Outsourcing vs Offshoring: The Key Distinctions

Posted on:
December 9, 2021
min read
Mark Daniel
Table of Contents
What are the benefits of outsourcing to developing countries?
What are the challenges of outsourcing to developing countries?
Top 5 Most In-demand Developing Countries for Outsourcing
What are some successful examples of companies that have outsourced to developing countries?
What are the best practices for outsourcing to developing countries?
Outsourcing vs Offshoring: The Key Distinctions
KDCI Outsourcing
September 6, 2023

Outsourcing vs offshoring has been the talk of the town following the permanent closure of roughly 200,000 US establishments due to the pandemic. For years, business leaders have been scrambling for strategies to protect their businesses from financial loss. Thus, outsourcing and offshoring have increased their popularity. However, outsourcing and offshoring are often used interchangeably. As a result, many businesses adopt the wrong strategy because they don’t heed the critical differences between these two practices.

That said, we will distill overwhelming topics on outsourcing and offshoring. At the end of this blog article, you will gain an in-depth understanding of these two business practices. At the same time, you will determine which one is suited for your business needs.

How do outsourcing and offshoring operate?

Outsourcing is when a company subcontracts a third party to carry out operational tasks outside the organization. There are many reasons why companies choose to outsource. One of which is to hire specialized talents that are not present in their organization. Some outsource to increase efficiency for time-consuming functions such as customer service and back-office functions.

Companies that have outsourced include Alibaba, founded by Jack Ma in 1999. When there was a scarcity of web developers in China, Jack Ma and his team started outsourcing their web development needs to the US. As a result, they successfully built a sustainable eCommerce infrastructure and became a popular online marketplace.

While outsourcing involves entrusting business processes to an outside party, offshoring, on the other hand, refers to transferring jobs to another country. In offshoring, companies hire a dedicated remote workforce from another country. Imagine you have an extension of your company’s locally based staff in an offshore location. If a service provider manages all activities in outsourcing, offshoring allows you to integrate the remote staff into your company entirely.

Therefore, your team will perform tasks based on your command. WhatsApp, for example, is among companies that have sought the benefits of offshore staffing. As a result, the company offshored its software development to Russia shortly before its inception in 2009.

To sum up, WhatsApp used offshore expertise to provide design solutions and handle core app development, while its in-house engineers focused on client-facing activities like customer support. Consequently, the chat app quickly rose to the top of AppStore and Google Play.

In essence, outsourcing and offshoring are interrelated practices. However, they vary in carrying out tasks to external organizations. Outsourcing can be done locally and globally, whereas offshoring can only be done abroad. Hence, when you outsource internationally, it can be referred to as an act of offshoring.

How does the work assignment get done?

When it comes to work assignments, you want to get things done at a speedy turnaround time. So which between outsourcing vs offshoring is fit for your needs? If you prefer a fast and flexible approach to work, outsourcing might be a good choice. In outsourcing, the delegation of tasks is through your service provider. Therefore, you can leave menial functions and focus on your core activities. However, if you choose to outsource tasks that need your attention, you must lean towards offshoring. It may take time to accomplish tasks since it requires communication between you and your remote staff. But the good thing is you have all the control that the work gets done.

A harmonious group of dedicated Asian BPO outsourcing vs. offshoring staff, immersed in collaboration and exuding contentment, diligently navigate their tasks within the vibrant office environment.

How does the interaction take place between parties?

Interaction is essential in building long-lasting relationships. Do you prefer little to no interaction, or do you want to integrate your remote staff into your company fully? Outsourcing is perfect for business owners who are often busy. Indeed, when juggling many responsibilities, you have no time to supervise and train your staff. That is to say, you want to get things done by handing over these to your service provider.

Meanwhile, offshoring is ideal if you want to be fully involved in talent acquisition and integration of your offshore staff. With offshoring, you can explain your company’s culture, objectives, and processes to your team. By doing so, they can perform better and are more likely to stay with your organization.

How do they vary in terms of quality standards?

Quality of work guarantees better profits. In short, which between outsourcing vs offshoring can render the highest quality standards? There’s no doubt both can promise high-quality standards. But you have more opportunities to bolster your quality standards with offshoring.

Why? Because you have the authority to impose work quality requirements on your staff. Your team is expected to focus solely on the job you assign them because they are devoted to working on your company’s duties—not for other clients.

This will ensure that they will consistently deliver high-quality work. On the other hand, the quality of work may be unstable in outsourcing because the outsourced team is not devoted to your organization. In addition, employees handle multiple clients with time-sensitive campaigns in outsourcing companies. Thus, your tasks may often get taken aside.

In the heart of a bustling office, a diverse team of focused Asian BPO outsourcing vs offshoring workers diligently toil behind their glowing computer screens. A testament to multicultural collaboration, they tirelessly facilitate seamless business operations, helping companies worldwide scale towards success. Their eyes, alight with determination and purpose, tell a silent story of commitment to exceptional service delivery and an unwavering passion for growth.

How can they help you scale up your workforce?

Sometimes, your business may not be ready for the peak season. This fact begs the question, “Which can help me scale up with an already-trained staff that can handle the increased volume of my business?” When the job flow during a seasonal peak is unclear, outsourcing could be of great help. A contact center can provide you with customer support agents equipped to take incoming calls and acquire the information needed from customers. When the busiest season ends, it’s just as easy to scale back to a smaller set of agents. While outsourcing scales up your workforce during peak seasons, offshoring can help you expand based on your needs. Offshoring allows you to begin with a small or big team. Then, as your company grows, you may extend the team by adding more jobs as needed. Since you take charge of the hiring process, it is considered a longer-term strategy.

Build Your Dedicated Offshore Team with KDCI

Building a high-performing team in the face of a pandemic requires a lot of work. Hence, you may need offshore staffing to take the load off your shoulders. Offshore staffing can help you tap into global talent while keeping COVID-19 implications at bay. Here at KDCI, we have offshoring specialists who can support your existing in-house team. Our company has a dedicated team ranging from finance and accounting to digital marketing. We can help you boost your operational efficiency while increasing your profits.

Do you want to know more about offshore staffing? Contact Us today!

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