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Outsourced Product Development – Understanding the ‘Tip of the Iceberg’

Posted on: 21 September '10

Outsourced Product Development (OPD) has become an integral part of Software Product Engineering for more than a decade. OPD business has high potential as well as challenges. The idiom ‘tip of the iceberg’ applies to OPD in two contexts – at a macro or industry level, in business context, and at the micro or product level, in engineering context. Let me explore these two contexts in this blog.

First of all, at the macro level, the growth we have seen in OPD all these years has been very promising. OPD started with the outsourcing initiatives that involved Product Testing or Quality Assurance of software products. Gradually product maintenance that typically involves defect fixing and addition of new features got accomplished successfully at offshore centers. Subsequently, module development or complete product development started at offshore centers. This trend of OPD growth continued and embraced offerings related to professional services as well. At present OPD is a stable and maturing industry. There are opportunities galore across several areas including platforms, tools, business automation products, portals and other internet products. While cost effectiveness and lack of availability of talent pool at a single location became the key drivers that promoted OPD, it is very important to understand that the user community has grown global and this mandated businesses to position engineering teams as well as sales and marketing teams across the globe to serve customers. While cost-effectiveness came as a relief to overcome budget constraints, OPD proved to be the right strategy for product vendors in staying ahead of completion and ensuring timely product releases.

This is not the end but just the end of the beginning. What we have seen is just the tip of the iceberg. For the past two or three years OPD has started including R&D and Innovation as key service offerings. It is not uncommon to see products designed elsewhere in the globe being served in local markets.

Next, in Software Product Engineering context one must observe this phenomenon at a micro level or product level itself. Let me share with you an interesting conversation that happened when I met a Product Manager couple of years ago. He was our customer and was visiting our facilities in India for the second time. We had shown process improvements and delivery efficiency and he was pretty satisfied and provided us valuable insights too. During one of my conversations with him his eyes lit up when I asked, “Typically what happens to the final codebase that we deliver and what does it take to put it into production?” He became very passionate and we engaged in a long conversation. “What your team does and sees is just the tip of the iceberg,” he started. He took me through the entire set of complex onsite activities that involved spot reviews, user acceptance, beta testing, discussions related to production planning, creation of upgrade scripts, the final production move and post-production activities for several weeks until the sustenance starts.

As you may guess, what lies beneath the tip of the iceberg in this context is again context driven. It may differ from customer to customer. Its magnitude is different in different ecosystems. However there are several commonalities across ecosystems that are worth sharing. These are the hidden parts of the engineering iceberg on OPD perspective. These include ‘User Acceptance Testing’, ‘Beta Testing’, ‘Production Planning’, and ‘Moving into Production and Stabilization’. OPD segment has several players who offer transactional services that do not penetrate beyond the tip of this iceberg. This is not only a sure recipe for failure but also a means to stagnate value creation.

After several years of growth story, at a micro level or at product level, there are very few providers that cater to several aspects below the tip of the iceberg. Thinking through this phenomenon and applying it to a given context is very essential to appreciate the value we deliver in OPD. Understanding the significance of OPD services on the overall product lifecycle is quintessential to sustaining our passion in SPE.

Unless we understand the micro level context of this phenomenon, we will find it very challenging to leverage the potential of OPD business.

Do you agree? What are your thoughts?

Mindtree Blog Archives

Mindtree blog Archives are a collection of blogs by various authors who have independently contributed as thought leaders in the past. We may or may not be in a position to get the authors to respond to your comments.

  • sanjay

    Hi Raja,

    Good topic you have touched upon. For our customers business core activity is to conceptualise the product features and successful launch of the same even though the end user uses the codebase developed by us.

    Hence our customers can outsource the code development but not conceptualising the product or product release. Is there any way we can climb in the value chain?

  • Dear Sanjay,

    Tyically, when we work with our customers over a period of several years, the relationship as well as engagement maturity rises up the value chain. We move up from the level of a project owner to a product owner and then become a valued partner.

    For customers, an engagement with a valued partner means flawless delivery, intense collaboration and exchange of ideas, and suggestions on value-added features for existing products as well as discussions on new product ideas. No doubt, such a collaboration will enrich conceptualization.

    This is a way to move up the value chain.

  • Sukumar Jena

    Before some days I was searching some article based on OPD. Today I got all my requirement in this article. Thanks Raja!

    Sukumar Jena

  • offshore product development

    Thank you for sharing this offshore product development blog.

  • Ismail

    Informative post.