Outsourced Product Development (OPD) is a growing trend due to the transient nature of markets, customer expectations, and technology. Today’s companies are more customer-centric and focused on improving customer satisfaction with better support and a more comprehensive range of innovative services. Product development is in our DNA.

There are four reasons why companies outsource product development:

1. Better return on investment

2. Deliver higher quality products

3. Go to market faster

4. A valuable and long-term partnership

So what exactly is Outsourced Product Development (OPD)?

Outsourced Product Development, as the name suggests, is the process of outsourcing specific or all activities related to product development and maintenance. OPD allows product and (or) services companies to take advantage of product development expertise and global talent pools available from OPD providers.

While outsourcing product development may seem conceptually similar to outsourcing software applications development, there are significant differences. These differences are mainly in the skills, standards, and expertise required for product development.

Why Should you Outsource Product Development?

As the software market becomes increasingly competitive and mature, companies are under immense pressure to bring new versions for their online platforms regularly. In a globally competitive market, a company’s efforts to achieve better visibility are generally challenged by:

1. Technical adolescence and (or) obsolescence

2. Rapid advances in design and engineering technologies and

3. The increasing complexity of design and engineering

In addition, product development is an intensive activity that requires a lot of attention. Suppose top management pays attention to the in-depth details of product development. In that case, market and marketing analysis activities directly affecting the company’s success will not be the highest priority. In the long run, it will affect the profitability of the company.

If a company can collapse its product roadmap and release new versions earlier than planned, it could gain significantly in terms of market share and revenue. However, product development budgets are fixed and resources are limited. The only way for the companies to crash their product plan and release a newer version faster is to outsource product development activities to OPD providers.

By Outsourcing Product Development, companies can:

1. Gain expertise

2. Build additional resources

3. Minimize development costs

4. Crash product roadmaps

5. Drive results by focusing on new competencies.

How to Start Outsourcing Product Development?

Emerging Models of Product Development

1. Peripheral Development:

In this model, product companies outsource certain product lifecycle activities such as testing, documentation, or product implementation, but not the main development activity itself. That helps these product companies gain comfort with the OPD provider’s capabilities and also educates the provider about the specialty domain knowledge related to the product. One of the key advantages of this model is that the source code of a product does not need to be shared to start working together.

2. Modular Development:

In this model, companies outsource the development of parts of the product, primarily considered secondary. Product integration capabilities to build these modules become key for the company and OPD providers.

3. Co-Development:

This is a model where the company’s team and the OPD provider work together in a coordinated manner for product development. The OPD provider team is considered an extension of the company’s team and has all the necessary rights and permissions to work on the code base.

4. Full Development: 

The OPD provider assumes full responsibility for one or more products of the company. This helps the company focus on ideating next-generation products.

Conclusion

OPD, as a business model, has gained acceptance as an extended development option for companies from various industries. It represents a relatively low-risk, high-benefit opportunity for these companies, but careful planning and monitoring of the relationship with the OPD provider at all stages is a must.

However, companies that see OPD as a short-term cost-cutting opportunity may get disappointed with the results. To derive true business benefits, they must make OPD an integral element of their overall business strategy.

As an outsourced product development service provider, BigStep Technologies can deliver shorter development and testing life cycles, a process that directly affects your time to market, while simultaneously reducing software development and related support and maintenance costs. Enhancing product functionality, which can allow your customers to enjoy a greater value from your products and services, is also a direct business benefit.

To explore more about OPD, you can get in touch with our team of experts.