It takes time to start a new product development effort—time to hire developers or engineers, time to get up to date on technology, time to evaluate manufacturing capacities, time to study rivals and regulations and more. Since most business owners kick off major product development efforts only every now and then, it can take even more time to get familiar with each step.
One possible answer is to outsource the job to an organization focused on new product development. Businesses that sell product development services promise to help customers minimize delay, cut costs and get superior designs.
“It's the same reason you do anything," says Steve Owens, founder of Finish Line Product Development Services in Hudson, New Hampshire. “It's going to be a lot faster, better and cheaper."
—Steve Owens, founder, Finish Line Product Development Services
Outsourcing product development lets businesses tap the expertise of companies that have created well-honed systems for managing the process.
“They may develop one product every five years," Owens says of his customers. “We develop five products a month. That helps us improve our procedures on a continuous basis."
Product development specialists may be able to adapt existing components from other products to make new products much faster and at less cost. Perhaps most importantly, outsourcing development can mean that your business won't have to hire full-time designers.
“Most products require at least two to three engineers to develop," says John Teel, founder of Predictable Designs, a developer of electronic hardware products in Sedona, Arizona. “If you didn't outsource, you'd have to hire probably three engineers."
Outsourcing development rather than hiring to do it in-house also lets businesses tap talent anywhere in the world, rather than restricting itself to whomever is available locally.
Perils of Outsourcing Product Development
While outsourcing product development can shrink timelines and cut costs, it can also expose businesses to risk.
For a business that lacks the expertise to design a product, it can be difficult to know how good the resulting design is.
“You may spend all this money and not be able to judge the quality," Teel says.
Scams are also not unknown in the world of product development. Teel recounts the case of one company that paid for a new design that turned out to be a copy of another product.
“All the developer had done was to take an existing design and put a new logo on it," he says.
Along with the risk of paying for a poor design and facing copyright infringement, companies can go wrong by outsourcing the wrong thing, and could consider outsourcing only part of the process.
“You don't want to outsource your core," Owens says. “That's the one thing that defines you that you do better than anybody else in the world."
In addition to avoiding that misstep, outsourcers can reduce risk by keeping the following issues in mind.
Product Development Outsourcing Tips
Outsourcing product development doesn't have to be all-or-nothing. Businesses can outsource part of the development process. From feasibility analysis and initial prototyping to product testing and product maintenance, any portion of the product development process can be outsourced. This can let a business limit its exposure to missteps.
There are also options for different types of product developers.
Freelance designers and engineers may be one-person operations that don't cost much, but have limited capabilities. Full-fledged design firms can handle an entire product development effort and do it in less time, but may charge higher hourly rates.
Whatever provider a business settles on for its product development, it is important to get referrals and check references. Owens advises business owners to look for developers with customers like themselves. Teel suggests hiring another development consultant or firm to review the product designs and make sure they are adequate.
Whether using domestic or offshore product developers, Owens says businesses should visit the site.
In order to protect the business's brand, consider asking specific questions about whether a developer has systems and processes for deliverables such as documentation and handing off designs to manufacturing to ensure quality control.
"Look for specific answers, like, 'Yes, that's our process number 52,'" Owens adds.
Owens suggests that the benefits of outsourcing product development may mean that it won't be too long before nearly everyone is farming out at least part of their product development.
“In the future," he says, “it will be rare to do it 100 percent in-house."
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