You have been given good advice already. At the risk of duplicating some of it, I'll add a few of my own thoughts:
In all likelihood your prototype is really (at least) 2 prototypes that are likely going to be developed in parallel and will feed off each other: let's call the first one your "engineering" prototype: this is the one that proves that you can build a device that does what you say it will do. The second one is your "industrial design" prototype: this is the one that makes sure yours is a device that people will buy and wear, which meets all of your design constraints including weight, UI/EX, any regulatory or safety compliance requirements you need to meet, drop testing, and housing the circuitry from your engineering prototype.
Depending on the degree of specialization, it may or may not be easy to outsource the engineering piece. And if you further subdivide into hardware and software, I would try to keep the software piece in house and outsource hardware if you must. Why? Because if you succeed V2 of your product will likely be an entire redesign from a hardware perspective but may or may not be an entire rewrite on software.
The design prototype can absolutely be outsourced, but make sure you only hire a top-level studio. Experience doing this and familiarity with manufacturing matters. You don't want to end with a stunning design that everyone loves but cannot be manufactured because of a 0.5 degree design mistake on the loft angle in the injected plastic enclosure...
Others may have very different views, this is just based on my somewhat limited experience.