Product development is globalizing rapidly: Forrester

MUMBAI, INDIA: According to Forrester Research, the Product Development space is currently witnessing rapid globalization, ultimately shaping an ecosystem where firms leverage both development approaches – captive as well as outside partners – to cope with rising costs, skill-shortage, attrition and project failures in product design work. This ecosystem is swiftly gaining ground as firms having mid-size to large captive Offshore Product Development (OPD) set-ups realize the benefits of this approach. 

Says Sudin Apte, Forrester’s Sr. Analyst covering this space, “It’s an approach wherein firms use their captive set-ups for core work, and bank on third party vendors for the non-core or vendor-specialty work. In the wake of sky-rocketing costs and attrition, the ecosystem essentially allows firms having mid-size to large captive centers to reduce costs, shorten the time spells and ensure project continuity. Despite challenges, this model helps them keep alive the fundamental rationale of going offshore for product design. As stated in the past by Forrester, we are now observing this OPD Ecosystem swiftly gaining the critical mass.” 

Commenting on the Captive Vs Outsourcing approach for product design, Apte says, “Firms now realize that building offshore capability for product design is a journey, and not a quick fix. While developing a globally distributed R&D system, product firms pass through various maturity stages as they improve their program management processes and define what core and non-core development is. And only when the nature of work is both – core and very confidential, it makes sense for firms not to outsource.”

Apte, in one of his latest reports - Tapping The Full Potential Of Offshore Product Development, states that majority of OPD users lack sophistication in terms of sending work offshore. He adds, “If we take example of the Offshore IT Services users, they generally went through a fairly logical and phased evolution while sending work offshore. They had experience of outsourcing with onshore providers even before sending work to locations like India. In contrast, in the past five years, most product firms jumped quickly into the offshore model without significant outsourcing experience to help guide their decisions.” Apte recommends that IT Services best practices regarding the fundamental factors such as internal preparation, setting the right expectations, top management support etc. could be tweaked to suit product development.