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Offshoring vs Outsourcing

Companies have been adopting outsourcing for quite some time to save on costs, improve productivity, access expertise in areas such as Manufacturing, Finance, I.T. and HR services just to name a few. Outsourcing can be done within a country or offshore and is employing services on an “as needed” contract bases.   Adopting an offshore team with Go Remote Staff offers considerable cost savings for businesses in Australia, NZ, UK, USA, and Canada with the potential to save up to 70% on local based wages. Following is a table from Deloitte’s 2021 Global Shared Services Report . This report shows that the most used services by Global Business Services (GBS) are Finance, HR and I.T and that the largest organisations are best a leveraging GBS models providing higher values at a lower cost. Creating a business partnership with a BPO organisation like Go Remote Staff will help you become more competitive in a global market so you too can leverage GBS to provide better value at lower cost.

Pros and Cons of Offshoring vs Outsourcing

The two key reasons why businesses are using offshoring to save money is because it lets them focus on their strengths and secondly it saves them time. Offshore versus Onshore – This is another key benefit to offshore. Offshore allows companies to concentrate on their strongest assets, which are their customer and employee relationships. When it comes to call centers, offshore outsourcing allows companies to outsource middle and back-office functions to locations where these business functions are performed. Offshore outsourcing also allows companies to outsource non-core business functions such as payroll processing, insurance, finance, and human resources to the Philippines or India. In many cases, this allows many companies to concentrate on their core business functions while reducing costs associated with those business functions.

How Offshoring

Works One way that offshoring works is using technology and the internet. Companies can outsource various services and products to a foreign country. Offshoring occurs when a company has a contract with a foreign country and that country provides a work environment and standard of living for the employee. The advantage of this arrangement is that the foreign country will perform work that will produce results that the company is willing to pay for. Another advantage is that a foreign country's lower cost of living will make the products and services the company purchases more expensive than those in the home country. Some of the key differences between offshoring vs outsourcing include the cost savings that result from the business functions being performed in a foreign country. Companies may be able to save tens of thousands of dollars every year by using offshoring as outsourcing. A major disadvantage to this is that many people use these types of business practices but do not realize how much money they are losing to the process.

Business Process Outsourcing

Many companies use third party services for their in-house business functions. This includes everything from payroll to accounting to training and development. Offshoring is when a company uses an outside provider to perform these services. The major advantage to using an outside provider is that they are usually established, experienced, and skilled. The major disadvantages to using an offshoring company include a lack of in-house expertise and difficulty finding qualified professionals in the specific area of the service requested. A major drawback to third party companies is that they do not have the same level of skill and expertise as established, in-house business processes.

Offshoring Software Development

Often smaller software companies use offshoring to develop software applications that they believe will be perfect for their target market. For example, if a business owner develops a web-based CRM application they will outsource this task to a web development company. These types of programs are more difficult to code than ones developed internally, but software companies that specialize in this type of development can help build the application with ease. This is a common practice used by tech companies to help them gain a competitive edge over larger competitors.

Outsourcing Web Development

Offshoring web development is when a company utilizes an external provider to help it build web applications and websites because they are unable to do so in-house. In some cases, this practice is third-party subcontracting because the provider will develop the application for a price and then sign a contract with the company. The contract typically states that the company will utilize the service for a pre-determined period, either a one-time offer or recurring services. Most of the time the services are done on a pay-as-you-go basis with minimal monthly fees. Outsourcing software development is very popular among small businesses that don’t want to invest too much money into their business but rather want to outsource low-end programming tasks. As you can see there are many pros and cons associated with offshoring vs outsourcing. When deciding which strategy to use, whether it is offshoring or outsourcing, it is important to take these pros and cons into consideration. By doing so, you can ensure that you are making the decision that is best for your company and your needs. By weighing these factors, you will be able to decide which is right for you.