Two business solutions are considered exceptional for reducing costs and scaling operations. These two solutions are offshoring and Outsourcing. Some firms outsource their crucial business operations to business process outsourcing (BPO) companies in their own country. While others offshore their business operations to Europe, Asia, and Latin America.
However, it is important to know the key differences between these two. This is because many people need clarification on these two terms. Some professionals and businesses use these two words interchangeably. However, proper differentiation and use are vital to making informed business decisions.
Key Differences Between Outsourcing and Offshoring
What is difference between offshoring vs outsourcing? These two methods, Outsourcing, and offshoring, have become increasingly famous in the business world. This is because it is an effective business solution. Both of them possess several potential benefits. The benefits range from lessening costs to streamlining operations to thriving businesses. But, there are some key differences between them that we have discussed in this article. Keep reading to learn these differences.
Job: Nature of Work
The major difference between offshoring and Outsourcing is the nature of the work done. Outsourcing entails delegating particular functions or tasks to an outside vendor.
On the other hand, offshoring involves moving all processes, operations, processes, or services to a different place. For instance, you outsource to the Philippines to have a BPO firm deal with your customer service. But when you offshore, you develop, own, and operate a call center in the country for this business work.
Management: Duties and Responsibilities
To understand the difference, consider the management level needed for each business solution. In Outsourcing, you provide your BPO partner the freedom to operate your business operations. However, during the process, you also collaborate and communicate with them.
On the other hand, offshoring needs full control of your operation. It means overseeing your process, people, and infrastructure to ensure everything goes smoothly.
Cost: Benefit
The cost benefits clarify the difference between offshoring and Outsourcing. Offshore Outsourcing is a budget-friendly solution for particular or short-term projects. It helps you save the cost of labor by up to 70%. However, in the case of outsourcing onshore, cost reduction might not be your business goal.
On the contrary, offshoring is the best way to reduce costs in the long term. It lets you decrease the labor and other operating expenses. For instance, utilities and office leases.
People: Employees vs. Non-employees
The workforce is important to explain the difference between Outsourcing and offshoring. When you outsource, the people dealing with your operations differ from your employees. Rather, they work based on contracts with your BPO service provider. Meanwhile, in offshoring, you hire people who are your actual and long-term employees.
Conclusion
The two terms, offshoring and Outsourcing, often need clarification. However, some differences make these two entirely different in terms of functions. However, both of these have their importance when it comes to handling business operations. In this article, we discuss the main differences between offshore and Outsourcing. It will help you understand why they are different from each other.
