Outsourced Product Development: Success Roadmap

An outsourced product development project has several stakeholders, including the management of the product and service companies. The key stakeholders are the VP and Director of Engineering in a product company and the Technical Lead and Project Manager in a service company. The experience and skills of the key stakeholders can make or break the engagement.

Some key aspects leading to successful engagements include:

• Taking responsibility to execute the project in a turnkey fashion, with the payments based on milestones and deliverables. The product development process almost always involves hardware and software. While it’s much easier to have everything done by the same vendor, one must also evaluate the vendor’s capabilities in both areas individually.
• Outsourcing a product’s development requires extensive documentation, much more than when doing it internally. Since it is a contractual arrangement, it requires detailed documentation. Lack of adequate documentation can lead to project failure. Successful engagements document the requirements before the actual work starts and all the way through completion.
• Successful outsourcing companies conduct extensive evaluation of their partners’ capabilities from the business and technical perspectives. It is important to understand the ownership of the product development and all its components. One must also make provisions for Engineering Change Orders (ECOs) for tracking any change in specifications, schedule, etc. The roles and responsibilities of the key personnel should be listed here. Another important aspect is to document each phase’s success criterion on the project and the overall project itself.
• The milestone in business process outsourcing is to introduce key members of the team, decide on the frequency and modes of communication, procedures for reviews, etc. The project schedule, dependencies, and commitments should be reviewed in the meeting with the entire team. The entire project team including the junior most engineers should sign up to the objectives and schedule of the program.
• Successful companies include a process for doing good program reviews. For effective review program, the participants should have already reviewed the documents and questions should be raised early in the program without hesitation.
• Success in offshore outsourcing is the ultimate fruit that is harvested after the long process of careful and planned implementation of the various components that go into the execution of an outsourced development project.

Outsourcing work to a third party vendor offers low costs with immediate benefits. Considering the advantages of outsourcing, this is the ideal time to explore the options, as well as prepare guidelines for future engagements. Outsourced product development is truly the best option for  developing the products economically.