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Should Tech Startups Outsource Product Development?


When startups ask me whether they should outsource product development, I usually answer that it’s not normally a yes or no question but more about which portions of the total project should be outsourced. I do admit that I am biased: my Silicon Valley consulting firm offers outsourced product development. Let me share with you my somewhat different perspective on outsourcing.

1. Outsourcing does not necessarily mean the work is done in another country or state. Most of our customers are in the San Francisco Bay Area. We augment our clients’ development teams not only because we are easy to work with and manage, but also because our expertise complements their in-house skills and experience. We have a design process that ensures we make the right device and that it is designed with high quality. We also have a number of techniques for joining and extending our client’s team as needed.

2. The most important skill a startup needs to differentiate itself in the market is to be able to translate a deep understanding of a market need into a product description and set of requirements. They do not need to have all the skills required to develop the product; in fact, these days, technical risk or execution risk is often much less than market risk. To survive, much less thrive, most startups need to focus on developing a thorough appreciation for their customer’s needs and the constraints a solution has to meet to be able to satisfy them. The critical skill is often customer marketing and product definition. An outside firm can assist them in verifying the requirements and completing the design. Make sure an outsource supplier takes the time to understand what is needed, including a written document carefully describing the features of the device.

3. Outsourcing tasks that are not mission-critical or truly differentiating is critical to most early-stage startups’ success. The startup team has to leverage its core competencies, but it often does not make sense to hire full-time employees to satisfy the entire set of skills that will be needed. Product development involves a wide range of skills. No startup would even consider setting up a circuit board manufacturing facility in-house. It is always outsourced. Likewise, it doesn’t make sense to develop circuits if the core skill of the startup is software. Many startups have failed because they tried to do too much internally.

4. Collaboration tools have made it much easier to work remotely (whether in another city or another country). Many startups have teams scattered across the globe. These companies have no trouble outsourcing development. It is often difficult to tell the difference between team members that are internal and those that are outsourced.

Hence, we do not act as just design consultants but as partners in your product development and release to volume production. To act as a partner in product development, we believe it is our job to:

  • Document the requirements carefully. A well-written proposal will go a long way toward satisfying this need, however a full specification is needed.
  • Identify key risks in the design and offer a plan to mitigate them. Often a feasibility stage is needed to address risks.
  • Communicate effectively and frequently with the client.
  • Have a senior team of engineers who bring deep experience and appropriate expertise. We have learned many things from our experience and can help you avoid making mistakes.

Voler Systems provides services critical for successful outsourcing partnerships. We create innovative technology while meeting tight development schedules and budgets. We have experience with sensors ranging from thermocouples to cameras.



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