Through the years, there have been various buzzwords circulating around the industry. Oftentimes, these buzzwords are commonly misunderstood. And one of the most misunderstood is the difference between offshoring and outsourcing. There are people who even interchange these terms. But what is the difference, anyway?
Outsourcing is when an organization hires a third part to take charge of a certain department or service. This can be in the form of a company hiring a team to be in charge of their customer service or accounting department, then later getting the service back. And in doing so helps the organization transfer the responsibility to an expert to let them focus on their expertise.
This strategy has been around for a long time, and a lot of organizations have already reaped the savings it has promised. Outsourcing has definitely generated wealth for the economy of the world. As we all know, when there are advantages, there are also disadvantages that come with it.
When you decide to outsource your services, you also impart knowledge—business secret—to an entity that you only hired for the purpose of managing a part of the company. Meanwhile, other critics say that outsourcing is responsible for job losses since outsourcing is laying-off people when the organization is capable of handling their own or they find a new supplier along the way.
Meanwhile, offshoring focuses more on the geographical aspect of the organization. In essence, offshoring is when the organization takes their processes or services overseas to take advantage of the lower costs other countries offer. In the West, it is obviously more expensive to start a factory than developing countries.
Once an organization offshores the factory to another country, they get to experience the costing of that country, not from the home country. Afterwards, the organization can now sell the goods in their hometown. Together with technological advancements, offshoring has become accessible and continued to lower costs of consumer goods. In addition, offshoring is not only limited to the production of physical goods, it also involves services.
It is important to know the difference between offshoring and outsourcing since these have different functions in the industry. Both save on costs for the organization, but specifically perform different roles. As for outsourcing, Ezy Outsourcing Hub has experience in providing outsourcing solutions and offshoring solutions to help businesses have a pool of talent and experience huge operational costs. Interested businesses can call 02-6571872 / 61 419 200 663 or email email@example.com.