Business Development 2 minutes read

Offshoring vs. Outsourcing

IT industry tends to be very dynamic when it comes to day to day operations, needs for keeping up with funding runways, product delivery, etc. All of this leads to C level management reaching out for outside help that costs less than local support thus, the outsourcing becomes the helping hand. There is also, another term that people are often misunderstanding and confusing it with outsourcing - offshoring.

So, let's lift off the fog of confusion.

Outsourcing

Outsourcing - the practice of using outside firms to handle work normally performed within a company -- is a familiar concept to many entrepreneurs. It can include a wide range of roles, industries, and niches, from customer support and sales to design and development.

In short – companies outsource all sorts of responsibilities to third-party service providers who become responsible for all planned or current activities. Also, many large companies turn to outsource to cut costs. In response, entire industries have evolved to serve companies' outsourcing needs.

Offshoring

Offshoring is the process of moving some business operations to a different geographical location. Outsourcing relies on outside help from a separate entity and it depends on great deal of trust, obviously and it is usually not used for core operations. On the other note, offshoring core operations are quite common.

The disadvantages of offshoring are somewhat similar to disadvantages of outsourcing, especially if the latter is done in a different geographical region.

Which one is better?

It’s all about finding the right balance between distributing critical and non-critical parts of your operations.

Offshoring is subject to a significant amount of criticism. Many blame offshoring for stealing jobs from potential employees in the country. On the other side, outsourcing is not subject to the same amount of criticism or risks.

Conclusion

Outsourcing is a tested strategy to improve operations. Big companies and small businesses turn to outsource to reap the benefits of this approach. But before you start with outsourcing or offshoring, it’s imperative that you fully know and understand the correct ways of integrating these strategies into your business.

Or how successfully people like to say: 'The more you learn, the more you earn.'

Start learning.