Outsourcing Vs Offshoring

Outsourcing – out·source verb (used with object) 1. (of a company or organization) to purchase (goods) or subcontract (services) from an outside supplier or source. 2. to contract out (jobs, services, etc.) a small business that outsources book keeping to an accounting firm. verb (used without object) 3. to obtain goods or services from an outside source: U.S. companies who outsource from China.

Offshoring noun the practice of moving employees or certain business activities to foreign countries as a way to lower costs, avoid taxes, etc.: the offshoring of software jobs to China.

Although the definitions overlap a little depending on whether or not an object is used, I see these as two very separate ways of working, regardless of which countries are involved.

For me, Outsourcing is using another company to handle a specific function, whether it’s bookkeeping, administration, telephone answering, IT or any of the other jobs that can be done outside the company. The work is performed by a professional in their field, someone who knows how to do the work and doesn’t require micromanagement.  In other words, the result is all that matters and you hire a professional to do the work so you don’t have to worry about the “how”.  You’ve hired a professional under the belief that they have the knowledge to achieve the results you need. 

Offshoring, on the other hand, is the task specific hiring cheap labour that needs close supervision, generally to perform mundane tasks.  The rate you pay will be far less, but you will have to spend more time on both detailing the procedures to accomplish your tasks and checking that things are being done the way you want. 

The most important factor is to make sure you’re using the right type of assistance for the right job.  If you hire an offshoring company and expect them to do the same job as you’d get from a professional, you’ll probably end up being burnt.  Likewise, if you need a basic job done, paying the rates for a professional to do it may put it totally out of your reach, or make you feel ripped off by the cost.

There are endless stories of people who’ve bought a logo from a cheap offshore graphic designer only to find out later it’s a trademarked brand logo used by another company.  Or from Virtual Assistants who’ve been hired to fix up a spreadsheet that had been ruined by cheap labour overseas.

Building your list takes hard work and it’s probably one of your businesses greatest assets.  The last thing you want to find out is that your cheap as chips assistants are sharing it with their other clients, or even worse, selling it to supplement their income.

Also, it’s worth keeping in mind that there could be a backlash – some people have an intense dislike of offshore call centres, while others are happy to limit their “shop local” policies to the supermarket.

Just be sure to keep in mind that when it comes to moving work outside of your company, there are options and although the term “outsourcing” is used to describe both methods of working, the end product is definitely not the same.