Following the global COVID-19 pandemic's impact on people's mobility, an increasing number of businesses are turning to high-tech solutions and on the lookout for dependable outsourcing partners to help them step up their game.
In this article, we'll discuss the difference(s) between outsourcing and offshoring, as well as provide an overview of both terms.
This is the relationship between the two terms as a simple rule of thumb.
| No offshore | Offshore | |
| No outsource | We do the work here | We do the work in foreign countries |
| Outsource | Someone else does the work here | Someone else does the work in foreign countries |
Outsourcing: What is it? Offshoring - What Is It?
Outsourcing is derived from the term "external resourcing." Unlike insourcing, which is performed entirely by in-house employees, outsourcing entails a third-party company producing all or a portion of a product or service.
Offshore refers to something located outside of one's own country, whereas onshore relates to something situated within one's own country. Nearshore is a related term that refers to offshore areas but very close together, typically sharing the same time zone/culture/language or only having minor differences.
When people think of outsourcing, they typically envision a provider located in another country. It can, however, be in, near, or far from the company's host country. Additionally, when we think of offshoring, we typically think of outsourcing, which is not always the case.
For instance, an American business might define onshore, nearshore, and offshore as follows:
Depending on the geographical distance between the outsourcers and outsourcers, the time zones may be the same or different—with time gaps that are barely noticeable or that span several hours to a day.
In a nutshell, the primary criterion for offshore is whether the operation takes place domestically or internationally. In comparison, the primary standard for outsourcing is whether or not the process occurs within the same business.
When the outsourcers are located in the same country, a company can outsource without offshoring, focusing on its core business. This is referred to as onshore outsourcing.
Without outsourcing, a business can go offshore when establishing a new office/branch in another country, allowing it to tap into a new market/talent pool.
Finally, offshore outsourcing occurs when the two parties are geographically separated. A variant is nearshore outsourcing, which occurs when a business relocates to a neighboring country with negligible time zone and cultural differences.
Despite the significant time zone differences, it is frequently the best option for many businesses to "leverage cost advantages" and maximize their time by having offshore teams work while the outsourcers are sleeping. This type of outsourcing ensures that projects are continually monitored and managed around the clock.
How do businesses outsource?
Numerous products and services are outsourced globally. There is something for everyone from highly technical fields such as data security or software development to more creative ones such as content writing & proofreading or video editing.
Depending on the type of products or services being outsourced, the business will typically seek a partner who fits its product vision and budget.
A business may choose to collaborate with a co-located partner for a service that requires thorough local knowledge—for example, writing and editing critical legal documents.
Meanwhile, it can choose to collaborate with an offshore partner on products that require skills and global insights that are not readily available in-house or locally—for example, developing a mobile application targeted at a worldwide audience.
The role of offshore outsourcing in an increasingly technology-dependent world
Globally, the prolonged (and thus far incurable) COVID-19 pandemic has put a strain on people's mobility and prompted an increasing number of businesses to seek high-tech solutions. Indeed, the outbreak has compelled them to seek out dependable outsourcing partners to bolster their efforts.
You are probably using some apps right now that you are unaware have been offshored, such as Google, GitHub, Skype, Slack, and WhatsApp.
It's natural for individuals to have some preconceived notions about outsourcing. However, if outsourcing does not enable these behemoths to leverage their effectiveness and efficiency on a global scale, they would almost certainly never opt for it in the first place.
Summary
This article defines outsourcing and the terms that fall under its umbrella, such as onshoring, nearshoring, and offshoring. With it, we hope you can now tell them apart.
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