While many people believe outsourcing and offshoring are the same thing, there’s actually an important difference between the meaning of the two terms, difference which can be crucial for the success of your business. Usually, both outsourcing and offshoring are considered to be processes through which you take certain tasks and/or projects that would have normally been completed by your employees and redirect them to freelancers all over the world. In reality, this is not the case for both concepts. Today, we’re going to talk about outsourcing and offshoring, explain what they are, and see which one would suit you best.
What Is Outsourcing?
Outsourcing is the process of hiring a third party to do some of the work your employees can’t. This third party can be either an agency or a freelancer, and the type of work you can outsource ranges from projects, to processes, and tasks. This means that there are many types of outsourcing out there. For instance, you can ask an agency to handle your customer support, which is something many companies do. You can also outsource basic or repetitive tasks. This will allow your employees to focus on more important things. Especially if your business is quite large, you’re probably going to need to outsource part of the work. The third party you decide to go with can be from the same city, the same country, or even from a different one.
What Is Offshoring?
Offshoring relates strictly to work that you assign to agencies or freelancers from a different country. So, if your business is U.S.-based and you hire a freelancer who also lives in the U.S., you’re outsourcing your workload. If you choose someone from India, you’re offshoring it. Yet another difference between outsourcing and offshoring is the fact that the latter focuses more on reducing costs, while the former is more interested in an advanced skillset that will get the job done faster.
Outsourcing and Offshoring: Advantages and Disadvantages
Among the main benefits of outsourcing is the fact that you don’t need a long-term contract. This means that the process is flexible and it allows you to switch contractors quite fast. So you don’t need to move your business to another geographical area. Moreover, you save money and you’re not the only one responsible for the projects you outsource. However, you might have trouble communicating with the contractor or synchronizing with them when it comes to deadlines. Plus, you also have to pay attention to confidentiality and what you decide to share.
When it comes to offshoring benefits, an extra one is the fact that you can enjoy the time zone benefits and receive constant support. Moreover, you can take advantage of global talent at a much lower price. Still, the communication barriers remain, and they can become even worse than in the case of outsourcing. Furthermore, you have to remember that the culture and the work habits might also be different. Plus, actually meeting with the contractors in person is quite difficult.
If you want to decide which option would suit you best, all you have to do is think about your business needs. Do you want to find a cheap and reliable solution? Then offshoring might be the answer for you. Are you looking for high-quality work and the possibility to interact with the contractors more? Then maybe you should choose outsourcing.
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