Outsourcing vs Offshoring: How They Compare

In the West, talent is in short supply. Companies have been forced to look elsewhere, outside their local IT markets, when searching for qualified candidates. By outsourcing or offshoring work, organisations aim to refocus their attention on their core activities.

Currently, offshoring and outsourcing are business buzzwords. This is partly due to a global talent explosion in the East and an increasing need for IT and software engineering in the West.

Offshoring and outsourcing offer businesses a way to break free of traditional development and hiring models and generate significant returns. While these words are understood as paying someone else to do your work for you, they are much more than that.

It is common to confuse offshoring and outsourcing, often thinking of them as synonymous, but their business models are fundamentally different. When examining outsourcing vs offshoring, we should ask ourselves which provides the most benefits?

Examining the benefits: outsourcing vs offshoring

Outsourcing has numerous benefits. For instance, it's flexible because employees only work for you when you require their assistance. They don't just stay inactive while collecting a paycheck. There are also significant cost savings to gain with outsourcing because it eliminates infrastructure and administration costs.

Despite these advantages, expectations for bigger benefits eventually led to a decline in the popularity of outsourcing. Organisations began to look for a business model that was scalable and cost effective, but also gave them greater control of the product.

This need gave rise to offshoring. When comparing outsourcing vs offshoring, we see that, unlike outsourcing, offshoring provides a company with more control over its core activities, such as recruiting, directing, and training its offshore teams.

Businesses in places like the US, the UK, and Australia face enormous challenges in finding and recruiting skilled individuals. Yet, many qualified, well-educated, and English-speaking candidates are ready and waiting in talent-rich countries like India.

While cost drives many companies to consider offshoring initially, it's more about the access to exceptional talent an offshore partner can provide. Offshoring provides organisations with something unique — long-term, sustainable software development centres composed of global expertise. With this capability, it can scale its business and support its clients whenever and wherever they require it.

Choosing the right model

When looking at outsourcing vs offshoring, we see that they both have advantages and disadvantages, but the biggest challenge they share is geographical distance. When working with a team in another time zone, poor implementation of tools and procedures can result in delivery lags and a slower time to market. The good news is that a partner with experience in cross-continent collaboration will ensure that the means of cooperation are correctly implemented.

Outsourcing is usually the most reliable option for short-term projects. But when choosing outsourcing vs offshoring remember that offshoring is the way to go if you're a company looking to build a team of talent hand-picked from a deep pool without losing control of the process. It’s a better fit for the long term.

With offshoring, businesses across the globe can build incredible development teams by hiring the best talent. While there will be challenges, you’ll be able to work with a team that you can call your own. By collaborating directly with the offshore team, you can establish an efficient workflow without compromising the output quality.

Offshoring requires the guidance and assistance of experts in the field and experienced technology professionals who can guide you through the process, so choosing the right offshore development partner is vital.