Outsourced Product Development: The Secret to Startup Success

Many thriving startups owe their success to outsourced product development, but few advertise it.

Outsourcing gives you a fast, cost-effective way to get your software product to market.

How? Well, consider the time and effort that goes into hiring an internal product development team.

First, you must identify the type of knowledge and skills you need. Then you have to seek individuals with those skills, go through several rounds of interviews, onboard each hire, and get them up to speed on your goals for the product.

The process can take months before you’re ready to begin product development, much less go to market.

Outsourced product development companies save you all that time and expense.

When you outsource, you get a cohesive team that can start developing your product almost immediately.

And while they get to work on your product, you can focus on building your business.

There are many myths and misinformation about outsourced product development. In this article, we will look at what outsourcing is and how you, too, can make it the secret to your startup’s success.

What Is Outsourced Product Development?

Outsourced product development involves engaging an external vendor to take on some or all of the work involved in creating or updating a software application. Although it includes software development, it also encompasses the rest of the product lifecycle—market analysis, product distribution, and so on.

Product development requires a different mindset than software development alone. 

Software development teams focus on writing code to solve an identified problem. Product goals and requirements are well defined, freeing software engineers to build applications that address them. Estimating, architecting, coding, and delivering the code is more predictable, making more task-level planning possible.  

For product development teams, the path is less certain. Early product versions may be changed, scrapped entirely, or evolve as the stakeholder understanding of the product changes.

These teams must consider engineering trade-offs and evolutionary architectural approaches that enable solving problems whose definitions aren’t yet clear. Product development requires shaping and re-shaping work as it evolves. 

Outsourced Product Development Benefits

Outsourcing your product development gives your startup several advantages, such as organizational agility, technical and domain expertise, process optimization, and cost reduction.

Organizational Agility

One of the most significant benefits of outsourced product development is that it allows businesses to adapt quickly to market changes.

The ability to pivot rapidly is critical for startups, which are particularly vulnerable to their users’ changing needs and desires.

Take artificial intelligence, for example. A year ago, AI was still considered the stuff of science fiction. Then, AI art generators like DALL-E, Midjourney, and Stable Diffusion exploded onto the scene, followed a few months later by the debut of AI text generators like chatGPT. Now everyone seems to want to add AI to their product.

If a new technology impacts your app mid-development, you may need to pivot fast to stay competitive.

While the need for this kind of agility might seem to require an in-house team, it’s actually a benefit of outsourcing.

If you need to add an AI programming expert to your in-house team, for example, it could mean weeks of interviewing, hiring, and onboarding new talent.

An outsourced company may already have someone with AI experience on staff. With minimal (if any) delay, the vendor can add them to the team.

No matter what role you need to fill quickly or in which direction you need to pivot, an outsourced product development team will give your more agility than an in-house team.

Technical and Domain Expertise

At the outset of the product lifecycle, many startups “don’t know what they don’t know” – including what kind of expertise they need on their development team.

Building a high-quality app takes more than a software professional or two. Depending on the type of project, you will likely need one or more UI/UX designers, front-end developers, back-end developers, database engineers, project managers, and QA engineers.

Furthermore, each role needs a skill set targeted to your product. For example, some backend developers are proficient in Rust and Java, while others use Python and Go. You need to fit the developer to the best technology for your product.

Here again, outsourcing gives you an advantage. A custom product development company gives you the breathing room to determine the best tech stack for your product, then add the product engineers with the right skill sets from their talent pool.

It also gives you access to talent that may be scarce or expensive in your area. According to the Deloitte Global Outsourcing Survey 2022, half‍ of the surveyed executives identified talent acquisition as a top internal challenge in meeting their organization’s strategic priorities.

In particular, they have difficulty finding experts in cybersecurity, AI/Machine Learning (ML), and data science.

Process Optimization

Product development is a process that starts with ideation and goes through several stages before product release. These stages may include:

  • Market Analysis
  • Business Model Design
  • Feature Set Design and Estimation
  • Product Discovery and Design
  • Development Team Recommendation
  • Tech Stack Analysis
  • UI/UX Design
  • Product Architecture Development
  • Prototyping
  • Minimum Viable Product Development
  • Software Development
  • Quality Assurance and Testing

Each stage breaks down further into focused subprocesses. Most custom product development companies also include post-release support and maintenance.

If you’re launching your first startup and trying to hire an in-house team, your newly-hired developers may struggle with an untested workflow. An outsourced provider can deliver an experienced team with established processes and best practices.

Their development process is optimized already, so there are fewer hiccups with your project.

Cost Reduction

Startups have limited funding, and hiring in-house product developers can quickly eat up 50 to 70 percent of your budget.

As a result, you could find yourself short of funds for the other crucial parts of your business, such as marketing and sales.

Outsourcing allows you to operate your business with a smaller in-house team, so salary and benefits consume less funding.

It also saves you money on office space, hardware, training, and software licensing. When you hire an internal team, you’re on the hook for these expenses. Not so for outsourced vendors.

Who Owns the Product?

No matter how much of the product development effort you outsource, you own the product at the end of the process. There are usually no licensing or residual fees. The product belongs to you.

Depending on your contract with the vendor, you may even be able to white-label and resell the final product. You may establish a maintenance and support agreement with the vendor, but that’s separate from product ownership.

Even if you plan to do support and maintenance internally at some point, it’s usually a better idea to engage the team that built the product for short-term support immediately after the release.

Is Outsourced Product Development Right for You?

Outsourcing is a cost-effective way to quickly build an experienced, cohesive product development team.

Outsourced product development allows your startup to take a high-quality product to market fast, while leaving you the time and funding for other critical business functions.

If you need help getting your startup launched, talk to Taazaa. We offer a full range of product development and engineering services. Our high-performing teams bring fresh thinking and vast industry experience to your digital product’s design, engineering, and development.

Contact Taazaa now to get started.

David Borcherding

David is a Senior Content Writer at Taazaa. He has 15+ years of B2B software marketing experience, and is an ardent champion of quality content. He enjoys finding fresh, new ways to relay helpful information to our customers.