Offshoring vs Outsourcing

Offshoring - moving production to another country - usually refers to a company business but state governments may employ offshoring.

Advantages:

• Access specialist skills

• Lower labour costs

• Increased efficiency

• Geographic proximity - e.g. to raw materials

• Cultural diversity

Outsourcing - getting a 3rd party to perform services in-house employees would usually do

• Offshoring is a type of outsourcing

Advantages:

• Access to specialist skills

• Improved focus on core business activities

• Increased reach and facilities

• Greater competitive advantage - efficiency, quality

• Reduce certain risk

Disadvantages:

• Instability - outsource company can go out of business

• Management difficulties/culture clashes

• Hidden costs

• Lack of control and flexibility

• Confidentiality and security at risk