How is Offshoring Different from Outsourcing?
| August 16, 2020
Businesses around the globe are constantly looking for ways to improve efficiencies, reduce costs and grow their services. Unfortunately, there is never a simple solution to achieve all of these goals. However, there are a number of methods you could implement to start your path towards a healthy, growing business. One of those methods is utilising offshoring or outsourcing. The question then becomes, what’s the difference and which one is better for my situation?
What Is Offshoring?
Offshoring means sending internal business processes to another country in order to execute work. Generally, organisations will hire a team ‘offshore’ to fulfil a department that they wish to grow. For example, call centres, customer support, accounting etc.
There are a number of benefits offshoring can bring to a business such as;
- Rapid team growth and expansion
- Round the world talent acquisition
- 24/7 service periods
- Up to 75% savings in overhead costs
It can be daunting switching to an offshore model for your workplace, however, the benefits speak for themselves. Like any business model, it’s all about how you utilise every aspect of it and ensure team members are in a position for growth.
What is Outsourcing?
Outsourcing is the agreement between two businesses to complete a set amount of work. You could offshore and outsource at the same time and it be the same thing, for example, if you sent an internal project to your offshore BPO you would be outsourcing offshore. However, you could outsource work locally and that would just be referred to as ‘outsourcing’.
Generally, outsourcing doesn’t refer to hiring a team or department full-time. Whereas, offshoring is more often the sourcing of an entire department or work function. Think of outsourcing as a short team and offshoring as a long term.
Which Method is Best For My Business?
Now that you have a better understanding of Offshoring vs. Outsourcing, it’s important to evaluate which model is better suited towards your organisation. This is a completely subjective process, as every business varies in priorities and objectives. For example, if you’re a business looking to significantly reduce overhead costs and keep quality, then offshoring is likely the solution for you. A checklist is compiled below to assist you in your decision making:
- I want to reduce overhead costs
- I care about quality work and services
- I feel comfortable providing briefs for a team
- I want to expand our service hours
- I want to grow rapidly
- Overhead costs aren’t too much of a concern to me
- I would like to physically meet my team, often
- I don’t generally provide physical briefs for my team
- We have no need to expand service hours
- I need someone working the same hours as me
Still have questions?
It’s understandable to have additional questions about a new business model, that’s why our team is fully equipped to handle all questions thrown our way. Feel free to contact our team here: [email protected].