Offshoring vs Outsourcing

Offshoring vs Outsourcing – What should you choose for your development projects?

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Whether you have an urgent piece of work or you are short of tech specialists, do not worry! With the growing demand for tech specialists, new trends of the global IT market presents you with options to outsource your project or offshore your business. These trends have proved as an efficient way to maximise the performance either by utilising external expertise or by delivering extra skills to your projects. 

To utilise either of these options, you will need to understand the mode and nature of the processes. Outsourcing refers to the practice of hiring third-party companies for your projects, whereas offshoring refers to the practice of extending your business to a foreign place. Either you are looking to offshore your business or outsource your project, get acquainted with these ideas.

A Brief Comparison Chart

OffshoringOutsourcing
Definition Offshoring means relocating your business to some foreign country to get your operations done at lower labour costs.Outsourcing refers to the practice of hiring third-party companies, which may or may not be foreign people.  
BenefitsThe global pool of talents gives you many options. You will be able to get your urgent work done at comparatively lower rates. Better skilled people are available at relatively lower costs. You can meet your urgent tasks with outsourcing. Outsourcing promises labour flexibility 
Risks and CriticismTransferring jobs to other countries is risky and require too much effort. Other shortcomings are language differences, communication gaps, geopolitical risks, fewer resources and varying rules and regulations. Some of the main concerns are the security of data and information. Freelancers lack the vital knowledge of in-house operations that is sometimes necessary. Outsourcing also includes the misaligned interests of vendors and clients.

Let us have an in-depth knowledge of the benefits and downfalls of offshoring and outsourcing offer. 

Offshoring – Advantages

  • More Control: You are working with your trusted employees. Despite the fact that they are working offshore, you have control over your existing employees. There will be no further need for any contracts and negotiations. From development operations to project trajectory, you will have control of each and everything. The communication will be feasible, and your trusted employees will be able to understand your commands clearly. 
  • Keep Information Secure: Your security is in your hands. All of your company secrets and specifications of your projects will remain in-house when you offshore. Offshoring disables the necessity to share your confidential information with outside sources or third parties. Offshoring ensures that your information will not make its way to the public sphere. 

Offshoring – Disadvantages

  • Too Much to Handle: Employees always require their bosses to check on them. Otherwise, they get lazy and take their duties lightly. With the extensions to your business, you will have to oversee more things than usual. You will need to monitor the progress and performance of both the inshore and offshore employees. Physical presence does magic, but you cannot be physically present at both places. 
  • Varying Norms: It is not your country, and you are not acquainted with the ways of the regions where you have set your offshore business. The norms and culture in your offshore country may impact the speed and quality of the projects. From electricity problems, internet availability and issues, lack of healthy food and resources to the rules and regulations of the offshore country might slow your pace.

Outsourcing – Advantages

  • Maximize your Time: Tasks and projects are flooding and might take your company down. Outsourcing provides you with an option to accomplish your urgent tasks. While your in-house developers are working on important projects, you can outsource your side-projects. Outsourcing also makes you have those skills on your table that are lacking in your developers. With outsourcing, you do not either need to hire or replace your staff. 
  • Contract-Based Projects: Professional companies offer you contracts and NDAs to prevent any irregularity and unprofessional behaviour from both ends. You always have the option to sue the vendors for any illegal activity. A contract ensures the security of your project and any other confidential information.
    Contracts also save you from hiring permanent staff and enable you to accomplish your occasional projects. 
  • Quick and Efficient: With the growing competition in the atmosphere, freelancers are toiling hard to make their portfolios look extraordinary. Lower development rates, efficiency, quickness and quality are the promises they do not fear fulfilling. A software house in Pakistan is such a developing house that keeps such promises. 

Outsourcing – Disadvantages

  • Outside Sources: You are going to trust unknown people; with whom your data is at risk. Without contracts and any legal documents, your project may face delays and not even get executed at all. There is a higher risk of your project being compromised if there is no contract signed. 
  • Poor Quality: There is always a possibility that the team you have hired does not meet your expectations. They may accomplish your project in a hurry to move to clients in the queue. You must research the company before you outsource your project.

Shared Benefits and Fallbacks

Advantages Disadvantages
Lower Costs: Many countries have lower development rates, which could help you save bucks. The ways of cutting costs are different in outsourcing and offshoring and ensure lower costs. Developers keep their developing costs low to stay relevant in the market. Communication Problems: You can face bandwidth issues, language barriers, time zone differences and clash with cultural holidays and breaks. The communication gap can create misunderstandings that may produce unexpected results.  
Global Pool: Both offshoring and outsourcing open up a world full of talents and skilled persons. It fulfils the urgent demand for skills and delivers efficiency to your project. Political Controversy: These enterprises take away jobs from the locals. Some of the companies also avoid taxes and abuse the workforce. 

What will be your pick? 

It all depends on the nature of your project and work. As long as you are paying taxes, keeping your communication clear, managing your offshore team, complying with the culture and signing contracts with the outsourcer, you must not fear anything. The success will be at your doors.

So which one are you going to pick? Let us know in the comments. 

 Also read about: Why Do Companies Outsource The Ecommerce Support Service?

Techsprohub- team

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