On seeing an article i had a doubt that what is the difference between Outsourcing and offshoring..That pushed me to write this little post with a bit info:)..
In business, the term word sourcing refers to a number of procurement practices, aimed at finding, evaluating and engaging suppliers of goods and services as we know.
Offshoring and Outsourcing:
Offshoring describes the relocation of business processes such as production, manufacturing, or services from one country to another whereas Outsourcing is subcontracting a business process, to a third-party company.Reason for outsourcing is to
reduce cost and to make more efficient use of labor, capital, technology and resources.In offfshoring too reducing the cost is the basic idea.so two terms Outsourcing and offshoring are not the same thing.Offshoring is simply outsourcing outside of the country.
Now, what it means Offshore outsourcing?It is the practice of hiring an external organization to perform business functions in a country other than the one where the products/services are actully developed.It is different from offshoring.
Now comes,Onshoring(domestic outsourcing)
Onshoring is “the act of transferring some of a company’s recurring interval activities and decision rights to outside providers, as set in a contract, usually within the same country, in order to reduce costs. “.
Next,Farmshoring – Is shifting of employment from abroad into rural communities across the United States. It is conceptually similar to onshoring. Farmshoring refers to a specific variety of outsourcing where, services being sourced outside of the contracting company, from urban to rural locations.
Finally,Nearshoring means sourcing service activities to a foreign, lower-wage country that is relatively close in distance or time zone (or both). The customer expects to benefit from geographic, temporal, cultural, linguistic, economic, political, or historical linkages. The term “nearshore” was originally used in the context of fishing/ocean-based activities and later by the business world.