The Different Types of Outsourcing

In this blog, you will learn about the different types of outsourcing. Being an outsource service provider, this is a topic that is particularly close to us. When we think of outsourcing, we think about improvements in productivity, quality and savings. A quote by Richard Brandson comes to our mind “Everything in your business can be outsourced… if you are not emotionally attached to doing it all.”

What Is Onshore Outsourcing?

Let us move forward and learn about the different types of outsourcing. Onshore outsourcing, also known as domestic outsourcing, is the obtaining of services from someone outside a company but within the same country. There is another type of outsourcing that is similar but not the same. It is known as “Nearshore Outsourcing.” That is to say, the practise of getting work done or services performed by skilled workers in neighbouring countries rather than in the same country. The purpose of onshore outsourcing is to enable a third party to handle nonessential activities that still hold business value. For example, common human resources (HR) functions. Onshore outsourcing enables a higher level of control and closer contact between the two companies. But, depending on the work involved, this can come at a higher cost in comparison to other outsourcing options.

Benefits Of Onshore Outsourcing

As we are learning about the different types of outsourcing, let us learn about their benefits as well. There are several benefits for onshore outsourcing, some of them are as follows:

• Communication Is Easier

The ability to communicate in the same language is one of the most obvious benefits to onshore outsourcing as a contractor’s employees, including those in sales, marketing and customer service and support, are fluent in the native language. In addition, it is easier to communicate with suppliers in the same time zone(s) of the native country.

• No Dealing With Cultural Differences

Cultural differences are one of the major reasons for offshore outsourcing problems. The companies that choose onshore outsourcing won’t have to deal with those differences. For example, onshore suppliers will share the same holidays as their customers, while offshore providers may take days off to celebrate their holidays and won’t be available to handle issues for their customers. In addition, there may also be differences in the way offshore providers approach work and business.

• Cost Savings

The idea of saving money is one of the major reasons that organisations opt for offshore outsourcing. But it may not be cheaper in practice. For example, if you need to straighten out a problem in person, it is much easier to meet with an onshore service provider. It is expensive to visit overseas providers, in terms of travel costs and time lost. In addition, an organisation will likely save on project management as onshore projects need much less management than projects done overseas.

• More Quality Control

Onshore outsourcing makes it easier to deal with quality control issues. If a company must train its supplier or service provider to work in a specific way, it’s easier to meet in person to understand what’s required.

What Is Offshore Outsourcing?

While we are learning about the different types of outsourcing, let us move to the next one. When a business hires a third-party supplier to complete tasks outside of the company’s home nation, this is known as offshore outsourcing. That is to say, unlike nearshore outsourcing or onshore outsourcing, offshore outsourcing refers to a vendor that is far from where the hiring business’ home base is located. In terms of monetary value for offshore outsourcing, companies will pay significantly less for the same amount of work. That is to say, onshore outsourcing refers to companies that work with other companies or individuals who reside and operate in the same country. On the other hand, offshore outsourcing is the opposite of that. 

Benefits Of Offshore Outsourcing

As we are learning about the different types of outsourcing, let us learn about their benefits as well. Offshore outsourcing has a lot of advantages, some of them are as follows:

• If applicable, you may require skills that are lacking in the people at home. Offshore outsourcing allows you to find those skills abroad. In this case, you would not hire employees or recruit staff abroad. Instead, you would develop a contract between your company and an organisation abroad.
• Based on the cost of living around the world, labour is cheaper in certain areas. In many cases, although these individuals earn less than those in your home country, they are still often making more than those locally.
• Being able to offer 24-hour customer support for a fraction of the cost. In addition, by working with people from around the globe, they will be awake and alert while you sleep.

Now that you know everything about the different types of outsourcing, we hope it helps you in decision making in the future.