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Outsourced product development used to be an unfamiliar business maneuver, but is now a common strategic move amongst companies of all sizes. It is a time-tested approach that allows startup founders to release functional software to the market in minimum time while sparing them time to focus on other core business functions.
According to Statista, the application outsourcing industry charted $109.10 billion in revenue in 2021 and is predicted to sustain its growth in the following years. In this article, I’ll show you how to successfully outsource software development and be competitive in the market.
What is outsourced product development?
As the name implies, outsourced product development is a process where a company engages an external vendor to take on software development and related tasks. Product development outsourcing allows non-technical founders or product managers to successfully launch software products without getting into the technicalities of doing so.
While outsourced software product development services have been trending during the pandemic outbreak, it is a practice that has been ingrained in the business community for years. Some global brands, including Whatsapp, Google, and Microsoft, outsourced their software development needs at certain points of their growth stages.
For example, Whatsapp engaged Eastern European developers to work on its app during the early years to save costs and gain access to top expertise. Meanwhile, outsourcing product development remains an ongoing practice for Google as the search engine giant seeks to tap into the global talent and provides support for in-house employees.
Outsourced product development: Benefits for New Project
Entrepreneurs embarking on their pioneer projects often face the dilemma of hiring an in-house team or contracting outsourced product development services. Uptech experience shows that founders greatly benefit when working with an outsourced product development company instead of recruiting.
A startup must be agile and ready to adapt quickly to changing markets. Despite the control an in-house team offers, founders are better served by the outsourcing model. The latter keeps overhead low and allows them to retain a lean team structure.
These are the top reasons why founders choose to outsource software product development.
Tech & Domain expertise
Developing a functional and engaging app takes more than a software professional. Depending on the type of project, you might require a UI/UX designer, front-end developer, back-end developer, database engineer, project manager, and QA test engineer.
Each role involves unique and varying skill sets that take years of experience to master. For example, some backend developers are proficient in Laravel and Django, while others use ExpressJS and Ruby on Rails as frameworks to build backend services.
Outsourcing software product development helps founders overcome local talent crunch and tap into the vast and diverse talent in different regions. With outsourcing, you can hire talents that are otherwise scarce or expensive in the local market.
IT process optimization
App development takes more than writing codes and piecing together multiple software components. All successful apps go through streamlined processes that start from ideation and persist even after app release.
At Uptech, a typical app development goes through discovery, feasibility study, prototyping, development, testing, and post-release improvement. Each software stage is broken down further into smaller, detailed subprocesses.
Inexperienced founders are likely to struggle when putting up newly-hired developers into an untested workflow. Instead, outsourcing ensures that the software development is taken by a well-coordinated team familiar with established processes and best practices.
For example, our team is familiar with the Agile methodology, which allows us to introduce rapid successive changes from user feedback.
In developed Western countries, hiring local software developers can stretch the budget to the limit. This isn’t a wise move for bootstrapped startups as the funds are equally crucial for marketing, operation, and other purposes. Outsourcing provides a cost-efficient alternative to building an app while meeting established financial goals. According to Deloitte, 70% of companies surveyed cited cost reduction as a major motivation for outsourcing.
For a start, you’re spared from paying the in-house team a fixed salary and other benefits. Furthermore, you can save expenses on the workspace, hardware, and software licenses when working with an outsourced product development companies. Most startups turn to Eastern Europe for their outsourcing needs because Eastern European developers offer a balance of quality, cultural similarity, and affordability. For example, Ukraine’s hourly rate of $35-$60 per hour is attractive compared the higher cost of hiring developers in Western countries.
Forward-thinking startups should also anticipate the huge, recurring expenses of an in-house team even after the product’s development is largely completed. Founders will find themselves issuing monthly paychecks to an idle development team. Letting these permanent hires go is not easy, particularly in Europe, as you’ll navigate through a complex series of local legislations.
Outsourced Product Development Process: Explained
Arguably, outsourcing to offshore software developers is less complicated than managing an in-house team. You don’t need to be hands-on or coordinate the workflow amongst the team of developers. However, you’ll still need to manage the offshore development team, monitor progress, and provide prompt feedback.
Here’s how to get started in hiring your first outsourced developer.
Step 1 - Define Your Goals
Be clear with your requirements before you search for potential offshore developers to work with. Some founders are hunting for expertise to build an app from scratch, while others might want to add new features to existing software. List down your project needs as it helps you find the right vendor with prior experience or skillsets.
Step 2 - Choose A Partner
There is no shortage of software development firms specializing in the outsourcing model. However, finding one that demonstrates trustworthiness and has an excellent track record involves performing due diligence. Check out testimonials from other clients and ensure they match what the candidates pitch to you.
Step 3 - Choose A Model Of Collaboration
Outsourced development firms usually offer several models to help startups remain competitive in fast-moving environments. Decide if fixed-cost, time and material, or hiring a dedicated team works best for you. Consider the financial implication, timeline, and the project’s volatility when deciding on an outsourcing model.
Step 4 - Agree On Communication Rules
Clear, seamless communication is pivotal in ensuring that your project is progressing as per the agreed schedule. This is only possible when both parties agree on a particular communication framework. For example, setting up a progress update schedule and agreeing on a communication platform like Slack.
Step 5 - Formalize The Partnership
When you’re satisfied with a particular vendor, it’s time to strike up an agreement and spell out the terms in a clear manner. Ensure that both parties understand the contract before kicking off the collaboration officially.
Outsourced product development: Uptech Case Studies
Our team has demonstrated competency, teamwork, and timeliness throughout the years as we helped various startups bring their ideas to life. Not only do we consider technical requirements, but our team also shows aptitude in understanding the business goals of the respective founders.
These are some of the best works we’ve done for startups in different countries and industries.
Yaza: Product Design Outsourcing
Yaza is a real estate app allowing property agents to share home listings and 3D virtual tours. The client tasked us to build the Yaza mobile app from scratch based on specific business requirements.
Upon taking on the project, our team initiated hypothesis validation, where we tested the proposed ideas against audience feedback. The consistent and genuine feedback proves pivotal for our UI/UX designers to hone in on possible difficulties and issues.
We fixed every uncovered issue by breaking the validation process into small, iterative steps before moving on to the next stage. This allowed our team to ensure that the app is continuously updated with UI elements that provide an optimal customer experience.
Nomad: Product Discovery Outsourcing
Nomad is another innovative property hunting app that fulfills Europe and the Middle East’s market needs. The app allows customers access to a personalized property listing and connects them with the appropriate agents seamlessly.
As Nomad is a pioneering initiative in the region, the app must be tailored to solve the user’s problem. Throughout the development stages, our team applied continuous discovery to ensure that the deliverables were aligned with actual user needs.
We ensure that every hypothesis is proven with customer feedback to shape and improves functionalities and features in the design stage. Our efforts translated into a well-received app that has become a favorite amongst home buyers.
Dollar Shave Club: Android Development Outsourcing
Dollar Shave Club is a US-based startup that sells men grooming products online. The company has a functioning app but requires a major revamp to keep up with modern trends and requirements. This collaboration demonstrates how Uptech can maintain strong communication and work seamlessly with our technical counterpart.
Dollar Shave Club's major makeover starts with meticulous planning and discussion amongst our team and the client. We mapped out the new app's milestones, estimates, and features. Our developers work closely with DSC’s internal team to introduce new features that significantly elevate customer engagement.
Plai: MVP Development Outsourcing
Plai is a performance management app that allows managers to automate employee appraisals in small and medium companies. Our success in this project is a testament of our ability to build an MVP within the stipulated timeline and a modest budget.
With so much at stake, we turn to the target users to ensure that Plai turns out to be a fitting product for the market. Our team interviewed the potential users to understand their pain points. This becomes a compass to structure the app’s roadmap and ensure the app is ready for further investment opportunities.
Product development outsourcing is and will continue to be a preferred hiring model for the startup community. You save precious time, cost and gain access to a vast talent network when you outsource product development to offshore vendors. Uptech has a strong portfolio where we’ve helped dozens of founders to design, develop, test, and align their apps to market needs.
Explore your ideas with us and reduce the time to market with our team of software experts.