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The Difference Between Offshoring and Outsourcing

May 31 ,2021

Even though more and more businesses across the world are engaging in offshoring and outsourcing, many people use these terms interchangeably, unaware that there are distinct differences between the two. As an offshore solutions provider in the industry for almost a decade, we discuss these two models to our potential clients so they can determine which one will work best for their business.  

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The gist of it is outsourcing refers to the process of having work contracted to a third-party company, whilst offshoring refers to building your own offshore global team – basically an extension of your team in another country. 

What is outsourcing? 

In outsourcing, you’re sending tasks to a different company whose workforce is anonymous to you. They assure you that they’ll finish the job, but because there’s no relationship or interaction between business owners and the outsourcing team, there can be little oversight over the quality of the output as well as accountability.  

But that’s not to say that it’s an inferior business model – you just have to figure out which tasks or projects would be done well in this option. Through outsourcing, you can take advantage of specialised skills from a different company, achieve cost efficiency as well as improved labour flexibility. The outsourcing model helps in completing multiple jobs at a faster rate, reducing costs, while running it more effectively in terms of profitable operations within your organisation. 

What is offshoring? 

Offshoring is a more engaged form of outsourcing in that you not only send work to an offshore solutions provider in a different country, but you’re sending it to a custom-built team that you manage. With offshoring, you can do more complex processes as you get to have a dedicated offshore global team or teams comprised of highly experienced individuals. They’re essentially a part of your onshore team except that they’re in a different location. And since they’re an extension of your onshore team, they follow the same rules and standards, and you get to manage them the same way you manage your teams in your home country, or however you see fit. 

The benefits of offshoring include high cost savings, access to a world-class talent pool, managed services like recruitment, HR, IT and account management. Whilst you are in a different country, there is a great system in place to ensure that your offshore global team is fully supported so they can deliver results. 

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Offshoring as a long-term approach to success 

In offshoring, your onshore team also reaps the benefits. It allows your staff to focus on more high-level business goals as they have more time to focus on core tasks. This helps your local staff to work on the bigger picture, and focus on strategies that will help you scale your business. 

Outsourcing and offshoring are both viable options for your business that make it possible to achieve high-quality value and expansion for your company. It is important, however, to differentiate between the two so you can determine which model will complement and integrate well with your existing operations, support business continuity, and help your business grow like never before.

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ASW is an offshore solutions provider with offices in Vietnam, Malaysia and the Philippines, committed to building high-performing offshore global teams for you. We are eager to partner with companies looking for effective ways to scale and achieve long-term success. Talk to us to learn more about our custom offshore solutions, and how we can help you build, integrate, and manage your own highly effective and premium offshore global team.