What Is The Difference Between Outsourcing And Off-Shoring
Many people confuse off-shoring with outsourcing. Outsourcing is not
about getting a cheap workforce to do as much work as possible at a
cheap rate in a developing economy. You can outsource your social
media management to Chicago if you want. The point is to get work off
your desk or to get specialist skills that you don’t have yourself or
within the team. Off-shoring, on the other hand, is purely about
lowering costs by transferring some business processes abroad to
increase corporate profitability.
Traditionally, only big companies are associated with off-shoring, but
with the age of the internet, this is also accessible to smaller
businesses.
For small businesses, the two certainly overlap, but it’s important to
distinguish the difference to better identify your motives for
outsourcing and therefore apply the best strategies. Now, it’s when
you may want to look a little deeper to understand the difference
between offshoring and outsourcing and hopefully it may help you to
understand better. Although the two may sound the same and have some
similar properties, there are some distinct differences between
offshoring and outsourcing.
Offshoring usually offers a cost-saving advantage by getting work done
in different countries. While outsourcing refers to the process of
having work contracted out to a third-party company.
It is completely possible to outsource work without having to offshore
it. The benefits of outsourcing are aplenty – you can take advantage
of specialized skills from a different company, receive cost
efficiency bonuses as well as improved labour flexibility. Basically,
outsourcing helps to complete multiple jobs at a faster rate, reducing
costs, while running it more effectively in terms of profitable
operations within your organization.
Next, let’s talk a little bit more on the benefits of offshoring which
include taking advantage of lower prices from skilled labour in a
different country. In most cases, the offering of offshore options can
also provide you with better availability of labour and materials as
well as a much larger talent pool for getting things done.
Similarly, for offshoring, it allows your core staff to focus on more
important tasks and to spend less time on tasks that don’t require
immediate attention. Hence, this helps your staff to be more time
focused on the bigger picture that will require more time to work on
especially when it comes to making strategic decisions that will help
your business to grow and develop.
You must be wondering how outsourcing first came about? It all started
as early as 1980 and throughout the modern business world, this is
something that happens quite often. Companies continue to grow and in
order to have the skills that are necessary to continue building a
company, specialized skills need to be sourced quickly and effectively
in order to scale.
With both outsourcing and offshoring solutions working together, it’s
possible to achieve high-quality value and expansion for your company.
It is important however to remember to differentiate between the two
in their full definition.
While you can outsource and offshore at the same time, offshoring
doesn’t always mean outsourcing. Offshoring could be an extension of
your local team but in a different country, a new labour supply or
other aspects of production that can improve the overall performance
of your company. Keep the main differences between these two in mind
if you’re interested in making improvements in your company through a
proposal to outsource or offshore.
Daven Michaels is a New York Times Best Selling Author and CEO of
premiere global outsourcing company, 123Employee. The company employs
hundreds of young bright individuals on three continents. His
International event, Beyond Marketing Live! inspires entrepreneurs to
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