What You Need to Know About Product Development Outsourcing

Have you had trouble finding the right IT talent as an early-stage startup? You’re not alone—even the biggest, most successful tech companies have the same challenges. As a result, more and more startups are outsourcing the product and app development process in order to compete with their larger competitors.

These days, tech entrepreneurs and co-founders have more outsourcing options than ever. Thinking about using outsourcing for your own product or app development? Here’s everything you need to know.

What Is Product Development Outsourcing?

In general, outsourcing refers to hiring an external individual or organization to perform a given task or function. As the name implies, product development outsourcing means the outsourcing of activities related to product development and maintenance. When used in the context of mobile applications, product development outsourcing may include research, design, prototyping, coding, testing, and launch, depending on the individual project requirements.

Essential steps of outsourcing app development.

1. Define the Scope

Don’t rely on an agency to turn your abstract vision into a polished product. Before approaching potential outsourcing partners, determine the specifics of your app, including the details of what you plan to offer users.

Ironing out the wrinkles in your plan before sitting down for a conversation helps make the talk more productive by giving potential partners a better idea of what you need. During this conversation, define both the proposed responsibilities of your business and the external app developer’s role during the partnership.

2. Communicate With Potential Developers

Defining the scope of your outsourcing needs in advance makes it easier to communicate and compare bids from different design agencies. Discuss your goals, current plans and any important details, like the platform upon which the app runs. Good agencies will already understand your industry and be able to extrapolate a rough outline of a development plan.

Communication needs to be a two-way street. Listen carefully to potential partners’ responses, including any non-verbal cues. Review their past work to verify their track record of success. If an agency submits the lowest bid, you should consider that a possible red flag instead of an unusually great deal.

3. Draft a Legal Contract

After choosing an app development agency, you need to formalize the arrangement with a legal contract. The stipulations should include timelines, feedback arrangements, data security protocols, intellectual rights, compensation packages and termination.

Always seek legal assistance when drafting and signing contracts with outsourcing companies, even if you’re a legal expert. Another set of eyes verifying the terms of the contract will help you eliminate any loopholes that could backfire on you unexpectedly.

4. Maintain Contact

Just because you’ve chosen to outsource development doesn’t mean you can kick back and relax. If you want your product or app to come out as you envision it, then you need to be closely involved during the development phase. The contract that you’ve drafted should include provisions for feedback and quality control.

Maintaining close contact with your outsourcing partner during development will create a better working relationship. Solid app development agencies expect to be in close collaboration with their partners because they’re almost as invested as you in building a superb product.

5. Ease Into Offboarding

As your app nears completion, so should your relationship with the outsourcing agency. The contract that you’ve signed should include provisions for an eventual offboarding of the agency, reflecting the fact that you no longer need all their services.

A gentle offboarding process ensures the relationship isn’t suddenly or unexpectedly severed, which could create legal issues. End the partnership as cordially as you begin it. If the app development agency does a good job, you may wish to collaborate again in the future.

The Advantages of Outsourcing Product Development

1. Eliminating Training

Training new hires requires substantial time and effort to get the new employee up to speed with the project — resources that tiny startups can’t always afford. Outsourcing app development eliminates the need for you to train and onboard your own employees.

2. Instant Expertise

The right design agency should come ready to apply the expertise that it’s already acquired from previous partnerships. These companies thrive on innovation within their industry — an asset that eludes many startups because it comes only through experience.

3. Lowering Labor Costs

Because outsourced workers aren’t your own employees, you don’t need to worry about providing vacation days, health insurance, office space or perks to retain their talent. All of those concerns are the domain of the app development agency that you hire.

4. Quick Scalability

Startups can experience many unexpected events, like a sudden surge in demand or a change in the industry, that may require you to develop your app more quickly or add more features. Partnering with an external agency is the simplest and fastest way to upscale your project.

Reduced risk

Compared to consulting with an agency, launching an extensive campaign to find and hire internal app development talent is a massive investment. If your project doesn’t pan out as expected, outsourcing is a smaller risk than hiring once the contract is terminated.

The Disadvantages Of Outsourcing Product Development

1. Loss of Confidentiality

In a competitive startup landscape, you need to protect your ideas. If you have proprietary company knowledge such as drawings or formulas, using an outsourcing agency may put it at risk of exposure.

2. Data Theft

Selecting a poor outsourcing partner can result in the project going over schedule and budget. The agency you choose may be inexperienced in the given technologies or too disorganized to complete projects on time.

3. Delays and Hidden Costs

Select a trusted agency with a solid portfolio and avoid lowball bids. Contracts should stipulate timelines and costs explicitly.

4. Communication Barriers

Communication problems can arise for a number of reasons: your choice of partner may be located in a different time zone or country, or you don’t have established channels for sharing information.

5. Loss of Control

Many companies fear that using outsourcing will cause them to relinquish control over the project, unable to manage its direction. As a result, the final product will be unsatisfactory or not in line with expectations.

How to Minimize the Risks of Outsourcing Product Development

Despite the challenges mentioned above, there are ways to minimize the risks of outsourcing and successful partnership:

  • Loss of confidentiality: Provide information to your outsourcing partner only on a need-to-know basis. Draft an airtight non-disclosure agreement that keeps your sensitive company knowledge within the agency.
  • Data theft: Restrict data access only to those working on the project. Monitor and protect the flow of information between your company and the outsourcing partner at all times.
  • Delays and hidden costs: Select a trusted agency with a solid portfolio, and avoid lowball bids. The contract you sign should have explicit, precise timelines and costs.
  • Communication barriers: Most communication issues can be prevented by clearly defining the roles of your company and your partner. Decide on a feedback mechanism in advance so that you stay in constant contact.
  • Loss of control: Contracts play a key role in providing control and visibility. Make sure that you’ve included an explicit termination clause so that you can cut your losses if you’re truly unhappy.

Key Factors For Selecting Outsourcing Service Providers

  • Select a service provider based on quality instead of cost. No need to pay top dollar, but the smallest bid won’t provide the best solution.
  • Choose an app developer with proven experience in your vertical. Apps have common building blocks, but industry knowledge helps create a better product, faster.
  • Partner with an agency which communicates well. Offshoring may save costs, but distance and language barrier may create communication roadblocks.
  • Pick an app development agency which respects confidentiality. If they’re not keen on signing an NDA, don’t hesitate to step away.
  • Work with an outsourcing agency with strong data security. They’re more likely to understand the need to monitor data flow, restricting access on a need-to-know basis.
  • Refuse app agencies unwilling to agree on a collaboration scheme. Elect to work with outsourcing companies who agree on regular contact to avoid loss of control.
  • During the contract creation phase, make sure the outsourcing company accepts checks and balances as part of the deal. This includes timelines on deliverables and specific development goals.


As long as you define your expectations and mitigate the risks, outsourcing development to a trusted partner allows startups to compete with their larger competitors and make waves in the market. However, it’s important to first find the right outsourcing agency to work with: balancing quality and cost, while ensuring that you maintain confidentiality, security and control over the project.

Companies like WebileApps can help you turn your app ideas into reality while saving you time and money and getting your product to market faster.