In the past few decades, there has been a trend towards outsourcing and offshoring of business processes and activities by large entrepreneurs. In a broad sense, these phenomena are similar: companies use third parties to carry out tasks. But if you go deeper, outsourcing and offshoring are different concepts that have several key differences and are recognized to meet different needs.
Based on the deep expertise of our technology partner Emerline, we will figure out how outsourcing differs from offshoring and which approach will best suit your business needs.
Outsourcing and ODC: 5 Key Differences
Meaning and Main Goals
Outsourcing can be understood as the transfer of non-core business functions or activities to another firm or organization with a wider staff. This approach is also suitable for companies that need to get work done on a very tight schedule. The main purpose of outsourcing is to attract additional technical forces to carry out certain tasks.
Offshoring can refer to the relocation of the business or functions of an organization to any other country where the costs of doing this type of business or function are lower. Thus, the main purpose of offshoring is to minimize costs.
Outsourcing doesn’t imply that the person performing the activities of the business will be the employees of the organization. Very often, the outsourcing team can be involved in other projects from other customers. As for offshore development services, the staff is employed as a remote workforce committed to the client’s company, just as an in-house team operating in an offshore location.
Transfer of Functions
Outsourcing will involve the transfer of business or operations to external parties or third parties. Companies that choose to outsource can hire an additional workforce and entrust them with either part of the job or developing products from scratch. On the contrary, offshoring will involve the transfer of business functions or activities, as well as its offices.
Offshoring can be only done outside the country or say outside its primary country. Outsourcing can be either done in the same country or outside its primary country. The main difference here is not where the work is performed but who does it, and it’s not your in-house team.
Lastly, outsourcing and offshore initiatives are effective throughout a variety of time periods. For example, outsourcing is more practical for rapid scaling and meeting transitory workforce demands. An offshore development center helps you to expand your organization and is ideal for businesses that need full-time workforce involvement.
Understanding Offshore Development Center Approach
For most people, outsourcing is a good option for long-term collaboration. By choosing an ODC, companies can significantly save costs, increase project scaling flexibility, and gain other advantages.
If you are in doubt as to whether ODC is right for your business, we suggest you take a closer look at the points below to have a better idea of whether ODC will help you.
1. Determine the main goal of your project.
Before you decide on the approach and start looking for suitable partners, clearly define the goal that you want to achieve with your future project. It is also important to clarify in advance the reason why you want to give part of your tasks or the whole project to partners. If the main goal you are pursuing is cost savings, ODC is the right solution.
2. Determine the deadline
The second step is to determine the approximate time frame for the completion of your project. If you are interested in a long-term collaboration that implies continuous scaling, ODC will be the right decision.
3. Plan your staff resources
It is also vital to determine what kind of specialists you need for the project. Access your internal expertise and your capacity to manage the project’s overall delivery. If your project needs a specialized development team with technical expertise and delivery management, but you still want to maintain control over the process, ODC is a viable alternative.
4. Decide on the location of the remote team
Finally, if you need to hire experts from less costly countries or offshore locations, ODC setup services will be of help.
Since ODC setup is a risky deal, you need a reliable partner to accompany you on your journey. If you’re searching for a reliable partner capable of reducing your hiring costs, offering flexible and fast project scaling powered by a cost-effective infrastructure, we’re glad to address your challenges, Emerline experts are always ready to help. Book a free consultation!