Episode 110: The Client-Vendor Playbook: Product, Outsource, and Outstaff Explained

In Episode 110 of Fintech Garden, Igor Tomych sits down with Artem Boboshko, VP of Business Development at DashDevs, to dissect the client-vendor relationship in fintech. They break down outsourcing models, vendor accountability, and the benefits and risks of external partnerships. This episode is a must-listen for fintech startups, product managers, and CTOs navigating the complexities of software development, product management, and financial technology innovation.

Defining the Different Engagement Models

The discussion starts with the different types of vendor engagement models, crucial for fintechs building and scaling digital products. Artem highlights six key models:

1. Software Outsourcing – Clients bring ingredients (business requirements, tech stack) and need expert execution.
2. Product Outsourcing – Clients define an end goal but require vendor expertise to shape the product.
3. Outstaffing (Staff Augmentation) – Extending in-house teams with external specialists.
4. Consulting Services – Engaging vendors for strategic guidance.
5. Recruitment Services – Hiring specialists through external vendors.
6. Licensing Models – Using pre-built financial technology solutions.

Product vs. Software Outsourcing: Understanding the Difference

A simple analogy of an apple pie illustrates the distinction:

• Product outsourcing is when a client says, “I need an apple pie,” expecting a vendor to create the entire product from scratch.
• Software outsourcing is when the client has the ingredients but needs a vendor’s expertise to execute the recipe.

Many fintechs lack the internal expertise to estimate resources, timelines, and execution strategies, making outsourcing a strategic choice.

Vendor Accountability in Fintech

Accountability is a major factor in fintech vendor engagements. Who takes responsibility for success or failure?

• Early-stage fintech founders often seek vendors who bring expertise in regulatory compliance, software development, and market trends.
• Vendors bridge knowledge gaps, providing insights on industry best practices and regulatory requirements.
• Internal vs. external product development – When should fintechs build in-house vs. rely on external vendors?

Should You Build In-House or Outsource?

The decision to build internally or partner with a vendor depends on:

• Project complexity vs. complications – Simple problems (like implementing KYC) vs. complex, market-defining innovations.
• Time to market – Vendors accelerate fintech product launches.
• Scalability – Vendors provide agility in team size and resources.
• Internal expertise – Startups often lack specialized skills in fintech software development.

Common Pitfalls in Vendor Relationships

• Mismatched expectations – Hiring a developer but expecting strategic product guidance.
• Failure to define success metrics – Without clear KPIs, outsourcing engagements can fail.
• Rigid vendor management – Successful fintechs treat vendors as strategic partners, not just service providers.
• Ignoring vendor expertise – Fintech founders should leverage market knowledge and prior vendor experience.

Successful Vendor Collaborations in Fintech

The episode features real-world fintech success stories, including:

• A UK-based financial services company collaborating with multiple vendors to deliver a specialized product for a niche market.
• A fintech startup working with core banking providers to integrate services from ClearBank, Stripe, and Third Fin.
• How fintech vendors provide faster execution, cost savings, and industry expertise, reducing hiring risks.

Book Recommendations from the Hosts

To complement the discussion, Igor and Artem recommend two must-read books:

• Understanding Payments – A fintech guide covering payment systems, regulations, and digital finance trends.
• Positive Intelligence by Shirzad Chamine – A book on identifying mental barriers (saboteurs) and improving decision-making.

Final Thoughts

For fintech founders, CTOs, and product leaders, vendor relationships can make or break a product’s success. Whether outsourcing software, engaging product consultants, or scaling teams with outstaffing, selecting the right model and setting clear expectations is crucial.

Listen to Episode 110 of Fintech Garden for expert insights into fintech outsourcing strategies!