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What is outsourcing vs offshoring?

Mahnoor Fatima

Grokking Modern System Design Interview for Engineers & Managers

Ace your System Design Interview and take your career to the next level. Learn to handle the design of applications like Netflix, Quora, Facebook, Uber, and many more in a 45-min interview. Learn the RESHADED framework for architecting web-scale applications by determining requirements, constraints, and assumptions before diving into a step-by-step design process.

A large company has multiple business functions, including:

  • Human resource management
  • Customer care
  • Information technology
  • And more

It may also be spread across different regions.

Managing the entire company singlehandedly can affect its overall productivity. As a result, these companies usually get some of their work done indirectly to save resources, cost, and time.

These kinds of business activities fall into two categories:

  • Outsourcing
  • Offshoring

Offshoring

In offshoring, businesses send a part of their company to some offshore location.

This allows the company to operate within a region without being concerned about and taxes and tariffs.

Outsourcing

In outsourcing, businesses hand over the contract of their work to a third party.

This lets the work be performed by a specialized team and saves the company the burden of dealing with something outside their niche.

Comparative Analysis

Outsourcing

Offshoring

Advantages

Specialized skillset

Low cost

Cost-efficient services

Global talent pool

Flexibility of labour

Better communication with the local community

Disadvantages

Increased reliance on third party

Transfer of jobs to other countries

Lack of in-house knowledge/communication

Geopolitical risks

Misaligned interests of client and vendor

Language/communication barrier

RELATED TAGS

outsourcing
offshoring
recruitment

CONTRIBUTOR

Mahnoor Fatima
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Grokking Modern System Design Interview for Engineers & Managers

Ace your System Design Interview and take your career to the next level. Learn to handle the design of applications like Netflix, Quora, Facebook, Uber, and many more in a 45-min interview. Learn the RESHADED framework for architecting web-scale applications by determining requirements, constraints, and assumptions before diving into a step-by-step design process.

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