A software services company’s customer is typically one company that has a specific requirement that is being satisfied through outsourcing. Although the customer is hoping to get domain expertise, the minimum expectation from the team is the technical skill set. In a software product company, in the long-term (preferably in the short-term as well), the domain expertise becomes more important than just technical skill set.

The differences go well beyond just skill set: the expectation from a services company is to deliver an application/system program or a product module to the services customer who will in turn deliver it to their end-customer. The services company has much less control over the schedules and often asked to attain difficult goals. While the quality requirements are likely to be stringent, typically there is however a buffer before your deliverable reaches the end-customer. This shields the services companies from the direct impact of a product or a project release, of the kind faced by product companies.

A software services company expects its professionals to acquire a breadth of skills to ensure he/she can fit into many different project teams. The value of a services software consultant is directly proportionate to the number of skills in which he/she can claim expertise. In a software product company the depth of domain and technical skills overrides all other expertise requirements. A services company’s revenues are directly proportionate to the number of employees while product companies try to maintain the least number of headcount for a given product line. Note that a services company that takes on product development often has most of the characteristics of a product company depending on the level at which the relationship is built. Employees in such teams need to understand the dynamics of both models.

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