Whether you decide to engage in external accounting, software development or any other services, a question that may arise is: what is the difference between outsourcing and offshore and which is the better option for you? This article will help you understand each model so that you can make the right decision for your own business. Defining outsourcing and offshoring: Outsourcing is the business practice of getting a party outside a company to perform services or any tasks that traditionally conducted within the company by its employees. You would usually do this as a feasible solution when you do not have the skills internally, time or it is more effective to have it completed by someone outside your company. On the other hand, offshoring refers to a shift in business operations to another country. You could offshore one role or you could offshore whole teams to a different country. These resources are generally owned and managed by the offshore company; however, depending on the offshoring model, they could also be dedicated resources. The best offshoring model is one that fits your current and future business needs. How do outsourcing and offshoring models differ? Outsourcing involves contracting work to a third-party. People performing the services are the employees of that third-party. They are employed to provide a particular outcome determined by the number of hours or a fixed fee. They will complete assigned tasks; however, they may not fit your company’s structure and processes. As a result, this may cause the dilution of company culture. Offshoring teams, by contrast, is like an extension of your existing team, and is integrated into your company culture, structure and processes. Therefore, they provide your company with the reliability and flexibility of an internal team, without the overheads associated with locally based full-time employees. What are the advantages of outsourcing and offshoring? Hiring locally can be expensive, especially in non-core activities. In these situations, it is smarter to outsource to specialized companies instead. As these are areas outsourced companies are skilled in, they can get the job done quickly. You won’t be wasting time and money training your staff. You simply have experts do it for you! However, with outsourcing, they are not your employees and are not working in your office, so you cannot really monitor what they are doing. Due to the lack of control you are putting the quality and reputation of your work into the hands of a third-party. With offshoring, you are no longer geographically limited when hiring your workforce. Without the geographical limitations you now have access to a global workforce. This not only increases your options but also means you can hire highly skilled individuals from across the world to create a capable, diverse and talented teams. So should you outsource or offshore? It depends. Both outsourcing and offshoring can help you grow your company and achieve your goals. To make this decision, you will need to assess your business objectives, your strengths and weaknesses, your financial situation and the current business environment in which you operate. At Ascension 6, we can sit down with you to understand your business and your objectives to tailor a solution that fits your needs. Contact us today on [email protected] to start your free assessment.
