The pace at which companies need to bring their products to market today requires a newer model than the traditional outsourced software development on a time-and-materials basis. "It's taking the thinking around outsourcing up a couple of notches," says Hari Haran, president of Persistent Systems. "Outsourcing is evolving to more creative and strategic partnering models."

Haran explains an example of this kind of thinking and the types of product development services that Persistent Systems performs for its customers. "We leverage our knowledge of our customer's products and product strategy to extend the product functionalities to reach customers in new markets. We take on risk to build product enablers and build bridges to other products or even bridge from our client's products to other products in the ecosystem to make even greater products."

He believes the model he describes is similar to what the contract manufacturing model for the hardware business was 20 years ago. In this model, the outsourcer needs to be a true partner, must understand the client's ecosystem, and must know not only how to put a product together but also how to disintegrate it and create enablers for a new direction. It's a focus on revenue generation rather than cost savings.

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