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Research: what Product Development Strategies are used by digital health startups
Sep 08, 2022
3 min read

Earlier, we asked experts in the industry about:

1. What obstacles in product development are they currently facing;

2. What strategy would they choose for product development;

3. What were the reasons for choosing the format;

4. What factors are more important for them when choosing an outsourcing/outstaffing company;

5. What alternatives they see.

What obstacles in product development are they currently facing?


The most common options:

1. Problem with scaling: how to introduce a product quickly, but potentially scalable.

2. Fixed costs and responsibility of hiring an in-house team.

3. Reducing the number of hiring expenses.

The first problem is purely competitive: startups do not want to let competitors catch up with them, and investors are pushing teams out of their comfort zone.

Problems 2 and 3 are related to scaling tools: companies can spend a lot of money on hiring each individual specialist and be held responsible for the fact that someone could not keep up with the pace of work and become part of a single mechanism.

What strategy would they choose for product development?

We see that companies most often choose between their own, however an expensive and possibly long-term solution, and a cheaper, faster, but possibly more risky solution.


If you want to read a more detailed comparison of these formats, you can read our article Here.

What were the reasons for choosing the format?

For outsource and outstaff:

1. To reduce and control costs;

2. To reduce the time spent on searching and hiring each individual specialist.


The first case is more clear. The second one shows us that in addition to saving money, many choose this format because of a rather slow recruitment process, during which you need to interview and check every candidate separately and then try to make a team out of everyone.

The reasons for choosing an in-house format are very different:

1. The desire to develop their own team: companies want the people working on the projects to stay after their launch. Outsourcing/outstaffing formats involve just the usual delivery of work, while the future support of the product remains unclear.

2. Distrust in the expertise in healthcare of other formats: companies consider that many outsourcing/outstaffing companies don’t have a deep enough understanding of a certain area and, as a rule, work in a huge number of areas. The risks of lack of expertise in the field are associated with the adaptation of standards in the product, which are specified in the laws of countries, and market-specific UX / UI practices that need to be taken into account, for example, in applications that interact with elderly patients or doctors.

3. Transparency of processes: outsourcing/outstaffing teams are just executors of the terms of reference. And this can be a big obstacle because if the terms of reference indicate features and ideas that are not competitive or not fully disclosed, the outsourcing team may simply not think about it and not raise this topic.


Therefore, on the one hand, we have the problem of the speed and high cost of hiring a team, and on the other hand, the lack of transparency, partnership, and industry expertise.

By the way, in our other question, addressed to both those choosing in-house and outsourcing formats, respondents noted that the disadvantages of outsourcing/outstaffing, apart from the deep knowledge of the health industry and transparency problems, are higher costs: in the long run, contractors are overcharging.

And there was also an additional interesting answer: “No real incentive to think outside the box”, which indicates the desire of the respondents to be included in the generation of product ideas.


What factors are more important for them when choosing an outsourcing/outstaffing company?

Surprisingly, the most common options here were not the number of cases, but again expertise & experience in healthcare, partner involvement: the ability to influence, advise, and price.


What alternatives do they see?

If you remember, we’ve covered the issues with outsourcing, outstaffing, and in-house formats above. Respondents suggested solving these problems and creating an alternative by simply teaching an in-house team and waiting for the long-term result; jokingly offered to take a captive to do the work :), or to find a solution that would combine outsourcing and in-house formats.


According to the description, the last option is a partnership with a studio, in which the partner works with you as one team. It’s just that they already have a ready-made set of people who develop your product as if it were their brainchild: with critiques of ideas and rapid hypothesis validation processes.

Studios view customers not just as clients, but as partners. Partners working with a product studio can expect a strong working relationship with their experts. You can read more about this format Here.

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