Companies that specialize in software product development face unique challenges today. Regardless of their industry focus, companies are under constant pressure to distinguish their products through complex feature functionality, cutting edge technology and attractive pricing. Hence, product development is a core-strength of software companies and rightly deserves full attention to make it a competitive advantage.
Outsourcing product development, a core competence for software companies can be viewed as a risky proposition. However, despite the risks, there are several compelling reasons why outsourcing must be considered by software makers. In this article, we analyze the risk factors and the advantages of outsourcing product development and offer some key factors to consider when making the decision to outsource product development.
- Product Cost. Knowing the cost of development of a software product is crucial to determine the price of the product and the price in turn is an overwhelmingly important factor in the potential success of the product in the marketplace. It is a proven fact that offshore outsourcing can effectively reduce the cost of product development by 50 to 60%. This can be a huge advantage in pricing the product and getting a distinct advantage in the marketplace.
- Time to Market. Success of a product in the marketplace is also linked to timing the availability correctly. Many times the window available to bring a product to market to gain the maximum impact is very small, less than what can be managed with in-house development. A distinct advantage of outsourcing is to be able to scale up resources quickly to accelerate the development timeline without the risk of taking on fulltime permanent employees. Similarly resources can be ramped down as the development winds down. Hence the ability to adjust the development bandwidth as needed without any collateral effect on in-house employees is a big benefit of partnering with a outsourced software development company.
- Leveraging Technology. One of the realities of today’s technology landscape is the speed with which it is evolving. Even companies that depend on developing software often find it hard to keep up with the myriad advances in technologies in areas including but not limited to mobile, web, cloud, storage etc. In contrast, outsourcing software development companies are exposed to a much broader range of technologies derived from working with software companies in many industry sectors and having a much larger pool of software engineers.
- Maintenance and Support. Software companies’ main focus is developing cutting edge software and attracting new users to their product offerings. Hence very often routine maintenance and support takes a back seat to new development, but it is important to keep the products well maintained to keep the customer base happy. So, outsourcing maintenance and support of products often proves to be a reliable strategy for software companies. The cost of maintenance is also be kept low by the outsourcing strategy, improving the profitability and the extending the life of the product.
While software product development has unique needs and challenges, software product companies and ISV’s derive several benefits as discussed above with adopting an effective outsourcing strategy. The outsourcing strategy chosen should be coupled with a clear understanding of the success factors in application development outsourcing and following best practices in outsourcing.