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Product Development strategies that health startups consider: from In-House to Product Dev Studio
Sep 01, 2022
1 min read

What is the biggest problem for startups right now? Many can say that getting investments in such an unfavorable investment climate is. True, but getting an investment won’t save you a headache.

Investors and advisors are concerned that the company will not reach launch deadlines: CEO has the responsibility to users and investors to release a quality product on time.

In this case, there is only one problem – finding a team to introduce the product to market quickly, but at the same time so that it can potentially scale.

What are the ways to solve this problem? There are 3 of them and the first one is in-house.

“If you want to do something well, do it yourself.” Everyone knows this quote, which is why many choose to hire an in-house team for development.


This format is first considered by almost everyone who encounters IT development for the first time, because:

  1. The product is like your child, so no one wants to give away their child, as the trust in unfamiliar companies is close to zero.
  2. A sad CTO who believes that without a personal team that is built from scratch, the product will be underestimated and not understood, and they will remain without duties.

And truly, to some extent, this CTO is right. But only in terms of the transfer of culture, which the outsourcing format can fail.

But when delegating the development to someone else, the CTO will not be distracted by micromanaging. They can focus their time and energy on communicating with users and thinking big, which is much more profitable for the company than the management of the in-house team.

But at the same time, the disadvantages of this format are probably the most critical, because:

  1. It is very difficult to search for, gather a team of different specialists, and check whether they can fit in terms of experience, area, the reality of cases, a trial period, etc. It will not be possible to assemble a full-fledged team anyway, due to limited budgets, and some important functions. For example, Product design can be performed by other team members.
  2. In-house team is a fixed cost of salaries with social benefits and the difficulty of breaking the contract, if suddenly after the probationary period the specialist will not be able to cope with the tasks. In the current economic situation, this can be very risky.

The following format is known to everyone, and this is probably the second option that is resorted to after the team realizes that it is inexpedient to opt for in-house.

Outsourcing & Outstaffing

We think that most of you know what outsourcing is.

IT outsourcing services include application development, infrastructure and software support and maintenance, data center management, and other initiatives. This approach can save a life for one company, but another one can stumble upon a bad provider, screw up the deadlines and lose part of the budget.

Outsourcing can be your salvation if you have found a good provider, and you have clear requirements and a vision for your product. As a result, you will receive a finished product according to your requirements, spend much fewer resources in comparison with in-house development and will be able to invest the resources in the development of the product.

However, even when choosing a conscientious provider, there are still a number of disadvantages of this model, especially for digital health companies: lack of expertise and experience in digital health, and ignorance of standards and laws. This can be a major barrier, because if you don’t have deep experience in the niche and outsourcing teams just do the task without any advice, the outcome can have many mistakes.

The same problem can be attributed to outstaffing. In this format, you just get a ready-made team in the state, but without your personal experience in the field and knowledge of where to go next, you will simply make mistakes and not take into account the laws and standards of the industry.

Bottom line: outsourcing & outstaffing can indeed be a good solution if you have a strong enough product team and well-defined requirements.

Product studio

This format may be unfamiliar to many, someone might hear about it and think that this is the same as outsourcing, which is technically true. Both formats include service providers, but if you call a product studio an outsource company, they will get offended (I know this myself).

So, what’s the difference?

Imagine you saw a cool hairstyle on the internet and decided to change your style. You went to the hairdresser, showed the picture, and said that you want the same. The hairdresser just met your requirements, you looked in the mirror, and accidentally you found out that this hairstyle just doesn’t suit you. Maybe if you came to the barbershop, they would tell you that this hairstyle isn’t for you and give you some suggestions.

In case of a bad hairstyle, it’s way easier, as you can just cover the head with a cap until the hair grows back. But what can you do if the company just executed your requirements without any advice, and you received the developed product and found out that your ideas and decisions were wrong?

That’s the difference between outsourcing and product studio.

The first ones are just executors. They will take your requirements and provide you with a stable and functional product that meets your criteria. This is not inherently bad, but if the requirements you bring to an outsource company are not well-suited to meet the needs of the market, your product will likely not thrive the way you’ve imagined.

Product studios are solution makers. They’re challenging your ideas and will be transparent if they think some of them are bad. Rather than simply taking a specification list and building it out, they provide value through quick and repeated validation. Rapid validation processes utilize user testing to ensure that your product will actually provide the envisioned value to the end user without any frills.

Studios view customers not just as clients, but as partners. Partners working with a digital product studio can expect a strong working relationship with their experts. Again, you are not just a customer; you are part of the team. This collaboration spans the entire product cycle, from the initial challenge to validating it, to continuously improving the product based on the market’s needs.

So, if you value open communication, you’re not looking for executors, and you’re ready to hear criticism, then this approach may suit you best.

Okay, now you know about all possible options. And now you’re probably expecting some sort of sales pitch like “choose our studio, and we’ll make you a cool product”. Don’t worry, we won’t do this.

We just wanted to say that all startups are living organisms, they’re all different, and only you know what approach will suit your needs best.

But if product studio concepts resonate with you, just email us, and we’ll discuss your idea.

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