What Is The Difference Between Outsourcing And Offshoring?Written By Peter Hammon
July 28, 2016
A key buzzword that has been popular in the modern business world for quite some time now is outsourcing. Most people are familiar with the term and associate it with overseas, reduced costs and the transference of certain tasks outside a company. However, the term offshoring is becoming more prevalent nowadays and there is still confusion on what it actually means and the difference from outsourcing.
Outsourcing is taking an activity or role in your business and having it completed and managed by another company, outside of your business. A good example of this is letting your accountant do your annual statements and tax returns. You don’t actually know how it’s done, you just want it done and as a result you have outsourced this to your accountant.
Offshoring is taking an activity and moving it to an offshore location, but that activity is still completely managed within your company, so you control the outcomes. An example of this would be allowing an offshore company to hire dedicated staff on your behalf, such as an accountant; they would work for your company only and perform the tasks your way.
To decide between outsourcing and offshoring, it will really depend on the nature of your business and your needs. Outsourcing may be better for those who want fast, flexible and cheap services. Whereas offshoring may be better suited for those who need more control, cultural similarities and higher quality services that are cost effective. Ultimately there are the benefits of cost savings and specialization from both business models.
It may be worth consulting with experts in both methods to determine which will be the best route to take for your business, before making a major decision.