Outsourcing vs Offshoring vs Offshore Outsourcing

Outsourced is a leading offshore outsourcing provider in the Philippines, but what does that actually mean?

Let’s take a look at outsourcing, offshoring and offshore outsourcing, so you can decide which is best for your company. We’ll also look at the pros and cons of each staffing model.

What is outsourcing?

Outsourcing is where a company contracts a third party to perform certain non-core tasks, roles or processes. This third party is usually in the same location as the outsourcing company but it can be located overseas (the latter is better known as offshore outsourcing, which we explain later).

Pros of outsourcing

The biggest benefit of outsourcing is that you can save up to 75% of the costs of hiring locally. It also frees up some of your resources to focus on your core activities, increases production capacity and improves service quality. Then there’s access to an extensive talent pool of professionals who can help grow and expand your business very quickly.

Cons of outsourcing

Since your company is delegating work to another company, you usually don’t have total control over the execution and outcomes of their work. In essence, you have less control over the systems and processes that are required to produce the outcomes you desire.

What is Offshoring?

Offshoring is where a company relocates part of their business operations or processes to a different location, usually overseas. Whilst critical operations may be offshored, it’s less likely that core activities will be relocated, but not outside the realms of possibility.

Pros of offshoring

The biggest benefit of offshoring is that your company’s systems and processes are still performed by your company, providing you with complete control over the outcomes. Other benefits include the reduced costs of operating overseas, but the bigger benefit is often the tax incentives in the overseas country.

Cons of offshoring

One of the biggest issues with offshoring is the social and cultural differences between the two countries that can often lead to misunderstandings or a lack in communication. Then there’s the time differences and difficulty with overseeing work performed in another country, including quality assurance. Finally, there’s the potential for political or armed confrontations overseas.

What is offshore outsourcing?

This combines both the outsourcing and offshoring models. It’s where you outsource non-core tasks or processes to an overseas country. This model is often confused with the outsourcing model, because many major companies outsource to a third party in another country, so they simply call it outsourcing for simplicity.

Offshore outsourcing is a model that encompasses production offshoring (Business Process Outsourcing or BPO), system services outsourcing, and innovation, IT or software outsourcing. In other words, the main company actually builds specialist teams or facilities overseas that are managed locally on behalf of the parent company. This is a model that Outsourced practices and is very popular across a wide range of industries.

Pros of offshore outsourcing

The benefits of this model are similar to outsourcing and offshoring, but the biggest benefit and what makes this model so popular is that you have local control. This means that Outsourced uses your systems and processes to manage your overseas teams or facilities, giving you complete control over the outcomes.

Cons of offshore outsourcing

Disadvantages of both outsourcing and offshoring are negated with this model, leaving only the geopolitical and military risks that are inherent in operating overseas.

Outsourced is one of the leading offshore outsourcing companies in the Philippines. Contact us today for more information.