Outsourcing vs. Offshoring. Does It Pay Off?

In the world of IT, establishing which type of services would be best for your company is not easy. There are numerous approaches from which you can choose to follow within your IT project. Let us briefly discuss the differences between outsourcing and offshoring to explain the drawbacks and main benefits of choosing either one.

The major reason for choosing outsourcing or offshoring is to improve your company operations. The thing is that sometimes one of those models fits a particular organization's needs more than the other. In this situation not only the benefits and drawbacks of both outsourcing and offshoring need to be considered but also the individual requirements of your IT projects.

Companies that outsource IT services simply delegate a portion of business processes to a third party. It is more common to outsource such operations that are not essential for an organization but need to be carried out anyway, for example, cybersecurity. Companies usually do that, even if they are tech-savvy and develop software, as cybersecurity is a vast field of expertise and security requires considerable knowledge.

By opting for outsourcing you are guaranteed by another company that some job is performed correctly without your and your employees' involvement. This gives you time to focus on the core processes of your business operation.

The main benefits of outsourcing include: reduced costs, as having your in-house team for dealing with some tasks is often more expensive than outsourcing; high quality of services, since companies that focus on cybersecurity or data science can provide you with more professional support; and increased efficiency, as delegating tasks saves time to take care of things that matter most.

There are always some disadvantages of outsourcing IT services. If you decide to outsource some IT-related tasks you lose control. The company that you hire has its internal procedures and ways of doing stuff. If you want to retain control over the project or the process, IT outsourcing may not be the best option for your organization.

Offshoring is similar to outsourcing in terms of reducing costs. Yet, to call it offshoring, your organization has to relocate those processes out of the country you normally operate into a different geographical location. Simply put, you move some tasks to a different country and create a branch of your company there.

The main difference between offshoring and outsourcing is where the actual team works. In the case of outsourcing, the tasks will be taken care of by some company in the same country as the main company. If you decide to leverage offshoring, you will probably participate in forming a dedicated team of professionals in a different country and need to define the standards of work on your own.

Both business solutions — offshoring and outsourcing — enable companies to get access to talented professionals, reduce costs and improve efficiency. Still, these two approaches differ considerably. Offshoring requires your involvement in shaping new teams and processes in another country. Outsourcing relieves you of this burden.