Is offshoring the same as outsourcing?

The differences between offshoring and outsourcing often get confused.

Its a topic that’s been written about hundreds of times, but being an outsource services provider that is offshore (depending on where you consider onshore to be – we are in the Philippines), this is a topic that is particularly close to our heart.

So, is offshoring the same as outsourcing?

When we think outsourcing, we think improvements in productivity, quality, as well as savings. We think of Richard Branson’s quote “Everything in your business can be outsourced… if you’re not emotionally attached to doing it all”.

If you have engaged a service provider to take on your process or function, then you are outsourcing. If that service provider is offshore, then you are outsourcing to an offshore service provider. The right outsource services provider should take what you are doing today and turbo charge it. Whether they are based in your country or are “offshore”.

If you are moving a process or function from Australia to the Philippines, have engaged someone to provide staff and an office but are going to manage it yourself, then you are offshoring the process. This type of model is commonly referred to as seat-leasing or staffing. You will be responsible for the output and day to day management of your offshore operations and team.

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What’s the right model for your business?

Well, putting it bluntly, if you have no experience in moving a process or function overseas, or have not established or managed an offshore team before, then outsourcing is the way to go. Why would you do it all yourself? The cost of getting it wrong can be 100’s of $1000’s. It can severely damage your reputation with your customers. Mostly it can be a huge distraction for you and your team, when the focus should be on your core business and generating new revenue.

If you do have experience, have established processes, a change management methodology and have experience in establishing teams in the Philippines, then staffing can work and should be considered. Seat leasing is often a bridging step for a business that is looking to setup its own permanent offshore operations as part an overall strategy to reduce costs or centralize functions.

We have experts ready to talk more.

Also read:

Outsourcing: An Outsource Provider’s Perspective

Outsourcing Offshore: Are You Ready?

The True Story of an Off-Shored Business: A Lesson in Spotting and Correcting Reality