 

3.1 Control is Crucial

I have come across many businesses owners who feel that somehow they seem to be losing control over outsourced projects. This natural reaction is usually without merit because managers often have more control over outsourced resources than internal ones. Product-development firms are usually bound by cost and budget, which highly motivates them to accomplish the work. That’s not always the case with internal personnel.

After all your product is your baby. And as parents, we strive hard to protect our babies. You need to guide the project; push it forward, and always stay in the loop. This definitely doesn’t mean you have to do everything yourself, but you need to remain in control of each step.

3.2 Creating a Budget For Both The Expected and Unexpected

According to several stats, information technology outsourcing hit $62 billion in 2018 (business process outsourcing, or BPO, reached almost $24 billion). Businesses when mapping out monthly, quarterly and annual budgets companies need to take into account their present staff augmentation needs, while factoring in how augmentation can help reduce their overall personnel budgets, if and when properly implemented. But they’ll also need to budget for the unexpected, such as unforeseen employee turnover, or a new contract that requires more skilled labour than is currently on staff.

3.3 Keep Realistic Expectations

Product development is a pretty complicated and daunting task. As a smart individual, you must tend to be realistic. For example, Many NPD activities cannot be directly controlled (supplier delivery times, for example), so don’t expect an outsourced service to control them any better than you can.

3.4 Outsourcing Shouldn’t be an Afterthought

Outsourcing opportunities often arise when a company is in crisis but lacks the internal resources or expertise to develop a product or solve a problem. Therefore, the outsourcing effort is usually unbudgeted. Entering into an outsourcing partnership while under pressure is not ideal.

3.5 Don’t Put All Your Eggs in One Basket

Putting your project in the hands of one engineering firm or one freelance engineer increases your risk in other ways too. 

Your freelancer may not complete your project, and they may take all the valuable details of your project with them. Freelancers come and go on a continual basis. Many engineers only do freelance work between full-time jobs, so if your freelancer gets a new job you may lose them.

4. Conclusion

So that’s all for now! I hope now you understand what outsourcing is and how it can assist your space into a profit-spinning venture. 

Itesh Sharma

Itesh Sharma is core member of Sales Department at TatvaSoft. He has got more than 6 years of experience in handling the task related to Customer Management and Project Management. Apart from his profession he also has keen interest in sharing the insight on different methodologies of software development.


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    1. Pratibha Singh

      As we know startups have very limited financial resources. So Cost saving is very essential for startups. This article Clearly explains if we need the success of our product then it must be more efficient and have more features as compared to existing products. Outsourcing is the only way which can enable us to compete with existing products in a cost efficient way.