Spend Money to Make Money: Differences Between Outsourcing vs. Offshoring

Around 68% of American companies are currently outsourcing some of their workforces. Learning about outsourcing vs offshoring helps you decide which option works for you. As most companies are using both onshoring and offshoring, you may decide this works for your business too.

According to WSJ, 42% of respondents from a 2019 survey of executives claimed that they felt optimistic about the domestic economy. Still, business owners are considering outsourcing or offshoring some of their work, and in 2020 the local and global economic landscapes have changed. Hence, getting the best resources for your investment is good business.

You’ve worked hard on your company and deserve to make educated business decisions that benefit your business.

Irrespective of where you operate your company, it will be using global resources. For example, you may be using cloud-based accounting software supplied to you as a SAAS (software as a service) model, and the owner of the software is located in another country. Therefore it’s standard practice to use the best of all facilities available, irrespective of where they’re located.

Or another example of using offshore services is, your website might be hosted with a hosting company located in a different country and hemisphere. Therefore you can take it a step further, and look at how you might decide to use outsourcing and offshoring for your business, starting with how the two services compare.

Here’s what you should know about process outsourcing vs offshoring.

Outsourcing (BPO)

BPO stands for business process outsourcing. It’s when a business subcontracts a third-party vendor for specific work operations.

Outsourcing isn’t location-specific. All it requires is contracting a third-party vendor to fulfil some type of work. That means businesses outsource both within their country and abroad.

Outsourcing Benefits vs. Negatives

Compared to hiring an in-house staff, outsourcing to a company saves money. It also helps businesses take advantage of specialized skillsets offered by other countries.

By outsourcing your process, you’re tapping other benefits, including flexibility and fewer investments. Learn more about these benefits by checking out the link.

Warning: Contracting a third party means you have less control over work outcomes. Communication mistakes are more likely to occur, which interferes with work.

Offshoring

Offshoring is getting work completed in a different country. Companies do this to leverage cost advantages associated with another country’s economy.

Business owners hire people in other countries to work offshore jobs. People who fill offshore positions are still on the business’s payroll. There’s no third party involved.

Offshoring Benefits vs. Negatives

The benefits of offshoring include having access to professional talent pools abroad. This includes everything from IT services and accounting to call center operators.

Offshoring also saves money by allocating labor costs better. It also gives a company more control over work quality.

Nonetheless, offshoring is controversial because many people see it as exploitive. They also accuse offshoring of sending jobs abroad at the domestic market’s expense.

Offshore Outsourcing

Offshore outsourcing is work performed by a third party located in another country. Avoid being confused as many outsourced jobs are also offshore ones. This helps businesses reap the benefits of outsourcing and offshoring.

When you outsource a job abroad, you save money and time you’d spend on domestic workers. That’s why many think wrongly of it.

Outsourcing vs. Offshoring: Which Will You Choose?

Companies outsource around 300,000 positions each year. Outsourcing vs offshoring is a tough call, but it’s worth the effort.

Around 59% of businesses use outsourcing to decrease their spending. Offshoring will also save you money if you play your cards right. Either way, the starting point is to do your homework, as you are sure to identify where in the business you can save it money big-time!

So what’s stopping you? It’s time to get educated — and you can commence with reading more of our articles, on anything to do with setting up and operating a business.