Though still viewed as core activity of an ISV and with issues remaining around Intellectual Property (IP), doubts over its feasibility and success of an outsourcing engagement, a piece meal approach to outsourcing product development and then incrementally increasing outsourcing product development is best the recommended approach.
Product life cycle typically involves:
- Development
- Enhancement
- Re-engineering and migration
- Support and testing (L2&L3)
To start with, ISVs can look at outsourcing one or more of above activities - better still, the ISVs can look at outsourcing one of above activities in sub-module of their product.
Startup companies, VC funded companies should be looking at outsourcing entire product development lifecycle and concentrate more on defining, marketing and packaging of product than product development.
Emerging Models of Product Development
- Software Product Line
Most companies target the needs of their prospective customers by creating a product line a portfolio of closely related products with variations in features and functions. This involves building modular product with Core and adds on features. To start with, outsourcing software product line once the core product is built, is a low-risk model to check vendor capability and free management's bandwidth for other activities.
- Modular development
Development of software in bits and pieces. As module any module can be outsourced as low-risk process.
- Co-development team
ISV and OPD (Outsourcing Product Development) teams work together. This is more relevant in T&M based engagement. Generally OPD firm provides resources while project is managed by the ISV.
- Product Development Outsourcing
OPD looks after every aspect of product development.
OPD has gained recognition as a viable development alternative for product companies. OPD provides ISVs with a comparatively low-risk and high-benefit prospect for boosting productivity, profitability but careful planning and monitoring of the partnership with the OPD provider at all stages is a must. ISVs must be also bear in mind that choosing a right OPD team is critical to a successful partnership.
Outsourced product development requires the offshore team to work in very close association with the client's engineering team. Partnering with an OPD service provider allows independent software vendors (ISVs) to leverage a strong value proposition, low time-to-market, reduced development costs and quality manpower. Outsourced software product development is primarily a means of leveraging an organization's resources and infusing new thoughts, skills and expertise, while reducing time-to-market. Outsourced product development is the obvious remedy to the current market scenario where technology, skills and approaches are momentary.
Offshore outsourcing phenomenon has been making waves across the world for many years. Companies have long outsourced software and products development to offshore development facilities equipped with state-of-the-art infrastructure and armed with best-of-the-breed talented professionals, offering world class services at reasonable price. In spite of some concerns such as job protectionism and intellectual property protection, the economic benefits continue to be big differentiators, driving IT organizations to outsourced product development. Apart from cost effective business proposition, the massive growth and widespread adoption of offshore IT services are results of following interrelated global developments:
- The depressed economic environment, rising globalization of business, increasing business complexity, and technological advances have in combination, crystallized the adoption of outsourcing, causing the emergence of outsourced product development.
- Apart from tactical objectives such as cost-effectiveness and focus on core competition, strategic objectives are playing more prominent roles, and more companies use outsourcing either for a distinct marketing edge or to score over their competitors.
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