Offshoring Vs Outsourcing Essay


Offshoring and outsourcing are often used interchangeably. Are offshoring and outsourcing the same? If not, how do they differ?

Offshoring is different from outsourcing, as offshoring is defined as moving business operations to different part of the world. Offshoring helps companies to reduce the production cost and increase the profit. Offshoring operations are still monitored and controlled by the parent company. Offshoring is mainly used to gain different advantages such as low labour cost, expert employees for completion of the task also legal and political advantages. Offshoring operations are established by the parent company to perform the company’s business operations. It is possible
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The major for rise of BPO is due to the low labour cost offered by the venders. Companies realised that for more effective outcome with minimum cost can be done by outsourcing the business operations. This enabled the company to focus more on achieving goals and setting new goals rather then spending time in achieving operational goals. Outsourcing helps increasing the profit margin to the company by transferring the business operations to the vendors. Outsourcing helps the vender to develop new skills by working for multiple companies around the world. BPO became successful as time went by and companies and vendors realised that it gave a fruitful situation for both sides. Outsourcing to other countries was beneficial to the companies as it was paid in foreign currency to the vendor’s employee for working and the employee also got exposed to new environment and culture. The company made savings on the exchange-rate disparity, this is termed as “Body Shopping”. The company outsourced when the company identified the processes that did not generate any major value but was necessary to be performed. This processes were outsourced and enabled the company to focus on improving and developing new value creating processes that increase the performance and efficiency of the company and also increase the profit …show more content…
How do the factors differ between a "captive" and an "outside customer"?

The different factors governing the relationship between a BPO service provider and Client are as follows:

Client Acquisition -
The communication between vender and client begins when the client is interested in offering a deal or invitation or the vender meets the client with a proposal. After deciding the proposal the client and vendor define the scope of the operation or services needed to be fulfilled by the vendor and later the agreement is signed which defines the specific needs and expectations of the client and services that are provided by the vendor.

Trust - 
There has to be trust between the client and vendor to successfully decide and agree to a valid proposal that benefits both the sides. To gain trust of the vendor’s skills and abilities the client visits the vendor’s site and evaluate the vendor’s capabilities, if they are enough to manage the project or process they might be employed. To gain more insight the client is allowed to communicate to the vendor’s employees, which helps in gaining mutual trust.

Vendor Selection -
Selecting the correct is the most important for the client, it the vendor done not meet the needs of the client then it might end up in an unfavourable situation for both. The client has to well define the needs of the project or process. The client has to choose the vendor

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