Why does an outsourcing company need its own product?

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May 04, 2022

Is it a good idea to develop your product being an outsourcing company? Yes, as you’re making a product anyway.

Every software company makes a product, be it for customers or itself. In the first case, it’s called a service company, in the second — a product one. Service-based (outsourcing) companies give customers a solution in the form of amenities. Such companies don’t need a high initial capital, the team is easy to build, and the market is always open for them, as the number of people who need solutions never ends.

With the product-based model, companies want to create top-quality products that have a high market value and are capable enough to satisfy the customer.

The two models are not rivaling but, in fact, complementing each other. Outsourcing is an ideal foundation for developing your own product, as it needs money that outsourcing can supply without continuous searching for investors.

Here’s a story of how an outsourcing company came up with the idea to create its own product.

Mitrix Technology Experience

One of the biggest challenges for an outsourcing company is client attraction. Mitrix Technology was not an exception. At first, Mitrix Technology used traditional methods. Inbound (SEO and PPC) were costly and time-consuming, that’s why the company employed outbound methods — looked for contacts in Crunchbase, Angel List, LinkedIn, and sent emails or private messages. The results were not satisfying enough because such methods are popular with all outsourcing companies.

Dmitry Blyshchyk, the founder, was constantly reaching out to potential clients through his personal network. Dmitry soon found out that it was much easier to contact and communicate with the CEO of a company through a professional tech community in Slack than via telephone or email. Besides, professional communities helped to find the right people who might need services.

That’s why he decided to scale what works best — personal networking. The company began to connect and monitor various technology online communities that the company found in different open sources. It proved to be effective — Mitrix Technology got its new clients via Slack communities.

This way, Mitrix Technology came up with Leadguru which was put on the market in 2021. This product automates lead finding in professional Slack communities and allows writing to them directly within the platform.

Today, the company successfully uses Leadguru to find clients for outsourced software development and developers for dedicated and augmented teams (outstaffing). Moreover, the platform helps to find customers for itself and any other B2B product in professional Slack communities.

If we look at the outsourcing market a bit closer, we’ll notice that the practice of creating your own product is quite popular among companies, as it brings a bunch of benefits.

Top 6 Reasons to Have Your Own Product for a Service Company

Get a competitive advantage. Your product helps to optimize business processes, be it communication, development, logistics, or any other day-to-day operations, as well as reduce the costs, connected to the core business, and get a competitive advantage. For example, Mitrix Technology filled the need to attract clients and saved on marketing and sales costs.

For example, working on outsourcing projects, Wetelo exposed a common problem — none of their clients had a robust management tool. When Wetelo grew bigger, it became a problem for the company as well. That’s why Wetelo created its own product Avanga —  a business automation tool for reporting and business process management with 500+ off-the-shelf business flows.

A proprietary solution increased development cost-effectiveness by 40% and reduced the time dedicated to creating products for clients by 20-30%.

Get business diversity. Creating several sources of income allows companies to manage risks more effectively and make the business viable.

Another company, ELEKS leveraged years of experience and transformed them into their competitive advantage —  a series of its own software for the electrical power sector, healthcare, government, and software industry:

  • Doctor ELEKS, for example, is a complex solution that allows optimizing the treatment process.
  • DAKAR System is a science-intensive software solution for power distribution systems.
  • STATR is an intelligence tool for comprehensive web and mobile app analytics.

All the three solutions have different target audiences and help ELEKS to diversify its business and become more economically sustainable.

Boost brand awareness. A well-crafted product increases the number of customers who want both your outsourcing services and your product. If the product helps your business, there is a strong chance that other companies will benefit from it as well. For example, EPAM launched their own product Covid Resistance — a digital health identity contact tracing mobile app that tracks risk exposure to COVID-19 anonymously. The project has already got a Pandemic Tech Innovation Award 2020, which is, apart from its social benefit,  a great PR move.

Let employees grow professionally. Software engineers learn faster and more effectively when they are involved in creating their proprietary products and have the opportunity to generate ideas. It’s an indispensable benefit of having your own product for every outsourcing company. Your own product development allows team members to try and master other roles, such as a product owner, product manager, analyst etc.

Understand customers’ needs better. This is another essential benefit of your own solution. Developing a product, software engineers learn to understand the needs and pains of their customers better because they have experience working on a customer’s side. Such skills allow companies to communicate with customers more effectively.

Solve the bench problem. If developers are not involved in an outsourcing project, they put their skills and knowledge into the company product and learn. A good example is Ardas which has been developing two products at once — Stripo and eSputnik. So, proprietary products allow service companies to use workforce more effectively.

Summary

As we see, no matter how many projects an outsourcing company works on, it’s always a good idea to launch your own product. This way, you optimize internal processes, get a competitive advantage, understand clients’ pain points better and increase the professional level of your employees. Numerous companies that are developing their own products prove it by their experience.

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