Outsourcing is well-accepted in the technology sector. Off-shore, near-shore, and domestic third-party relationships have proven time and again to be viable and highly profitable business models. All facets of software and product development have successfully been managed in outsourcing relationships, supporting quality products and high levels of customer satisfaction.
However, some say product management isn’t well suited to the outsourcing model—the argument being it is too strategic and intimate a service to leave to others outside your direct control. Yet outsourcing product management is fundamentally no different than outsourcing other technology services, and can be ideally suited to the recognized benefits and successes enjoyed through outsourcing relationships.
Either way, the decision of whether or not to outsource product management must be considered like all other technology outsource opportunities. Organizations need to make sure outsourcing fits their business and organizational goals, in terms of their commercial and market needs.
Five Compelling Reasons to Outsource Any Technology Service
It’s worth considering the decision to outsource product management. In one form or another, all outsourcing decisions are based on one or more of the following five basic business drivers. Each business driver leverages outsourcing to support strategic initiatives within a company.
- Reduce and Control Operating Costs
Reducing the expense of labor to increase profitability has long been a driving reason to outsource, as companies will always be attracted to saving money on products and services. However, it’s fair to note that cost reduction is rarely the leading reason to outsource product management. Cost reduction and savings from outsourcing product management are most often realized through other business drivers or as part of a larger outsourcing effort.
- Improve Corporate Focus
Nowadays, outsourcing is a great way to improve corporate focus. Companies increasingly turn to foreign and domestic partnerships to take over day-to-day activities so they can focus on core products, new markets, and competitive opportunities. Outsource partners are effective at maintaining legacy products and their associated profitability, as well as maintaining customer relationships and fostering customer loyalty, making them a good fit for product management.
- Gain Access to World-Class Capabilities
It’s nearly impossible to employ a staff with every skill, experience, and expertise necessary to support every project. Companies increasingly partner with others to introduce new skills into their organization and take advantage of the other’s experience. Outsource partners can leverage their collective experience to help overcome otherwise difficult challenges. Because they often work with many companies on a variety of projects, outsource partners can quickly interject critical skills and expertise to any product or software development.
Outsourcing product management makes sense in these terms. An outsourcing partner may bring a breadth of experience learned from years of managing product development across a number of markets while working with countless customers. This experience is invaluable, possibly reducing the time to market for a new product and ultimately lowering development costs. There’s no substitute for relevant experience when it comes to overcoming challenges and ensuring quality.
- Free Internal Resources for Other Purposes
Outsourcing is a highly effective means to allow talented staff to work on new initiatives, especially in growing companies. It not only frees key employees to work on new projects, but is also an effective retention tool to keep top performers who thrive on the opportunity to work on new projects and cutting-edge technologies often associated with new initiatives. Similar to allowing a company the opportunity to focus on core products, outsourcing product management lets key personnel turn their attention to the most important projects.
- Resources That Aren’t Available Internally
There are times when it is better to rent than buy, and this is often the case with outsourcing. It often makes sense to partner with an outside company to provide support for things like short-notice developments, limited projects, and one-off developments instead of taking on the cost and investment of hiring new staff.
Again, this is an area where outsourcing product management makes good business sense. Whether it’s supporting legacy products or tackling a short-term initiative, managing the ebb and flow of business with an outsource partner makes a lot of sense. They can absorb one-off projects and provide periodic support when needed, as well as immediately staff specialty needs that would otherwise require significant investment in personnel or training.
Characteristics of Successful Product Management Outsourcing
There are many ways to successfully outsource product management. Here are the critical success factors and differentiators, as seen from the perspective of the practitioner.
Successful product managers distinguish customer requirements from product requirements. Product managers must balance functional, desired requirements with consideration of time and cost in order to deliver products that meet immediate market needs. Not all consumer requirements should be implemented right away, even with pressure from customers.
However, product managers should stay focused on customer and market value as opposed to innovation for the sake of innovation, and understand how core features are used to meet customer expectations and deliver a memorable experience.
Product managers must prioritize their customers and end users, overlooking personal bias or favoritism. The needs and desired experiences of the end user must directly influence product features and planned releases, as end user adoption ultimately defines the success of a product. The most successful product managers listen and respond to their customers, and are aware of the end user experience and its importance to success.
Similarly, product managers need to be sure they are taking appropriate direction from and responding to the needs of stakeholders, and know the difference between influencers and decision makers within the account they are serving.
Successful product managers focus on building the right product rather than building the product right. The key is to focus on adding end user value to a product, not getting caught up in development processes that don’t support this goal. Always concentrate on the making the product successful.
Product managers must differentiate a good product from a good business model. Business models are how you generate a profit, and the product makes that profit possible. There needs to be a clear distinction between a complete product and a sellable product—they aren’t the same. Demo, ALPHA, and early release products are valuable in the overall development process and may satisfy a number of immediate market and commercial needs. Successful product managers understand this, and while they are conscious of the complete product, they don’t overlook a sellable opportunity.
Product launch should not be considered a success, but rather a critical milestone. There is a lot of work to be done following an initial product launch, and the best product managers keep their eye on completing product development while providing ongoing support to customers and evolving market needs.
Product management can be successfully outsourced, delivering tremendous value to companies and organizations of all size and scale, resulting is numerous commercial and market benefits—direct and indirect cost control and savings, redeployed corporate resources, improved corporate focus, and immediate infusion of unique knowledge and experience. Outsourcing product management also aids established core business values and strategic corporate goals. Product management is well suited to be outsourced, adding incredible value to product development endeavors.
How to Successfully Outsource Product Management