Offshoring and outsourcing are similar business strategies that involve one party hiring another to take care of specific business processes that the company cannot do, like manufacturing and design. The biggest difference between offshoring and outsourcing is that offshoring refers to an international process, while outsourcing occurs within the same country. However, offshoring companies are more likely to offer a higher level of expertise than outsourcing companies, while the latter may provide faster and less expensive services.

What is Outsourcing?

Outsourcing is shifting work to a third party, like an Offshore IT Company in India, who will carry out the work. Outsourcing allows businesses to focus on their core business and eliminates redundancies. For example, if a company outsources its payroll function to an offshore company in India, it could pay for the service once instead of paying salaries. Businesses outsource to save money and eliminate redundancies. There are many advantages to outsourcing, but there are also disadvantages as well. Many companies need more time or resources, so they need to allocate funds to hire additional staff or personnel outside the company, which can be expensive.

What is Offshoring?

Offshoring, also known as offshoring trade or outsourcing, transfers portions of a business process to another country with lower costs. It occurs when a company moves its operations to another country. Offshoring can be partial or complete. Partial offshoring includes such practices as shipping goods from one country to another for final production and then sending the finished goods back to their home market. Complete offshoring refers to shifting all production tasks overseas, including research and development. It was first used in the 1980s by IBM, which sent software jobs to India’s HCL Corporation. Offshoring has become more popular today as technological advances have made it easier for companies to do so.

Difference Between Outsourcing and Offshoring