Question

Explain outsourcing vs offshoring in 250 words

Answer 1

Offshoring is generally referred as offering a cost saving benefit by executing the work in different countries whereas outsourcing is revered as procedure of providing a contracted work to the third party. Prima facie these two may sound the same and have similarities but have distinctive variations among them. Both the segments help in stabilizing the economy by providing services.

Offshoring provides various advantages such as cost savings as many companies provide offshore services to developing countries where wages are low thereby resulting in cost savings. Offshoring also helps in leveraging skills where there is accessibility of skilled human resource for specific activities with a global talent pool. As compared to offshoring, Outsourcing also provides the advantages of cost benefits as giving work to their parties are cheaper. Outsourcing focuses on core competency core services that provide them a competitive advantage such as finance payroll, consultancy services etc. Outsourcing also provides labor flexibility so that company doesn't have to worry about firing and hiring.Outsourcing often provides a capable and efficient quality services that company doesn't possess that help to finish a job at a faster rate.

Nevertheless, Offshoring also involves a project failure because of weak communication, political unrest influencing the services, arbitrary restrictions forcing unnecessary restrictions on MNCs and poor infrastructure in a developing region can impact the timeliness. On the contrary, Outsourcing provides risk as vendor's familiarity lack with the clients business. There is also difference in alignment of business purpose among the vendor and the client.