Outsourcing and offshoring are related terms, but differ in many ways. While Offshoring means that work is done in a different country, Outsourcing is a business practice in which a company hires another company (or even an individual) to perform various tasks, services or operations that are either usually already executed or had previously been done by the company itself.
In fact, Outsourcing means the transfer of non-core business activities to another organization, which can be in the same country or abroad.
What are the main differences between the mentioned terms?
First, Outsourcing means shifting particular business operations, while Offshoring means that activities and offices are being relocated to another country.
Outsourcing is performed by non-employees chosen by the vendor; Offshoring is performed by the business entity. Also, Outsourcing can be done within or outside the country where the main company is located. Offshoring is always in another country.
The most important difference is that the main objective for Offshoring is to minimize the costs. Benefits of Outsourcing, besides to lower the costs, are to give the company an opportunity to focus on the core activities.
Like mentioned before, one of the main benefits of Outsourcing is that the company has the opportunity to focus more on its core activities, while some others are outsourced. In that case, certain projects and activities are outsourced for a certain time.
So, Outsourcing provides the flexibility without having to worry about hiring and firing during the period of a project.
Outsourcing to a third-party company, which is already well-established and has the relevant experience in providing services, is a much more convenient option.
