Offshoring vs. Outsourcing: Is There Really a Difference?

14 Aug 2019

In today’s business world, you might have done your research on outsourcing and decided that it was something your company needed, only to realize that offshoring was the more viable option. It’s easy to confuse or even misinterpret the two concepts when you have so many buzzwords floating around related to them: Staff leasing, remote staff, offshore recruitment, legal process outsourcing are just some of them. Both offshoring and outsourcing also offer staff members the option to either work from home or be provided with a service facility they report to every day.

Offshoring vs. Outsourcing

Although both ideas have the same concept of reducing company costs by assigning work outside of your local team, offshoring and outsourcing have fundamental differences that you need to be aware of. It’s important that you can differentiate the two because whether you need to outsource or require a full offshoring staff will depend on the objectives you want to get done.

What is Outsourcing?

Outsourcing got its reputation for being a cheap alternative labour for companies, making it a more general and much broader option.

  • Outsourcing service providers determine the objectives that a client needs to have done and the ensuing result will determine how much they are paid.
  • Clients have no control over elements such as choosing their staff, their selected roles or have a say in directly managing them.
  • This also means that the service provider retains full control of staff members selected and they have the option to change who they have working for a client.
  • Outsourcing is seen as a viable option for companies that want results done on a determined schedule and having an easily changeable staff would mean improving the quality of work almost immediately.

What is Offshoring?

On the other hand, offshoring means having more control over the staff you hire outside your local team.

  • Unlike outsourcing, the client has direct managerial control over the staff and is very involved in the recruitment process of their offshore team.
  • This can involve simply by assisting in the staff selection process or acquiring full offshore services, which can include staff training, strategy assistance, IT and HR support and the provision of office facilities.
  • While outsourcing lets companies select and change staff members on the fly to suit a client’s objectives within their determined timeframe, offshoring believes more in staff retention and cultivating the skills they bring.

So what should I use?

As noted earlier, both outsourcing and offshoring will save companies some money. However, offshoring also allows them maintain transparency and control over the staff they select for their team, maintain competitiveness in the market and explore new business models. By being more transparent in choosing the staff who will work with them in an offshore capacity, companies also will determine their benefits, how much training the staff will receive and how they can help develop their career pathways. For local staff, helping manage and control an offshore team can also help them develop a valuable skill.

Diversify is a full-service offshoring solutions provider with a full-service facility. 

If you are interested in availing of our services or want to know more about offshoring, contact us today.

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  4. Manila’s Status as an Outsourcing Destination