Question

Define outsourcing and offshoring. Compare and contrast the two as HR administrative tools. Give examples of the decision factors to consider when choosing one over the other.

Answer 1

Outsourcing and offshoring are two business approach by which organizations can benefit based on their requirement. Outsourcing is the process by which business responsibilities or activities are contracted out to a different organization which is known as a third party organization and it is their responsibility to make the work or activity successful which will help the organization. Offshoring on the other hand is the process by which work is done in a different country in order to reduce cost primarily. If we look at the two approaches, we will observe that these two approaches are white different the objective of the approach are different as well and hence in order to be successful and effective, the business organizations need to select the approach accordingly. For example if the objective is to reduce cost of production or manufacturing then offshoring may be a better option but if the objective is quality and perfection then outsourcing may be a better option because generally work is outsourced to the experts in the field.