What Every Startup Should Know about Outsourcing Product Development?

Have you ever wondered how Travis and Garrett (founders of Uber) attended a conference in Paris? How they became the owner of $17 billion Company? Or how Brian, Joe & Nathan (AirBnB founders) earlier rented mattresses at $80 and now run a $38 billion company? They have survived all the challenges every startup has to face like tight budget to outsourcing product development team, and many more. But there must be something that made them popular?

Well, among the lesser 10% startups that succeed the ones launched, they understood the pain points of the audience and came up with a digital solution.

These companies managed to escape the 90% startup failure ratio because they worked smartly and realized what they require to materialize the product idea.

And one of the approaches these giants adopted is outsourcing product development’.

Do you know?

  • As per Statista, the international outsourcing market size has reached $45.6 in 2000 to $85.6 in 2018.
  • 65% businesses will continue with the same outsourcing partners.
  • Mobile app development is the most frequently outsourced service. Also 37% of companies plan to increase the amount of work they outsource.


Must-Know Things about Startup Outsourcing Product Development

  • What is outsourcing product development?
  • How Outsourcing Product Development Team Can Benefit Startups?
  • What factors to consider when Outsourcing Product Development?
  • What to consider when you hire a Product Development Team?
  • Tips that will help Startups succeed  in Outsourced Product Development

Let’s get started!

What is Outsourcing Product Development?

In general, outsourcing product development refers to hiring offshore developers or hiring product development team to perform a given task or function.

As the name implies, product development outsourcing is defined as the outsourcing activities related to the product development as well as maintenance.

This may include research, design, prototyping, coding, testing, and launch as per the client’s requirements.

Great products are there to change the world. There may be a brilliant idea in your mind but it is not necessary that you have a large product design company at your disposal.

Today, it is no big deal with outsourcing product development as many successful projects have been released as a result of it.

With outsourcing product development services, most startups follow to develop a product and launch it in the targeted market.

Well, there are many doubts and queries that come across in the mind of entrepreneurs who are planning to outsource their product development.

Are you someone who can relate to this situation? If so, this article covers everything you might want to know regarding outsourcing product development. 

a) Outsource for Collaboration

When you collaborate with an app development company for startup or any company as per your project requirement, you have to analyse the Minimal Viable Product, suggestions change, doing R&D throughout the process and introducing new ideas will remain your work responsibilities.

You have to be prompt and agile in taking all the tasks while being innovative for the product is very important. If you are ready for this, your startup company will certainly thrive with the outsourcing the development of the product.

b) Should Product Development Team be Outsourced?

The first question is whether entrepreneurs should outsource their product development or not.

If the definition of outsourcing according to you is simply to hire a company, share your idea and expect the product development team to come up with the final product as quickly as possible, it is recommended that you abort the idea of outsourcing.

If you feel outsourcing starts with explaining your idea, doing the R&D, analysing the target audience and then looking for outsourcing company for the product development project.

You may just be on the path of success. After that, your role in product development wouldn’t cease to exist only because you have outsourced your development.

Outsourcing product development gives many benefits to a startup like less cost, faster time to market and no fixed cost eating. As a result of which successful startups like Slack, Skype and BaseCamp have outsourced their product development at some point. 

c) When to Consider Outsourced Product Development?

If you are a startup having an amazing product idea, here are a few scenarios where you should consider outsourcing your product development:

  • When you have to validate your product idea
  • You require scalability
  • You need the access to domain expertise
  • Whenever top-notch tech expertise is important
  • When the product is being developed is complex
  • When you are looking for Enhanced ROI

How Outsourcing Product Development Team Can Benefit Startups?

For any startup, the initial roadblock is developing a business plan while maintaining the available capital efficiently. Second is creating a product development team that have top-notch expertise and tech skills to create the product and launch it.

This issue can be easily resolved by hiring offshore developers from startup product development companies.

Outsource your product to an experienced company having specialized developers who will build it as per your requirements while sitting in a different geographical location.

This offshore development company will not only bring expertise to the table but also add flexibility and enable technology transfer for successful product development. Here are the benefits it offers you: 

a) Always Stay in the Loop of the outsourcing product company

Your product is your vision and it is important to pursue it continuously. When you hand it over to a dedicated software product development team, they start working on your project. This doesn’t mean that you lose the control but you keep a check on it.

You are the one guiding the project and giving it a direction. Even if you are non-technical individual, it is a possibility that you won’t understand the development process. But having a tech-savvy person by your side will help a lot.

b) Easy Communication through Prototyping

Communication paves the way towards success of your project. This is very important to you get the message across the product engineering team in the best possible way so that they understand the project idea and get results.

Note down your requirements and take care of the documentations so that you get what you actually want.

Wire-framing or prototyping helps in getting the idea across the team. A blueprint of the product is created with screen layout and navigation system.

It is very important to describe the main functionality of the product and the core functionality. The product development team for startups understand the wireframe and then accomplish the project accordingly

c) Reducing Risks by Implementing Checks and Balances

When you get a second opinion on your product design, it reduces the risk during the development process. Allow flexibility to a certain level and try having flexibility on the features of your product.

The initial version of the project has to be impactful. When it is properly designed, built, tested and finally launched, you should keep a track of the audience’s response.

You can then additional features in the next version. Concentrate on the core functionality and then the problem that it solves.

d) Agile Methodology and Offshoring

Agile methodology and offshoring is a perfect combination for getting amazing results. Having access to an extensive base of experienced professions by collaborating with the top offshore developers for startups you can make changes whenever required and get flexible responses.

Because the development system is very adaptable to the changes, this aids the improvement of the product throughout the development cycle.

What Factors to Consider When Outsourcing Product Development?

Startups that outsource product development should consider various factors before taking the plunge:

a) Outsourcing cost vs insourcing:

Cost is undoubtedly one of the biggest factors to consider when you are planning to look for outsource product development to India or any other country.

Well, outsourcing turns out to be cost-effective when compared to insourcing. This is because you don’t have to provide different salary to different individuals rather you will be giving a fixed amount to the company providing business application development services.

Factors In-House Development Outsourcing Development
Cost Higher because of hiring and retention of the developers Lower because of large talent & rate difference in countries
Time To Market Slower As Hiring Experts Requires Time Agile & Quick
Technology Expertise Limited Unmatched & Endless Talent
Flexibility Not much flexibility Extreme flexibility & adaptive approach
Security of IP Highly Secure Threat to intellectual property
Communication Face-to-face & clear communication with real-time inputs Difficult to manage due to language gap & time zone difference
Cultural Differences Fits company’s corporate culture Not necessarily a cultural fit

Recommended Read: Hiring Dedicated Remote IT Teams is Not Just Saving Huge Cost

b) Product Complexity

The next consideration to make is the product that you are planning to introduce in the market. A simple product may not require a huge expert product development team to materialize while a complex product may require greater specialization.

As per your product type, features and requirements, you can choose the type of outsourcing development agency.

c) Technical Requirements

New technologies are introduced in the industry every now and then. It is a possibility that your product may require the latest technology stack.

If you are not laced with the technology stack that suits your startup firm, hire developers for startups and it will be the best option for you.

What to consider when you hire a product development team?

You have to carefully collaborate with an offshoring company and here are the considerations to make:


When you are working with a remote development team, make sure they have a strong command on your written and spoken language so that it doesn’t become a barrier.


When you are working closely with the product development team, who maybe at a different location across the time zones, you will ensure that there is an overlap of atleast two business hours every day to keep the workflow hassle-free.


You should have knowledge about who is working on your project for full time. Also find out if those developers will be working on any other projects or not.

Contact References

Here are a few considerations before collaborating with the software development company. It is very important to speak to a few past clients to get answers to all your questions. This will help you get an idea about the workflow and performance of the company.


Top Software Development Companies for Startups will always say yes to any challenge that you will send their way. Make sure they have done similar kind of work before.

Ownership & Non-Disclosure Agreement

Always make sure you have complete ownership access to everything that the offshore product development is producing every step of the way.

In addition to this, ensure that the ownership is covered in the contract and you or the partner signs the non-disclosure agreement.

Tips that will Help Startups Succeed in Outsourced Product Development

Now when you have finally decided to outsource, it is important to know whether software development company for startup is beneficial or not. Let’s discuss the tips that will help a startup succeed:

Develop a Wireframe

To set up a product development team, you have to take the help of a startup app development company or web company that requires a crisp and clear wireframe.

It should have the following:

  • Outline of the product
  • User-interface
  • API integration for internal products
  • API integration for user portal
  • User-testing
  • Unveil new product to small test group
  • Set issues to define your product
  • Set key metrics and evaluate the success of the product

Checkpoints and Milestones

Once the milestones are decided, it is imperative to link the milestones with the payment checkpoints. This ensures a quicker and smooth product development.

The way you are clearly defining the product scope and how you are able to present it to the offshore development company determines the success of the product.

While you are planning to hire developers for developing the product, make sure you are able to effectively convey your idea to the remote product development team.


When a company defines their expectations and mitigate risks, outsourcing development to a reliable tech partner allows startups to compete with their competitors making waves in the market.

However, it is very important to search for a startup product development company and thereby balancing quality, cost while ensuring that you maintain the confidentiality, security and control over the project.

The global knowledge that has passed down to the offshore development center can help your company become better in order to compete in the international market.

It helps in hiring expert professionals having communication capabilities, suitable financial packages and technical expertise. The major reason why offshore product development has become a popular option is it can get businesses through the temporarily difficult times.

Also, it can save money and is not a one-side-fit-all option. So, it can be concluded that is a boon for different startups.

If you are planning to achieve the bottom line quickly and inexpensively, outsourcing is the best way possible. But this method is going to work only if you collaborate with the right startup development company.

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