5 Reasons Startups Use Outsourced Product Development [2023]

First published on
February 17, 2020
Last updated on
September 18, 2023



It seems obvious that if you want to create an application, you need to hire programmers, i.e. a software outsourcing company. However, there is a different approach – you can opt for a digital product development company that will take care of the application development process comprehensively. In this article, we’ll compare these two types of services to help you choose the best solution.

What does a software outsourcing company do?

Software outsourcing companies focus on writing code for websites, web/mobile applications or games.

For websites, simple pages can be successfully created using free CMS such as WordPress. More complex (in terms of number of subpages and their look) projects are usually tailor-made as they need a more individual approach, proprietary functionalities and therefore a custom CMS.

To the user, a web app isn’t much different from the classic website – you open it in a browser and can access it from various devices. For developers, however, the difference between a website and a web app is very distinct. The latter consists of complex functionalities, such as login pages, user profiles, etc., and requires much more careful planning as their scope is usually quite extensive. To develop a web app, developers need to be familiar with various frontend and backend technologies to fit the project’s needs. Today’s web apps are mostly based on JavaScript, which allows them to stay fast and lightweight despite having a feature-rich interface.

Mobile applications are another specialization of software outsourcing companies. With the widespread use of smartphones and the availability of fast Internet, mobile applications are a must-have for many customers. In this case, companies specialize in creating applications for specific operating systems or using different approaches. These include native, semi-native, hybrid, PWA or RWD applications.

Creating business intelligence tools is another area of activity of software outsourcing companies. Large organizations can take full advantage of the potential of collected data only when it is properly stored and analyzed.

Typically, software outsourcing companies work in a team augmentation model. In practice, it means that you should contact such companies when you already have a team but you need additional hands to work. Sometimes this approach is called body leasing and that’s how you should treat it. Probably there’s not enough time to deeply understand a domain, because this relation is usually time bonded. It requires a well-prepared specification or task list to make sure that developed parts of a product will satisfy users’ needs.

On the other hand, software outsourcing has obvious disadvantages. The software outsourcing company does not provide a client with consulting services. It is the client’s duty to create a product strategy and choose the right technology for the application. It still requires the employment of appropriate specialists for the project (which can be a one-off for the company after all), because usually, the company’s current employees do not have sufficient competence in the field of application.

How is outsourced software product development different?

The scope of activities of digital product development companies is much broader than that of software outsourcing companies. It includes:

Activities of a digital product development companies.

Strategy Phase

Careful planning of the product concept is most important for the success of the venture. Business value, UX design, development strategy, and product release should all be taken into consideration.

Product strategy answers one crucial question that keeps people motivated and on the same page – “Why does the world need your product?” It might sound cliche, but according to PMI studies, projects that are aligned with an organization’s strategy have a 20% better success rate than those that are not.

What’s also important is what will happen with the application after its release – customer support and product updates. A well-prepared strategy means the client can determine what kind of work the product will require when it hits the market.

Discovery Phase

Discovery phase in digital product development process.

The unspoken truth about product development is harsh. We operate in a complex world with a high degree of uncertainty. But there’s a light at the end of the tunnel. A good digital product development company can use its experience to help you deal with it. There are many activities related to the product discovery phase, so we are going to cover some of them.

User research and market research are an inseparable part of the work on the product strategy. User surveys which determine the expectations of potential customers are also key.

The objective of user research is to find out who the product will be targeted at, which is helpful in creating so-called personas. These are the traits of projected users of the application with their demographic characteristics, interests, ways of life or professed values. With this, you can determine who the real recipient of the product will be.

Market research helps to discover customer expectations. Equally important, however, is competition testing. You should know what kind of solutions other companies are using and test their application. This allows you to define product features that can give it a competitive advantage.

Based on research and strategy, it is possible to determine what your product will actually be. User-defined personas and archetypes, as well as requirements analysis, help shape the basic functions of the application.

Another part of the discovery phase is user flow research – the path the user takes from the first contact with the application, throughout the entire process of using the program.

Thanks to the user flow survey, it’s possible to develop an application that will be easy to navigate without unnecessary barriers and distractions.


To prepare for development, digital product development companies create the application mock-up. That way, the program structure as well as the hierarchy and relations between its elements can be determined.

The mock-up is usually a simplified scheme, although there are prototyping tools that will allow you to create a design similar to the future shape of the application. Thanks to this, the digital product development company will be able to show you the operation and appearance of future software.

The purpose of creating a mock-up is to design the application interface and visualize previously made project assumptions and their functionalities. The mock-up also lets you test solutions and gives the contractor a chance to consult with you to better understand your requirements before starting development.

Delivery Phase

There are two major approaches to software development: Waterfall and Agile. Depending on which framework you and your partner choose to pick, this phase might look quite different.

Waterfall means that scope, budget and time are fixed. It requires a great effort upfront and every change in your assumptions can be costly. Nowadays, fewer and fewer companies are going this way, but it is still used in specific types of projects.

On the other hand, there is a big Agile movement together with frameworks like Scrum, Kanban, Lean software development and others. The biggest emphasis here is on iterative development, adapting to change, and validating assumptions early.

Regardless of which one you choose, there are similar activities included. This means that in both scenarios you can expect a technical analysis, a code implementation, peer code reviews, application testing, user acceptance testing and deployment. There are many factors that determine which activities are crucial and your technology partner should explain them to you and discuss which you should adapt.

Why choose outsourced software product development?

As we explained earlier, the services of a digital product development company are definitely more comprehensive than the ones of a software outsourcing company. This difference brings much value to the client. Let’s find out what that is.


When you decide to employ a software outsourcing company, you actually hire programmers who create the application code. They have their preferences in the field of used technologies based on experience with applications from their portfolio. Therefore, it may turn out that the technology they work in will not be optimal for our project, but convenient and familiar to the programmers.

On the other hand, a digital product development company builds teams with cross-functional skills and competences. Therefore, a contractor is able to provide people other than developers to fill the gaps and make your product the best it can be. Whether you don’t have the time to write down a specification or need some user experience tweaks to increase conversion, there are people on the technology partner side that can pick up those tasks, do away with all bottlenecks and make the delivery process smoother.

In addition, the digital product development company is responsible for the entire project – from the moment the strategy is created, through the prototype, to implementation and further development. This means that the customer can focus on achieving business goals, not just the application development process.

Access to an interdisciplinary team

Digital product development companies offer their clients access to interdisciplinary teams.

The software outsourcing company offers you access only to the development team. For digital product development companies, you get a lot more – a team of specialists from various fields.

In addition to developers, there are business analysts, UX/UI designers, product managers, and others. Thanks to this, you can be sure that the project will be carried out in the most professional way, relieving you of the obligation to take care of all its aspects (which you may not have and you don’t need to have the competences to carry out).

Competent advice

The main advantage of digital product development is the ability to advise the client on optimal solutions. Because of this, you won’t have to employ specialists in the field of application development to create a full product strategy and choose the preferred technology.

In fact, when deciding on the services of a digital product development company, at the beginning it’s enough to have a defined product vision. This is just the beginning of the road to success. Experienced contractors will help you set measurable business goals, and, based on your target market and audience, try to find a way to reach them. Sometimes it’s better to verify your ideas on real customers before even one line of code is written, and most likely you can’t expect that kind of approach from a software outsourcing company.

What’s more, the digital product development company will be fully responsible for the entire application development process. You don’t have to worry about being left alone with any product-related issues – it is the contractor’s job to look after your product and help it grow continuously.


A digital product development company gives you a great advantage on your road to a great product. The times are gone when people thought that it was possible to spec down a product that will ideally fill end-users’ needs.

Nowadays, you need to move fast and validate your hypothesis with real users, and at the same time keep your codebase easily extendable with the highest quality to avoid massive technical debt that can potentially slow you down in the future. It sounds like a challenging task and it is, for sure. However, a good contractor knows how to deal with change and even expects it to happen. They also know the best techniques to validate ideas cost-effectively. There are various types of MVP you can try to understand what your clients really need. Why is it important? 42% of startups fail because there’s no market need or it wasn’t fulfilled.

This way of operating a digital product development company means, however, that you must reckon with the need to be more involved in the application development process. You should participate not only in the preparation of the strategy but also in prototype tests and ready application. This type of cooperation, although it requires more time investment from you, allows you to create a product that better meets the needs of your customers.

It’s time for your project to shine!

Are you interested in the issue of cooperation with a digital product development company? You’ve come to the right place! Our competences and experience in this field are confirmed countless successful projects. Contact us and let’s start creating your new product today!

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Marcin Dryka
Software Engineer
Bianka Pluszczewska
Tech Editor

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