Product Vs Outsource Company: What’s Better For Developer?

Dec 8, 2020 9:17 AM ET

iCrowdNewswire   Dec 8, 2020  4:17 AM ET

Software developers have boundless opportunities. Considering the ubiquity of IT solutions in today’s business landscape, developer skills are very much in demand in various settings. The US Bureau of Labor Statistics expects employment for developers to grow 22 percent from 2019 to 2029, much faster than other occupations. Around 316,000 new positions will be available within the next ten years.

If you are a newbie developer, there are various career paths available to you. In general, there are two types of companies that offer entry-level positions for IT developers: product and outsource companies. Perhaps, you’ll ask which one is better for a developer?

To better understand the difference between these settings, let’s take a look at how these companies work and the roles of a developer.

The ever-evolving business landscape gave rise to two main approaches in software development: in-house and outsourced.

Differences Between Product and Outsource Company

These two business models are in stark contrast but both have their unique advantages and disadvantages that may suit different types of businesses. Some businesses find their product development ideal while others might better outsource this business aspect. Primary considerations are factors like skills expertise required, cost, scale, and flexibility.

Although software outsourcing has seen a steady annual growth rate of 5.9%, in-housing is gaining traction especially among companies or organizations that require continuous IT development and sophisticated technologies. Hence, many developers are hired as in-house developers.

Product Company

A product company builds its software or products. They are mainly manned by in-house developers and IT professionals but may also outsource some business processes. Software solutions are intended for internal use or can also be sold to businesses in the same sector. The product company retains ownership of the products.

Outsourcing Company        

An outsourcing company builds software for other companies and clients. They build software based on client’s requirements and specifications. The projects are covered by NDA contracts and are delivered within the client’s deadline. These projects can be one-time, continuous, or recurring; and can either be long or short-term. Some outsourcing companies specialize in certain software development processes, programming languages, types of software, etc. Companies may differ in their workflow but in general, they all share the same business model. An outsourcing company does not have ownership of products.

Despite their differences in terms of the business side, they share similar work processes, inputs, and outputs. What an in-house developer does in a product company is most likely the same in an outsourcing company. However, the variety of work and type of projects a developer will encounter in a specific type of company may differ.

Project variety

Generally, outsourcing companies cover a wide range of projects. Here developers can encounter all sorts of requests from various clients in different industries and sectors. This proves beneficial for entry-level developers as you’ll have the chance to work with various domain knowledge, technologies, and clients. You’ll be able to learn new techniques and diversify your skills faster.

Meanwhile, in a product company, developers are more likely focused on specific types of technologies and processes. In some companies, you’ll be assigned to a specific task. If your number one goal is to improve your developing skills, a product company might not give you this chance. However, if you aim to specialize in specific projects and skills, then joining a product company may be the right decision.


In a product company, the main concern of an IT developer is to satisfy the end-users. In general, the company already has an idea of the target audience and the IT products are designed based on this data. Most likely, you’ll only have to deal with your immediate superior.

In an outsourcing company, you have to understand and satisfy both the client’s requirements and the end-users. As mentioned above, there are various types of clients you’ll encounter in an outsourcing company. It can be extremely stressful dealing with demanding clients and unpredictable end-users.

Experts at Entrance Consulting noted that if you want to improve customer satisfaction skills, then you’ll fit best in an outsourcing company. Meanwhile, if you don’t want to deal directly with clients, then you should opt to join a product company.

Job security

There are rumors that outsourcing companies do not offer job stability. But is this true? In the outsourcing model, the company needs to continuously scout for projects. If a project is suddenly discontinued (clients can stop a project for whatever reason), you might be left jobless.

Meanwhile, in the product company, there are long-term projects that the team handles. In case there are no more upcoming projects, employees are forewarned ahead of time, allowing you to look for other alternatives. Therefore, if you aim for more stability, a production company may be the best choice.

Career path

In terms of professional growth, there can be no definite answer as to which one offers the best career path. The opportunities available to developers depend mainly on your product or outsourcing a company’s organizational structure. Some offer exciting career paths – you can start as an entry-level developer and eventually get qualified as a CIO – while others have a limited organizational structure. In general, large companies (either product or outsource) provide more growth opportunities.

There are a lot of opportunities available to software developers. When choosing between a product or an outsource company, an entry-level developer has a lot of things to consider. But most importantly, choose a work environment where you will be most satisfied, personally, and professionally.