Product Development V/S Application Development

Outsourcing "non-core" activities to gain economic advantage has now become an essential constituent of any winning business stratagem. Nevertheless, as the industry matures, what constitutes its "core activity" is undergoing a change and is a constant debatable topic.

For Instance

• Nike outsources manufacturing of shoes
• Asian Paints, India's leading paint company has ancillary units providing thinners and even manufacturing season paints
• GE out sources manufacturing of F-16 engine part to an organization in Bangalore

The industry is in a maturing phase of virtual organizations, where HR, Finance, IT, operations, marketing and in some instances, even idea generation is being outsourced.

The equilibrium as to what constitutes core function continues to change.

Today, organizations have understood that manufacturing alone does not provide differentiation, therefore manufacturing is widely outsourced. Companies like Asian Paints have started building services around products while moving in the direction of outsourcing the manufacturing process, as non-core activity.

On similar lines, Independent Software Vendors(ISVs) have started looking at outsourcing product development, labeling the activity as " Non-core" while concentrating on product ideas, marketing, financing, customer relationship as core activity. The drive to outsource product development is further heightened by rising employee cost, rising attrition rate and reduced product life.

An outsourced software product development is principally a way of utilizing an organization’s resources in an efficient manner infusing new thought, bringing additional skills and know-how, while plummeting time to market. Outsourced product development is the palpable therapy for the contemporary market circumstances where technology, skills and approaches are transitory.