The Top 5 Compelling Reasons You Should Outsource The New Product Development In Your Company

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If you outsource your New Product Development (NPD), will it be effective and economical, and should you give it serious consideration?

If you outsource your New Product Development (NPD), will it be effective and economical, and should you give it serious consideration?If you outsource your New Product Development (NPD), will it be effective and economical, and should you give it serious consideration?

If you outsource your New Product Development (NPD), will it be effective and economical? Should you give it serious consideration?

Here are some points we noted based on our research and experience providing product development and product management services to industry both in the UK and further afield:

Outsourced product development means lower costs

Outside companies are almost always faster than internal teams at developing new products because they apply a heightened focus and dedicated resources to the project.

This can:

  1. cut costs in the short term,
  2. result in a quicker ROI, and
  3. result in higher profits in the long term

Outsourced product development minimizes team overload

In-house product-development departments are normally inundated with work. Unfortunately, corporate management tends to oversimplify the NPD process, which means design teams are typically overloaded with projects that require wide-ranging expertise. Most organizations would benefit by letting their engineering departments focus on fewer projects. In effect, that is exactly what outsourcing provides. If you outsource your NPD, you’ll get dedicated resources focused on completing a single project.

Outsourcing product development injects innovation.

Innovation becomes increasingly difficult as organizations grow. Reasons include a history of doing things a certain way, risk aversion, a narrow focus on one’s own industry, and fears of cannibalizing existing products and income. As a result, it takes a lot of gut and courage for companies to disrupt themselves.

Companies can overcome or mitigate these powerful factors by collaborating with InnovoloThe research concluded that those firms that do internal and external collaboration well are best equipped to succeed.

Increase productivity by outsourcing

Teams spend less time on NPD as companies grow versus maintaining existing products. For example, as companies grow and add products, they must use more resources to sustain engineering; this limits the time available for NPD. The problem worsens until an organization separates NPD from other engineering functions, but this is usually feasible only in large organizations unless you...

Yep, you guessed it.

Augment your team with diverse skills and expertise

Most NPD requires diverse skills and experience. Relying only on internal resources makes it almost impossible to ensure the necessary expertise is always available when needed. External resources broaden a company’s knowledge and experience base. Also, integrating internal resources with an outside firm widens the support network of suppliers, vendors, prototype houses, and the like.

This, too, can help accelerate a project.

FAQs about Outsourced Product Development Services

How might an organization benefit from outsourcing its product development?

There are several ways an organization might benefit from outsourcing its product development, including:

  1. Lower costsOutside companies are often faster than internal teams at developing new products, which can result in lower costs in the short term and higher profits in the long term.
  2. Minimized team overload: In-house product development departments are often inundated with work, leading to lower productivity. Outsourcing can help to minimize team overload by providing dedicated resources that focus on a single project.
  3. Injected innovation: It can be difficult for organizations to innovate internally, but collaborating with an outside firm can inject new ideas and help overcome some of the barriers to innovation.
  4. Increased productivity: Outsourcing can help increase productivity by freeing up internal resources and providing access to a wider range of skills and expertise.
  5. Cross-fertilization of ideas: Working with an outside company can also help cross-fertilize ideas, leading to a more innovative and effective product development process.

What are some of the challenges associated with outsourcing product development?

There can be several challenges associated with outsourcing product development, including:

  • Loss of control: When you outsource product development, you lose control over the process and the product. It is important to partner with a reputable company that you can trust to deliver a high-quality product.
  • Communication difficulties: There can be communication difficulties when working with an outside company, especially with a language barrier. It is important to establish clear lines of communication from the start to avoid misunderstandings.
  • Cultural differences: There can also be cultural differences between an organization and an outsourced company, leading to difficulties in understanding each other’s needs and expectations.

How might an organization choose the right third party product development firm?

When choosing an outsourcing partner, it is important to consider several factors, including:

  • Reputation: Choosing a reputable company with a good track record is important. There is no shortage of horror stories about businesses that shady outsourcing companies have burned, so it is crucial to do your homework before making any decisions.
  • Capabilities: The company should have the necessary capabilities to meet your needs. After all, you’ll want to ensure that they have the necessary skills and experience to meet your needs. But it’s also important to consider other factors, such as their financial stability, customer satisfaction record, and policies on intellectual property.
  • Cultural fit: There should be a good cultural fit between the company and your organization. After all, you’ll be working closely with them, and you want to be sure that you’re on the same page, at least with the project manager.

What are some of the trends in outsourced product development?

There are several trends in outsourced product development, including:

  • Increased use of agile methodology: Agile methodology is becoming increasingly popular for product development. It allows for faster delivery times and greater flexibility.
  • More focus on customer satisfaction: There is a greater focus on customer satisfaction in outsourced product development, as companies want to ensure that their products are of the highest quality.
  • Greater use of market research: Market research is being used more frequently to determine what customers want and need from a product.
  • Higher standards: There is a trend for outsourcing firms to have higher quality assurance standards, as they need to compete with other companies in the market.

Key Takeways

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