Skip to main content

WHAT IS THE DIFFERENCE BETWEEN OUTSOURCING AND OFFSHORING?

Outsourcing, also known as subcontracting, is the process of delegating peripheral or non-core processes or activities of a business to an external business. This is done to free up their resources i.e. money, time and manpower so that these could be better invested in the core activities of the business. This way, firms can focus on strong sectors and delegate those activities to outsourcing companies that they know are not good at it. Outsourcing companies have employees who have expertise in such tasks. Firms outsource services like manufacturing, accounting, payroll, marketing, development and more.

On the other hand, offshoring is shifting of business processes or activities from the home country to another country. This is done to enjoy cheap resources of an overseas country so that the organization's operating costs are reduced. In short, offshoring is a transfer of the business process to a foreign country. Generally, companies want to move their business from a developed country to a developing country to take advantage of low labour cost and cheap resources.

Therefore, the important difference between outsourcing and offshoring is that outsourcing aims to focus on the core activities of the business while offshoring aims to take advantage of cheap labour costs.

Outsourcing can be done in the same country where your business is present and also in outside countries, on the other hand, offshoring can be done only in the outside country.

There are basically two types of outsourcing i.e. Knowledge Process Outsourcing (KPO) and Business Process Outsourcing (BPO).

Outsourcing tasks are done by non-employees (virtual employees assigned to you by an outsourcing company).  On the other hand, offshoring tasks are done by the employees of the company.

The benefits of outsourcing are –

  1. Increasing focus on the core activities of business means better business development
  2. Increased productivity of in-house employees
  3. Better Quality
  4. Operating cost reduction
  5. Access to skilled virtual employees

 

While the benefits of offshoring are –

  1. Access to cheap resources
  2. Low labour cost
  3. Less tax rate
  4. Lenient laws, less government intervention
  5. Operating cost reduction

 

What is the difference between outsourcing and offshoring? – in table format

 

Outsourcing

Offshoring

Definition

Outsourcing is the delegation of non-core activities to an external firm.

Offshoring is the relocation of the business process to another country.

What it implies?

Sharing work responsibility to another firm.

Transferring operations to the third party.

Sharing work responsibility within the firm.

Shifting activities or offices.

Motive

Focus on core activities of the business.

Taking benefits of low labour cost, that means low operation cost.

Tasks performed by

Non-employees, virtual employees hired through an outsourcing company.

Employees of the organization.

Location

Within or outside the country

Outside the country

 

 

 

 

Labels:

Comments

Post a Comment

Popular posts from this blog

Check-out the Reasons Why Hire Offshore Remote Employees

Hiring  dedicated virtual employees  is relatively a new trend among companies to expand their businesses at cost-effective rates. When you hire  offshore remote employees , unlike regular onsite employees, they work for you remotely through an offshore office. This way, you avail huge benefits to your company’s bottom line as you don’t have to spend on space, equipment, and taxes, which you certainly spend on your regular employees. Besides, the cost of hiring remote employees is 1/3rd of the cost of hiring local employees.    With modern technologies, communication barriers are now seamless. You can easily collaborate with your  offshore remote employees  through advanced technologies like Skype, Microsoft Teams, and more. From reduced operational costs to enhanced productivity, you may be considering hiring virtually for your staffing needs.   It is a good idea to first step back and gather all the necessary information before hiring yo...
Post a Comment
Read more

HIRE A VIRTUAL ASSISTANT FOR SMOOTH-RUNNING BUSINESS

Gone are the days when you are unable to find a way to grow your business due to a tight budget. This is an era where almost all our problems have one or another solution. Outsourcing is a buzzword these days. Start-ups and SMEs worldwide outsource their administrative, data entry, bookkeeping, real estate, and marketing services to outsourcing companies. Firms hire a virtual assistant through an outsourcing company as it offers them many benefits such as   It costs much less to hire a virtual assistant through an outsourcing company than hiring a local assistant. This way, you can save up to 70 percent, which means it helps you manage your budget easily. No overheads. You don’t need to invest your money on office rent, staff salary, staff bonuses, refreshments, etc., because all these expenses are done by the outsourcing company you tie-up with. You just have to pay one time to your outsourcing company for hiring a virtual assistant, after that you don’t have to...
Post a Comment
Read more

Why should you hire a virtual assistant Company

If you are a startup or small-scale enterprise, you might be experiencing that many of your business tasks are not getting done. These are the tasks that should be performed on a regular basis. You may be missing posting on social platforms, timely publication of blogs on your company’s website, daily bookkeeping management, etc. Why is this so? Because your employees and you are already very much busy with activities that are core to your business growth.   Therefore, here comes the role of virtual assistants. You may be wondering how you can keep a VA if you have a limited budget? You can hire a  cheap virtual assistant  from India, who are affordable yet highly experienced. They do high-quality work at a low cost. And India has been considered the best place for outsourcing for many years because of its highly effective workforce, which is available at a minimal cost.   Hiring a virtual assistant can save you money in the long run. Want to know how? Think ...
Post a Comment
Read more