Difference of Offshoring and Outsourcing
What is the difference between Offshoring and Outsourcing? Although the two may sound the same and have some similar properties, there are some distinct differences between offshoring and outsourcing.
What is Outsourcing
Outsourcing is a general term, meaning to obtain certain services from an external company. General term, delegating part of your business to a third party.
The main motivation is to use the opportunity to have an easier access to a talent pool with specific capabilities. While some people associate outsourcing with a company in a foreign country, it is not necessarily true. You can outsource your work to a company located anywhere, even in the building next to you.
The companies which need outsourcing are generally looking for personnel for a specialized activity which is either too costly to perform internally or they don't have the workforce skilled enough to undertake the job. Outsourcing is often less costly and less time consuming.
Outsourcing refers to the act of contracting a third party company to carry out certain functions of your business. Outsourcing can be done for the sake of reducing operating costs as outsourcing is more cost effective than hiring an in-house team. Another reason why companies outsource services is to avail expert or specialized skills that their own team does not possess.
What is Offshoring
Offshoring means using a third party from distant, foreign countries to outsource business processes. Outsourcing within home country and nearshoring give the parent company geographical, temporal, cultural, linguistic, social, political and economic benefits. Offshoring gives mostly cost benefits.
Offshoring usually means delegating to another company, in distant countries, some of your business activities.
Referring to software development, it means to pass on some or all of your software development to a team overseas. The advantage of offshoring is significantly lower costs. On the other hand, the disadvantage is the time difference, high visit costs, delivery time, language barriers, and cultural difference.