Brian Terhune

Outsourcing product development can make any OEM nervous. All of us with experience in the field have seen first-hand what happens when outsourcing goes wrong—higher costs and time-to-market delays reduce sales volume, lower profitability, and shorten product life cycle.

In a perfect world, OEM project managers communicate their general product requirements to the development partner and establish a collaborative relationship with them. Both parties work together to define the exact requirements for the new product, and the development partner demonstrates the capability to execute.

But this thirty-thousand-foot view makes outsourcing product development sound easier than it really is. In the real world, projects stall due to a myriad of problems such as:

  • Vague or conflicting product requirements
  • Design solutions that fail to perform as expected
  • Processes that don’t include validation and functional testing

Understanding why outsourcing problems arise—and knowing how to prevent them—takes experience. This article will focus on recognizing the underlying issues that cause development problems and look at ways to mitigate the risks.

Remove the Guesswork, Remove the Risk

Product development issues manifest in many ways, and a few of the more common examples include: System interfaces aren’t well defined. Firmware features are improperly implemented. Components or subsystems do not meet required performance. Any of these can result in additional development cost or increased time to market.


To avoid problems in the first place, begin by recognizing vulnerability in three key areas:

  1. Product requirements
  2. Technology application
  3. Development practices

When you evaluate prospective product development resources with these three areas in mind, you improve your chances of finding a partner able to deliver the right product for you.

1.      Understand and Agree on Product Requirements

There can be no ambiguity when it comes to product requirements. It’s critical that you first agree, in detail, what it is your development team will design. They must be able to leverage experience and challenge your product requirements when appropriate. For example, if you have a requirement that will create issues with electromagnetic interference (EMI), you want a development partner able to suggest a design change that will eliminate the problem.

Identifying issues like this empowers the development team to dig deeper. Sure, they’ll document the overall architecture, but they’ll also team with you to evaluate expectations for individual components, environmental requirements, types of testing, and required certifications. Good communication eliminates the unknown and puts everyone on the same page, working toward the same goals.

Unknowns create uncertainty about costs, deadlines, and functionality. If you do not define and agree on product requirements, how can you be sure your development partner possesses capabilities necessary to complete the project on time and on budget? How do you know when you’re done?

The Product Development Balancing Act

When an OEM requests new product features after agreement on the detailed requirements has been reached, the product development team must perform a balancing act. It needs to weigh the benefits of the new feature against the potential impact on cost, timing, testing, production, and profitability of the product. You want a development partner brave enough to communicate the realities of these changes to you.

When the development team works with the OEM to establish definite, detailed product requirements and specifications at the outset, it removes the guesswork—and therefore risks—associated with change requests.

2.      No Substitute for Technology Expertise

In electronic engineering and manufacturing, technology is not one-size-fits-all. A given technology or component can work well for one product and fail miserably elsewhere. The result depends on a number of factors, including environments, tolerances, and functional requirements.

Product requirements often call out specific services instead of features. If, for example, you specify Wi-Fi instead of wireless connectivity as a feature, your development partner should make sure that is what you really want. To do that, the development team must ask the right questions.

What do you need to transmit? Is it just a few characters of text? Will the product be used in an environment where Wi-Fi is the most reliably available form of connectivity? How will it impact the energy requirements? Often, applying the right technology begins with questions about what drives the real product requirements.

3.      Good Process is the Foundation for Smooth Development

Process is the keystone of smooth product development. Good process creates opportunities for innovation, cost/benefit analysis, and product life cycle planning. Process that focuses on measured results keeps stakeholders aligned to common goals.

No project is without its speed bumps, but process can minimize their impact or help avoid them altogether. Good process provides clear detail on every element of development. From product specification and engineering, to validation, functional test, and manufacturing, sound process will mitigate inherent product development risks.

When you need to outsource product development, seek a process-driven partner who will work with you to maximize features, minimize cost, and race your product to market. Be sure they use a documented and repeatable development process, and have a track record for delivering end products that meet the needs of their customers.

Product Development Outsourcing Done Right

Product development outsourcing doesn’t have to be nerve wracking. It can do just what it’s supposed to—deliver the right product that meets requirements, contain costs, and keep inhouse resources focused on core competencies.

To make sound outsourcing decisions, identify the functions and features, all of the must-haves, your new product requires. Then find a product development partner able to marshal the right technologies for each stage of development and use a proven process to ensure timely, cost-effective delivery.

A collaborative outsourcing partner will dig deep in an effort to excavate all of the product requirements, bravely communicate the realities of feature creep, and show you the scars of their experience—demonstrating they have done this before. With a partner that applies the right capabilities, technologies, and process, you may find yourself in a near-perfect world after all.