As you work on growing your business, you’re likely searching for ways to eliminate inefficiencies and get the most from your investments. While there are lots of ways to do this, the most popular ones are outsourcing and offshoring. Both strategies can help you reduce costs and get higher-quality results for your efforts. The two concepts are closely tied together and even have very similar names. This leads to many professionals thinking they’re the same, however, there are lots of key differences between the two.
In this article, we’ll explore the differences between outsourcing vs offshoring. We’ll cover both concepts in-depth, as well as how you can take advantage of both outsourcing and offshoring more effectively with time tracking.
Let’s start our deep dive with the basics of outsourcing.
What is outsourcing?
Outsourcing is the concept of contracting certain business operations to third-party providers instead of handling them internally. Some common examples of outsourcing involve non-core business processes, like payroll and accounting. Certain companies outsource core operations as well, like manufacturing and development. This comes with the downside of having less control over the outsourced processes. However, the benefits of outsourcing oftentimes outweigh the disadvantages.
Why You Might Want to Outsource a Part of Your Operations
There are numerous reasons why you might want to outsource certain parts of your business operations. The most prominent ones include:
- Simplified management work
- Reduced costs
- Potentially improved work quality
Simplified Management
Outsourcing tedious and time-consuming tasks will make your management work much easier. You won’t have to worry about the processes of these tasks, only their results. However, you can also outsource tasks that your business is simply not good at. This will allow you to focus more of your efforts on tasks that matter—those that help your business stand out and grow. The saying “do your best and outsource the rest” has gained popularity for a reason, after all.
Reduced Costs
Continuing on the topic of sticking to what you specialize in, dealing with tasks that you’re not experienced in can be costly. This is especially true when implementing a new operational direction, like offering call center customer support. By outsourcing these to specialized providers, you can save money—both in the short and long run.
Work Quality
Outsourcing can improve the quality of your operations. For the previously mentioned customer support example, it could give you access to a standard of quality that you couldn’t achieve on your own. It’s also important to mention that even if you can train support personnel to a higher level, training takes time. Outsourced support, meanwhile, will have a steady level of quality from the very beginning.
Outsourcing vs Co-sourcing
While outsourcing is a popular strategy, it has a less popular variation that you might not have heard of: co-sourcing. Co-sourcing is the process of outsourcing certain business operations only partially. This way, you can take some load off your team without giving up a lot of control over the outsourced process. A good example of this is outsourcing manufacturing to increase your company’s output. You might want to do this to meet heightened demand during a time like the holiday season.
What is offshoring?
Offshoring simply refers to relocating parts of a company’s operations to another country. Just like with outsourcing, you can offshore either a core component of your firm or an auxiliary business process. Typically, offshoring involves creating a subsidiary of your company in another country. As a result of this, the offshored process will remain your firm’s responsibility. However, you can also offshore with outsourcing. With outsourcing or without, offshoring can have lots of positive effects on your business if implemented correctly.
Why You Might Want to Offshore a Part of Your Business
Offshoring can have lots of benefits for your company, with key benefits being:
- Access to a wider pool of talent
- Broader growth opportunities
- Decreased payroll costs
Access to Talent
By hiring staff from other countries, you can expand the pool of talent your business has access to. Offshoring your firm to more jurisdictions around the globe will further expand the talent pool you can hire from. This can help you hire the best professionals in your industry while also keeping your payroll costs in check.
Growth Opportunities
Growing your business internationally will provide you with various opportunities for growth. For example, you may be able to take advantage of lower shipping costs with offshoring. Another possibility is the potential to operate in a more favorable regulatory environment. Depending on your company’s industry, you might have other opportunities available to you that you’ll only be able to enjoy with offshoring.
Payroll Costs
Offshoring parts of your business to a country with lower wages can result in significant cost savings. This isn’t exactly the most noble reason to take advantage of offshoring. However, it might be a good option to help your business grow in its most vulnerable, beginning stages.
Why You Need a Time Tracker for Outsourcing and Offshoring
Both outsourcing and offshoring offer lots of advantages that make them attractive strategies for business owners worldwide. However, they also have numerous challenges, mainly in the areas of management.
Time Tracking in Outsourcing
While outsourcing can simplify your management work, you’ll still need to make sure your providers do a good job with their tasks. You’ll need to manage them instead of an in-house team, which can still be a challenging task. With a time tracker, you can dedicate a set amount of your time to this to keep on top of the work you receive. You’ll be able to periodically review the performance of your partner firms to ensure you wish to continue working with them.
Time Tracking in Offshoring
Offshoring an in-house team can be even more challenging than simply outsourcing certain business processes. You’ll need to manage staff across borders, who will most likely be working remotely. Fortunately, time tracking software is the perfect tool to ensure your remote employees are performing their best. With an app like WebWork, you can expand your business internationally with confidence.
Choosing a Time Tracker for Offshore Outsourcing
Before closing off this article, let’s briefly cover what you should look for when choosing a time tracker for outsourcing and offshoring. The key things you should pay attention to are:
- Tracking and reporting features
- Integrations with productivity suites
- Integration with global hiring platforms
Tracking and Reporting Functionality
A time tracker with lots of tracking and reporting functionality will help you offshore your business effortlessly. You’ll be able to manage international teams of all sizes with such apps, allowing you to take full advantage of the benefits of the strategy.
Integrations with Productivity Tools
Using a time tracker that works with various productivity tools will make it easy to integrate it into your workflows. Apps that offer both time tracking integrations and automation options, like WebWork, are easy to use without disrupting your existing processes.
Integration with Global Hiring Providers
Besides productivity tools, you should also look for a time tracker that you can use with a global hiring provider. This will help both your offshoring and outsourcing efforts. For example, you can grow your business internationally with ease through WebWork’s integration with Deel.
Concluding Thoughts
Outsourcing and offshoring are both popular strategies that help businesses get the most from their efforts. They’re closely related concepts that you can use at once to grow your business across the globe. Offshoring and outsourcing have their disadvantages too, mainly in terms of management. However, using a high-quality time tracking app can help you take advantage of the strategies with little effort.
