Why Not To Outsource Product Management

Never outsource your core competencies.

It's not uncommon for companies to collaborate with external partners. Whether you've experienced this from the perspective of a vendor or a contractor, you're likely aware of the dynamics at play. These external partners can take the form of professional agencies or freelance experts, often managed by a project manager who serves as the go-to person for the project.

But when it comes to product management, is it a wise choice to outsource this crucial role to specialized agencies? In my view, it's not, and here's why:

1. Commitment Discrepancy: External product managers are not as committed as their internal counterparts. Internal product managers have a stake in the company's success and are more likely to stay focused on their responsibilities. On the other hand, external product managers may move on to the next project, potentially leaving your project in limbo.

2. Accountability Challenge: While external partners may bear some responsibility for the product's success, holding them truly accountable can be challenging. The intricate nature of product management requires a deep understanding of the company's goals and culture, which external partners might struggle to fully grasp.

3. Onboarding and Knowledge Transfer: Just like internal product managers, external partners need to be onboarded, and this process can be time-consuming. The knowledge they acquire about your industry and user base may not stay within your organization when they move on to their next project.

4. Safeguard Your Core Competencies: Outsourcing certain functions can be beneficial, but you should never outsource your core competencies. Your company's culture, strategy, and core functions should remain internal. This is to maintain control and avoid becoming hollow and reliant on external forces. Product management, which includes defining the strategy of your product portfolio, should always be handled by your internal team. After all, your unique selling proposition (USP) must be cultivated within your organization.

How to Approach Outsourcing More Effectively:

1. Keep Leadership and Core Functions In-House: Leadership, culture, and product management should remain internal to your organization. These are the elements that define your company and its vision.

2. Leverage External Specialists for Specific Tasks: When it comes to specialized tasks like recruiting, marketing campaigns, or M&A advisory, it's wise to engage external specialists as advisors. They can provide valuable insights and expertise without taking over core company functions.

3. Define Clear Scope for External Partners: When collaborating with external agencies, ensure they have a defined, limited scope. They should complement your in-house functions, not replace them. This way, you maintain control and ensure that each agency operates within its area of expertise.

In the dynamic world of software development, a balanced approach to outsourcing is key. By keeping core competencies internal and strategically leveraging external partners for specialized tasks, you can maximize the benefits of collaboration while safeguarding the essence of your company.

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What I read

This is separate section of this newsletter. I will list some of the best articles I read on the internet. They may or may not be related to the topic of this article. I will keep a list of the best articles (currently >700) at https://www.digital-product-management.com. These are today’s picks:

Principles of Chaos Engineering: Chaos Engineering means experimenting on a system in order to withstand turbulent conditions in production.

Hypothesis Handbooks: Keep A “Lab Handbook” of Decisions and Actions.

Ivy Lee Method: Daily Routine Experts Recommend for Peak Productivity.