Embracing External Design and Development Firms -vs - Preferring to Keep Functions in House

We have seen various trends over the past several years when companies need to fill resource gaps in their workforce. Some industries are more open to hiring external staff or firms to fill staffing needs that are role specific or project specific.  With economic troubles mounting, more and more companies tend to outsource certain parts of functions, and it makes outsourcing product development a common practice especially for tech companies. According to STX Next’s 2021 Global CTO Survey, 89% of the CTOs plan to outsource product development in the future. In contrast, the apparel industry is rapidly accelerating in its adoption of new technologies and best practices from other industries. While outsourcing product development can be a best practice, a resource many other industries have successfully utilized, apparel brands still have a slow acceptance rate of this best practice. Why?

Organizations who haven’t yielded success with the outsourcing process often have hesitations about entering into a partnership with a product development firm.

Though several companies and teams point to the need for resources as the #1 reason why projects are not completed on time, we found their hesitancy to resolve the resource constraint by hiring an external person/team generally falls in five of the following areas of concern. We often answer these concerns and questions and wanted to share these with our network.  If you happen to be considering outsourcing your product development, these might be helpful.

Will I lose control?  On the contrary, your company has gained a valuable collaborator/s. You guide the ship, but the ship has an experienced crew with a history of success and will bring a higher chance of reaching its destination. The crew will also often have years of experience collaborating with external teams and brand teams which makes the communication and collaboration easier.

How can an outsourced product development team achieve product fit? Time is everything and accomplishing two tasks for the value of one would always be ideal. First would be new time your teams have to focus on other critical business needs, and drive strategies while someone else handles the ancillary deeds to bring product to market. Additionally, this gives you and your team a chance to hone in on customer needs and allows your team opportunity to stay focused on outpacing your competitors. 

What if I don’t have the time to manage an off-site team. Truth is, minimal time is required when you’re working with an established product development company. The firm will have a well-defined product development process, articulate communication tools, and experience leveraging the latest technology. They become your thought partners and your doers.

How does my IP stay protected? When working with an external product development team it is no different than working with an in-house development team. IP and secrecy are held to the highest of standards and are protected by agreements such as MNDAs and consulting agreements. Product development companies are used to working with product innovations across brands and have strict protocols and systems in place to ensure IP remains locked down. This at times also includes separate computers, servers, and cloud systems.

Do I need to consider geography? Not at all. Covid has normalized product development and innovation in any location across industries. If your PD partner has solid communication channels, access to the latest technology, and camera equipment, the product will be developed on time. Your onsite participation during the project may be beneficial for some meetings, prototype evaluations, or user testing from time to time.

While there are concerns by some companies, we also want to point out that there are several benefits that apparel companies can gain by embracing external design and development firms. Some of the key benefits include:

Access to specialized expertise: External design and development firms often have specialized knowledge and expertise in specific product areas, and some are a one-stop-shop, such as material sourcing, pattern making, technical design, digital marketing, e-commerce, and supply chain management. By working with these firms, apparel companies can tap into this expertise and gain valuable insights and support to help them improve their operations and grow their business.

Cost savings: In many cases, working with external firms can be more cost-effective than hiring full-time employees or building in-house teams. This is especially true for smaller or newer apparel companies that may not have the resources to invest in extensive in-house infrastructure. This allows the company to get the expertise they need without incurring the costs of hiring and training new employees.

Increased flexibility and scalability: External firms can offer a high degree of flexibility, which is particularly valuable for apparel companies that may need to quickly scale up or down their operations based on market demand. By working with external firms, companies can easily adjust their staffing and resources to meet changing needs, without having to invest in expensive in-house infrastructure.

Innovation and creativity: External design and development firms often bring fresh perspectives and innovative ideas to the table this can help apparel companies stay ahead of the competition and find new ways to differentiate themselves in the market.

Improved speed-to-market: By working with external design and development firms, apparel companies can speed up their development process and bring products to market more quickly. This is particularly valuable in the fast-paced fashion industry, where trends and consumer preferences can change rapidly.

Increased focus: By outsourcing certain functions to external firms, apparel companies can focus more of their time and resources on their core competencies and strategic priorities. This can help them become more efficient and effective, and better position themselves for long-term success.

Even after these concerns and benefits are addressed there are still some apparel companies that prefer to keep functions in-house rather than working with external design and development partners, and that’s okay too. Some of the reasons we have heard include:

Company culture: Some apparel companies believe that it is important to have all functions in-house in order to foster a strong company culture and maintain a sense of cohesion among employees. By keeping design and development functions in-house, they can ensure that their employees are aligned around a common vision and values. 

Strategic focus: Some apparel companies may want to focus their resources on their core competencies and keep functions in-house in order to stay focused on their strategic goals.

Overall, embracing external design and development firms can help apparel companies improve their designs, reduce costs, speed up their development process, and stay ahead of the competition. However, it is important to carefully evaluate potential partners and ensure that they have the expertise, experience, and capabilities to meet the company's specific needs and goals.

If you are considering working with an external design and development company for short term or long-term projects, check us out, The Squad Nation. We are happy to answer any questions as you vet the appropriate path right for you and your company.