Offshoring vs. Outsourcing

Main Difference

The main difference between Offshoring and Outsourcing is that the Offshoring is a Transnational relocation of business processes in the aim of enhancing efficience and Outsourcing is a contracting out of an internal business process to a third-party organization

• Offshoring

  Offshoring is the relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Typically this refers to a company business, although state governments may also employ offshoring. More recently, technical and administrative services have been offshored.

  Offshoring and outsourcing are not mutually inclusive: there can be one without the other. They can be intertwined (offshore outsourcing), and can be individually or jointly, partially or completely reversed, involving terms such as reshoring, inshoring, and insourcing.

  Offshoring is when the offshored work is done by means of an internal (captive) delivery model., sometimes referred to as in-house offshore.Imported services from subsidiaries or other closely related suppliers are included, whereas intermediate goods, such as partially completed

  cars or computers, may not be.

• Outsourcing

  Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally,

  and sometimes involves transferring employees and assets from one firm to another.

  The term outsourcing, which came from the phrase outside resourcing, originated no later than 1981. The concept, which The Economist says “made its presence felt since the time of the Second World War”, often involves the contracting of a business process (e.g., payroll processing, claims processing), operational, and/or non-core functions, such as manufacturing, facility management, call center/call centre support).

  The practice of handing over control of public services to private enterprises, even if on a short-term limited basis, may also be described as “outsourcing”.Outsourcing includes both foreign and domestic contracting, and sometimes includes offshoring (relocating a business function to a distant country) or nearshoring (transferring a business process to a nearby country).

  Offshoring and outsourcing are not mutually inclusive: there can be one without the other. They can be intertwined (Offshore outsourcing), and can be individually or jointly, partially or completely reversed, involving terms such as reshoring, inshoring, and insourcing.