Given the circumstances of today’s working conditions, we can assume that remote work isn’t going anywhere any time soon. Thus, we need to determine whether outsourcing is limited to the realm of remote development or if product management can be outsourced as well.
Before, we were confident that it was possible to outsource everything except the product team. But after a time we began to wonder, why can’t product teams be remote too?
This article will discuss whether remote product management and development are realistic and consider both the pros and cons of each.
Common Reasons for Outsourcing
Every month at Intellectsoft, we speak with dozens of companies that are considering remote development. Most often, they fall into one of several categories:
- Small to medium businesses that digitize a business model with proven offline results. In this case, the company has a working knowledge of how an online business should work. They simply bring existing business processes online.
- Companies that scale up existing business processes. This case includes all those who have built successful MVPs but are now thinking about scaling their success by adding more functionality to reach a larger audience.
- Companies that are working on a one-time addition to existing functionality. In such cases, it makes no sense to hire someone from the outside due to the irregular nature of the development work.
- Businesses that plan to develop a solution from scratch. Usually, these include companies that need a specific business solution and then long-term support. They do not intend to periodically change the product, conduct dozens of AB tests, and so on. Just building, deploying, and using is their purpose.
Recently, due to COVID-19, more and more companies are doing what was previously considered impossible. They are transitioning product and marketing development to remote.
Why Product Management Is Moving to Remote
Both well-developed businesses and young startups have been resorting to outsourcing for product management. Some of the most common reasons for this include:
- Lack of qualified human resources. Often, teams don't have enough in-house resources to test new products or research a new segment of users and do it right. This is where remote teams come in handy.
- They need new products or features urgently, and deadlines are on fire. Imagine you’re a face mask production and the pandemic strikes. Now you want to quickly scale production and customer acquisition channels but don't have enough workforce to do so. That’s when you don’t have time to hire and onboard new staff and need someone who can ship things right away.
- Need solid product expertise for good money. A company has no experience working with developers and product managers. They cannot spend a year and a half on acquiring expertise, hiring personnel, and developing it. In this case, it is better to turn to those who have sufficient expertise.
- The current team is failing and product development needs to be accelerated. If a company is willing to try a product-led growth model, the product manager has to be a seasoned professional. The current team may not be the best fit for the product-led growth philosophy or meet the new requirements for development speed.
The Critical Role of the Product Manager
The position of a product manager has only been around for a short time. There are plenty of definitions of what a PM is. But for all of them, there is one that we can stick to. The product manager is the person responsible for creating and bringing a new product to market.
Suppose you look through hundreds of PM vacancies and conduct an in-depth analysis. Soon, it becomes clear that a product manager is a specialist who works at the intersection of business, marketing, and programming.
At every stage, they control the work on a new product, interact with investors and users, and develop their brainchild after the technical implementation.
As mentioned earlier, the main task is to develop new products in line with trends and the needs of users. Beyond this, there are plenty of other responsibilities and fields of expertise for a PM:
- Collecting information
- Deriving product requirements
- Creating a work plan and distributing roles among staff
- Promoting and selling the product
Product manager's top skills:
- market research and market analysis to determine the basic needs of customers
- implementation of product lines and testing new ideas
- conducting competitive analysis, comparing similar products through numerous characteristics
- development of marketing communications
- liaising with the sales director to create a sales strategy
- working with clients and the sales department to assess the results of implementation
- formation of long-term and short-term sales forecasts, providing analytics to management
- introducing new products to the market, analyzing profitability (ROI)
- creating a marketing strategy with the marketers
- pricing based on market research, production costs, and expected demand
- scheduling and defining operational requirements
This is a crucial role for any project. So why would a big company's CEO outsource a product manager or an entire product team?
Reasons for Outsourcing the Product Manager and Product Team
Well, there are a couple of reasons to do so. First, you get world-class experts working on your product. These professionals usually take jobs for a limited period of time tied directly to KPIs or a set of other mission-critical objectives like:
- The number of conversions and sign-ups compared to the current performance.
- Marginality. The actual sales are compared with the planned figures.
- Active users. Evaluate how many people are using the product daily.
- Customer Retention Rate (CRR). The retention rate of new users, which in most cases is even more critical than the acquisition.
- ROI. An indicator of the return on income tied to the cost of advertising. It shows whether the investment has paid off or not.
Delivering these KPIs means that the remote project manager and their development team are responsible for more than just releasing new functionality. They are entirely responsible for achieving specific business goals.
Leading product development experts often command high salaries. Thus, hiring them as full-time in-house staff can be incredibly expensive.
Additionally, product design and prototyping equipment can cost hundreds of thousands of dollars, not including the costs of maintenance and repair. Outsourced product development is often much less expensive than in-house design.
And in the end, you are not responsible for your outsourced product team. This is very useful if you are testing a product MVP based on market hypotheses. You can quickly terminate cooperation if the test was unsuccessful and the product-market fit was not found. Most outsourced product teams agree on that with their clients in advance.
What Is the Future of Product Team Outsourcing?
At Intellectsoft, we see a roughly 25% increase in clients wanting to include product managers and analysts as part of their outsourced teams.
Agile development methodology allows for one product specialist to work on 1-3 projects simultaneously, alternating the planning, prototyping, development, and analysis phases among themselves.
The only requirement for organizing a high-performing IT team extension of this level is the willingness of stakeholders to adhere to the process and agreed priorities. Remote product teams are capable of quick pivots, but only within extended sprints.
We anticipate that product management and analyst outsourcing will become more mainstream over the next three years in the wake of traditional marketing and development outsourcing.
As skilled specialist shortages and prices grow, availability and affordable prices will become critical factors in attracting these teams to an increasing number of players in the market.