In modern business and industry, companies often seek to optimize their production processes and increase operational efficiency. Two important concepts in achieving this goal are outsourcing companies and products. Although related, the two concepts have many important differences. This article will analyze the differences between outsourcing companies and products and highlight the highlights of each concept.

Read on to learn the difference between outsourcing and product companies so that developers can have a comprehensive view before deciding which model to choose to work in.  

What is an Outsource Company?

An outsourcing company is a technology company that provides software outsourcing services. The company's goal is to create a product that meets the requirements/conditions set by the customer. They will receive requests from customers, sign a cooperation contract and produce software that meets the requirements/conditions. The software created by the outsourcing company must meet the set standards, as well as be delivered within the agreed time frame, and within the customer's budget.

In simple terms, outsourcing companies are hired to write software for other parties. They do not own, advertise, or sell the products they create. These companies are paid based on projects or hours worked.

In Vietnam, there are a number of large-scale outsourcing companies with famous brands such as TMA, Nashtech, FPT Software, Global Cybersoft, KMS, etc.

More: Top quality IT Outsourcing companies in VietNam

What is a Product Company? 

In contrast to an outsourcing company, a product(business) is a technology company that develops its own software. The product company will be responsible for all stages, from planning, developing the product, releasing, selling, and monetizing its users. 

Therefore, the focus of the product company is the end-users. The product created must satisfy the needs and tastes of the end-users. The software interface must be easy to use, convenient, and eye-catching. The more users the product company attracts, the more revenue their product will bring.

Some of the big product companies in Vietnam include Grab, VNG, or Tiki. In such big companies, the software development team is just one part among many other parts. Or at the startup scale, we can go to product companies like Stringee, 1Office, KiotViet,...

The difference between outsourcing and product companies

In the above section, we have also seen the difference between outsourcing and product companies - this is the concepts of the two models: outsourcing company and product. However, the two models still have many differences in aspects such as  

Target

For outsourcing companies, their goal is to satisfy their customers. To do so, they must deliver the right technical standards, on time, and within budget. For product companies, they develop products to suit the end user’s market. Therefore, the software they create must be fully functional, have a simple interface, and be easy to use.

More: IT Outsourcing trends in the context of global economic recession

Working process

Working process is an important side that we can see the difference between outsourcing and product companies.

Outsourcing Company:

In outsourcing companies, there is a specific and clear working process because it must meet the progress requirements to complete the product delivery plan to the customer. The working process of an outsourcing company usually goes through the following 5 steps:

• Seeking partner
• Outline requirements
• Programming Software
• Software handover
• Warranty, troubleshooting

When working in an outsourcing company, developers need to meet deadline requirements to keep up with progress and deliver on schedule. Most developers only take on a part of a large project and have to divide modules to work on. And one disadvantage is that programmers have little opportunity to give feedback or propose ideas to improve product features. 

Company Product:

As for product companies, the workflow serves the purpose of delivering a product to the end user, so there will be some differences. In general, a software development process includes:

• Solution, request
• Design
• Program
• Testing
• Deployment

Developers at the product company will have a more comprehensive view of the product, have the opportunity to discuss and contribute ideas to develop the product with everyone in the team.

Work environment

This is another side that the difference between outsourcing and product companies express.

Outsourcing Company:

• Get the opportunity to experience many different projects, and many new and different technologies
• Learn a lot from experts or predecessors about knowledge and experience
• Having the opportunity to expand relationships, meet many customers creates high adaptability for developers

Company Product: 

• Developers will stick with a fixed project for a long time, you can learn and dig deeper into the product
• Technology in product companies is more stable and often more focused.
• Developers will be involved in all stages of software development: launching, collecting feedback, improving user experience.

Should developers choose a product company or an outsourcing company to work for?

Product companies are highly encouraged to encourage employees to be creative and contribute ideas to build better products. So if you are a creative person who loves to bring valuable products to users, then Product company is a great choice for you. 

As for outsourcing companies, the main work they take on is client projects, learning about the business and then processing according to their requirements. Developers are hardly allowed to follow their creativity. So if you just want to work on many different projects and products without developing product thinking, an outsourcing company should be your home.

Summary 

In conclusion, both outsourcing and product companies play an important role in the modern economy. However, the difference between outsourcing and product companies express in their business models, target customers, and approaches to innovation. Understanding the differences between the two models can help developers choose the most suitable working environment for themselves.