Outsourcing Core Competencies

Marty Cagan argues that commercial software companies should never outsource three core competencies: product definition, user experience design, and the underlying site architecture/engineering that builds the product. He observes that outsourced product work typically yields inconsistent, incongruent, orphaned, and unreliable customer experiences, because outside firms lack deep customer understanding and accountability ends when the contract does. He examines four common reasons firms outsource, including misperceiving the product as just a channel, mistaken cost reasoning, slow engineering, and a belief that internal talent is lacking, and explains how each should be addressed. Outsourcing non-central functions like QA, SEO, or a corporate blog remains reasonable. The core message is that long-term success requires the product organization to become the expert on its customers.

01Key takeaways

• Keep product definition, UX design, and core architecture/engineering in-house if the product is central to the business.
• Outsourcing peripheral work like QA, SEO, or event management is generally fine and frees focus for core work.
• Outsourced teams rarely understand customers deeply and leave when contracts end, producing fragmented experiences.
• If slow delivery drives outsourcing, fix the feature firehose and product-to-engineering ratio rather than handing off work.
• Use external experts to build internal capability, not to create something and throw it over the wall.

02Key sections

Outsourcing that works

Cagan distinguishes central products from peripheral ones and notes that non-central functions such as a corporate blog or supplemental QA can be safely outsourced.

Why outsourced core work fails

Outsourced product work tends to be inconsistent, incongruent with customers, orphaned without ownership, and unreliable when problems span vendors.

Four reasons companies outsource

Companies outsource because management undervalues the product as a channel, believes it saves money, sees engineering as too slow, or doubts internal talent.

How to address the root causes

Each underlying reason calls for a different fix, such as educating leaders, reducing firehose feature requests, or building internal capability with outside help.

Becoming the customer expert

Long-term success depends on the product organization deeply understanding customers, which is why defining and designing must stay in-house.

03From the post

“A partnership dedicated to teaching best practices to product teams and product leaders”

Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.