Outsourcing and offshoring - what are the differences?
Outsourcing vs. offshoring - what's the difference? As these terms sound very similar, it's easy to confuse them. We will also briefly discuss nearshoring, as it is the third term that is often used together with Outsourcing and offshoring is called.
The difference between Outsourcing and offshoring is the following:
- Outsourcing definition - is the transfer of business processes to another company.
- At the Offshoring part of the business is conducted in another country, i.e. the entire part of the company's business is relocated, not just a specific process as in the case of the Qutsourcing.
- At the Nearshoring you would outsource a process to a neighbouring country. It's basically the same as Qutsourcingexcept that processes are outsourced exclusively to neighbouring countries.
When is it best to use outsourcing and when is it best to use offshoring?
Outsourcing is better for skilled labour and lower costs for labour costs. Qutsourcing also offers advantages through the global talent pool. If there is a shortage of skilled labour, then Qutsourcing find employees in another country.
Relocation of production in offshoring is better if the geographical location offers lower overall costs - for buildings and machinery or the manufacture of a product. A product or raw material may be available locally and is therefore less expensive to procure. Both have their advantages.
IT outsourcing vs. IT offshoring
Outsourcing and offshoring comparison - Outsourcing strategies and offshoring strategies
In this scenario, companies often ask themselves the question: Which is better?
IT outsourcing is the most popular option. This is because you only need staff and hardware, which is a process that can easily be outsourced. There is no need for a Relocation of production in terms of offshoringunless the company manufactures PC components or is a IT company.
Both strategies serve the Cost reduction and the optimisation of operational efficiency. They are also often used to optimise production volumes.
or to increase the services offered. Many companies use a combination of outsourcing and Offshoring, as required.
IT outsourcing vs. offshoring - advantages and disadvantages
Outsourcing advantages
Outsourcing offers several advantages. Here are a few points:
- Cost reduction in the recruitment of personnel.
- Cost reduction for hardware and workstations.
- Global talent pool that leads to easier access to qualified labour.
- Service providers only concentrate on one service.
- Responsibility for staff, facilities and equipment falls to the service provider.
Outsourcing disadvantages
There are also negative aspects to outsourcing, not many, but there are some:
- The specifications for the required work may be too vague or not properly communicated.
- Cultural differences that may affect good communication.
- Different legal requirements that can only be determined through extensive research.
- Skilled workers in the home country may be overlooked.
Offshoring advantages
Offshoring has a whole range of advantages. Here are a few points:
- Cheaper labour on site.
- Easier access to resources.
- More favourable offices.
- Cheaper services, such as internet and cleaning services for the office.
- Diversity and inclusion.
Offshoring disadvantages
The disadvantages of offshoring are:
- Legal aspects - the laws of the other country must be strictly adhered to.
- The resources in the country of origin are not readily available.
- Services and hardware that may be more modern are not available.
- Problems in the offshoring country can affect the business, e.g. political unrest or resources that are difficult to obtain.
- infrastructure in the developing country, which has an impact on quality or meeting deadlines.
These are some of the points to bear in mind when outsourcing and offshoring.
Offshoring examples
Here is an interesting tidbit:
According to Statista, Germany has a high number of Offshore wind turbines. Although they are fewer than onshore wind turbines, they are very numerous compared to other offshore projects. This is another form of Offshoring. Normally this is Offshoringthat is talked about, that Offshoring To find out more about this, please visit Statista.
Eastern Europe, India and the Philippines are world leaders in Offshoring. The setting of IT specialists in the USA and also in some European countries takes months, while recruitment by Offshoring or outsourcing only Weeks sometimes even less if they are Offshoring or outsourcing be set.
Summary
On the whole, it can be said that Offshoring and outsourcing brings many advantages and fewer disadvantages. However, everything should be taken into consideration to ensure that the project is successful. The best thing to do is to get a Offshore partner like Zeitarbeit International.
Outsourcing and offshoring strategies with Zeitarbeit International
Since offshoring and outsourcing must be organised in such a way that they are successful, it is absolutely necessaryto have someone at your side to advise you. We will help you:
- Choosing the right country for your needs.
- Selection of a country with low risks.
- Knowledge of the legal requirements.
- Cultural understanding.
- General support for the outsourcing or offshoring process.
- Ensuring that your business objectives are communicated correctly.
This is not an easy task and can be daunting if you go it alone. Together with Zeitarbeit International this process can much easier become. We have over 20 years of experience in the Outsourcing and offshoring. Contact us today and find out more. We are happy to support you!