Product vs Service Based Companies - Which One Should You Choose and Why?

Product vs Service Based Companies - Which One Should You Choose and Why?

Are you someone who is looking for jobs in the IT Industry? If yes, then you might be familiar with tech giants like Google, Adobe, Microsoft, Amazon and also renowned MNCs like Capgemini, Wipro, TCS, Infosys.

Choosing the right company is very important for a job aspirant as your career trajectory depends a lot on which company you are working at. A good company will help you gain practical skills, become more confident in front of people and will offer a package which justifies the hard work you put in.

And while exploring companies you might have heard the two terms, "Service Based Companies" and "Product Based Companies". In today's article, we will cover what Service Based and Product Based companies are, what differentiates them and what you should choose. Let us start with Product Based Companies...

What are Product Based Companies?

List of Product Based Companies Product Based Companies are ones which develop their own product for end users. For example, Google owns products like Gmail, Google Maps, Google Drive, YouTube, Google Photos, etc. They enhance these, add new features or launch new products. There are various examples of Product Based Companies such as Google, LinkedIn, Microsoft, Atlassian, Amazon, Apple, Netflix and much more. Also, the much trending term, "FAANG" is also the acronym of Product giants Facebook (now called Meta), Apple, Amazon, Netflix, Google.

What are Service Based Companies?

List of Service Based Companies Service Based Companies don't have their own product as they provide services to other companies across different domains. Assume, that SBI (State Bank of India) is a client of TCS and it needs a website of its own which needs to be both maintained and deployed, Now SBI will outsource this Project to TCS. Then TCS employees/team will work on this project. Examples of Service Based Companies are TCS, Infosys, Cognizant, Capgemini and Accenture.

Now you must have a rough idea of Product Based Companies and Service Based Companies respectively.

Now that we have got a rough idea of what they are, let us have a look at how are they different from each other. We will analyze key things like salaries, hiring process, initial training period, work environment.

Salary Comparison

  • Product Based Companies

The annual income offered in PBCs is way more than SBCs for a freshman joining the company. You can easily get around 6-7 LPA which means approximately ₹30,000-₹45,000 in hand. Adding to this some PBCs also offer shares in their companies which is really great for someone who has the knowledge of investments and all.

Salary hike in Product Based Companies

  • Service-Based Companies

In SBCs you have to settle for 3-4 Lakh packages which are really low for new joiners and the growth of Software Engineers almost stops here as they don't really work on real-life projects. This happens a lot in SBCs and it is a bitter truth that mostly these software engineers have to work on MS Excel/Word or Presentations which contributes literally zero value to their work experience.

What is the recruitment process in PBCs and SBCs respectively?

  • Product-based Companies

They recruit the best people for their companies and for this, there are several filters (rounds). Like, Amazon has 5-7 rounds (for SDE 1) that contain tests to challenge your Technical as well as Soft skills and Interview processes with HRs to know how you think. So now, you know how difficult it is to get into a PBC whether it's a startup or a well-established MNC.

  • Service-Based Companies

Mostly in SBCs, they do Mass recruitments as they have many clients both National and International. Bagging a job in SBCs is also not easy. As there are only 2-3 rounds to filter. The worst part I think about SBCs is, They filter the candidates not based on their Technical skills but on Class 10th or Class 12 percentage criteria which sometimes really gets frustrating, In this era where Elon Musk and Visionaries like Bill Gates & Larry Page who are focusing to hire candidates based on their skills, whether they are College Dropouts or haven't even completed their high school, SBCs still filter candidates based on these 90's criteria.

Training Period

  • Product Based Companies

Product Based companies are known for selecting the best candidates according to requirements. They generally expect the people to know things beforehand, so the training period lasts from 15 days to a month. During this period, the freshman is introduced to various technologies used in the company and what type of challenges he/she will have to face in the future. When the training period is over, the person is allotted real-life projects so that he/she can gain experience and can learn from his/her mistakes.

  • Service Based Companies

Service Based Companies are typically known as mass recruiters, due to their bul hiring culture. This type of hiring generates more employment but compromises the quality of employees. Speaking about the training period in SBCs, a few years back they were providing 6-7 months of rigorous training. But now, we can see that the cutting-edge competition and high demands of skilled engineers between SBCs and PBCs have provided an opportunity for SBCs to hire candidates who are already skilled enough that saves a lot of time as well as money which they can invest in their company's growth. So in SBCs, the training period is generally between 1-3 months.

Work duration

  • Product Based Companies

In PBCs the work duration is around 8-9 hours per day and basically, you have to meet the deadlines. Once you have finished your given task, your schedule becomes more flexible. Also in PBCs switching from one Team or Project to another Team/Project is pretty easy. But you are expected to follow this strategy: LEARN FAST-> BUILD FAST-> DEPLOY FAST, which sometimes gets hefty due to this much load of work.

  • Service Based Companies

Here also, the work timings are around 9 hours but they are really rigid on this and you have to stick to the schedule. But, there's an advantage here, as you are given an ample amount of time to submit your project, there's no rush to finish the work too early.

Quality of work

  • Product Based Companies

In PBCs, you get to work on good projects which will allow you to learn the trending technologies. Here, you will get the ownership of projects and you get to treat your projects like your child.

  • Service Based Companies

In SBCs, you don't get ownership of projects. The higher authorities delegate work according to cleint requirements and you have to work according to instructions. Here you will have to hear others instead of getting heard by others. Technologies you get to work on may not be future-proof. Many of my friends have gone on to become Software Developers in SBCs only to get PHP or Java projects.

Now the main question arises here: Which one should you choose and Why?

Product Based Companies vs Service Based Companies - Which is better and why

Why should you join a Product Based Company?

  • PBCs provide a healthier work environment than SBCs. They have a well designed workspace that people enjoy working in and the people also tend to push you to give your best.
  • Better pay scale: Its no surprise that PBCs prefer quality over quantity. So where there is quality, people will tend to get more compensation. Not only salaries, but the appraisals in PBCs are also more than double than that of top SBCs.
  • Ownership of projects. As I said, you get ownership of projects and you get the freedom to implement things in your own way as long as it fits the end user's needs.
  • Work on trending technologies
  • Flexible Work Schedule: In PBCs, you can work 24hrs for 3 consecutive days and chill for the rest of the week. Here, the work pressure is based upon the complexity of work you are getting. So there is less uniformity in work and it allows you to do other stuff as well.

Why should you join a Service-Based Company?

  • If you're someone who is more into Communication & Business Skills rather than Technical skills, then SBCs should be your first choice.
  • There are tremendous Abroad opportunities given as most of their clients are from Foreign Lands.
  • As discussed time and delivery of the project is very flexible.
  • In the future, If you want to prepare for government exams along with job (in SBCs), you will get a lot of time as there's no such work pressure compared to PBCs.


Product Based Companies vs Service Based Companies - Which is better and why

It shouldn't be a surprise if I recommend you to opt for Product Based Companies over Service Based Companies. Gone are the days when getting a job in TCS is celebrated by families like crazy. The tables have turned and people have started to shift to the PBCs as they provide a better career trajectory than SBCs. From package to quality of projects, PBCs dominate almost every aspects that we have covered.

If you are in college and looking for your first job, try getting into a Product based company as it will give you a good head start for years to come. If you are a guy with 10+ years of experience, then either one can be the best pick based on preference and position.

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