How does outsourcing differ from offshoring?
Outsourcing became popular in the mid 1990’s. In the mid 2000’s due to better shipping methods and telecommunications. Companies found that doing work in other countries was becoming more efficient. They also found out that in developing countries wages were lower and lowered the overhead of producing a product or service. A company can outsource work without offshoring work but cannot offshore without outsourcing. There are advantages and risks involved with both policies. I will discuss what each term means, examples, and some of the benefits and risks of doing business that way.
Outsourcing means a company contracts out a project, or an entire business role to an external organization to complete instead of completing the work in-house. An example of outsourcing is at my company we put together a kit to go with each machine. The kit is produced at another company across the street because the labor rate for them to kit the parts is less than the rate for our company to do it. There are risks to outsourcing work for a company such as quality control issues due to lack of component knowledge. The advantages are cost effectiveness and flexible labor in most cases. …show more content…
Off shoring is usually done because of a cost or labor expertise in that country, is advantages to the company outsourcing the work. An example of offshoring is my company uses a call center in India to help with administrative tasks because the labor rate is lower than using a call center in the United States. The risks for offshoring can be language barriers. Criticism for moving local jobs to another country is another negative aspect of offshoring. The advantages of offshoring are lower costs, more skilled labor forces in one particular skill resulting in faster
Outsourcing became popular in the mid 1990’s. In the mid 2000’s due to better shipping methods and telecommunications. Companies found that doing work in other countries was becoming more efficient. They also found out that in developing countries wages were lower and lowered the overhead of producing a product or service. A company can outsource work without offshoring work but cannot offshore without outsourcing. There are advantages and risks involved with both policies. I will discuss what each term means, examples, and some of the benefits and risks of doing business that way.
Outsourcing means a company contracts out a project, or an entire business role to an external organization to complete instead of completing the work in-house. An example of outsourcing is at my company we put together a kit to go with each machine. The kit is produced at another company across the street because the labor rate for them to kit the parts is less than the rate for our company to do it. There are risks to outsourcing work for a company such as quality control issues due to lack of component knowledge. The advantages are cost effectiveness and flexible labor in most cases. …show more content…
Off shoring is usually done because of a cost or labor expertise in that country, is advantages to the company outsourcing the work. An example of offshoring is my company uses a call center in India to help with administrative tasks because the labor rate is lower than using a call center in the United States. The risks for offshoring can be language barriers. Criticism for moving local jobs to another country is another negative aspect of offshoring. The advantages of offshoring are lower costs, more skilled labor forces in one particular skill resulting in faster