Cost cutting has been successfully implemented in IT companies through outsourcing developmental activities to third party. What was once called as subcontracting has taken a new form in the present day scenario as outsourced product development.

Outsourcing reduces risks and costs associated with managing HR and development environment. The main requirement is that the service delivery organization needs to fully understand the requirements of the client and then start with development activity. When this requirements elicitation is done completely the final product performance will be highly efficient. In this way, organizations get to choose the appropriate skills that meet project requirements and also have full control over the project run.