Outsourcing is Not Offshoring

Discover even more important differences among confusing outsourcing terms.

Not exclusively anyway. But you’d think outsourcing really is offshoring if you relied on the numerous rants against it. Despite the fact that a significant number of outsourced online jobs remain in the U.S., the average American believes outsourcing means offshoring, or sending jobs overseas.

This is not only problematic to American freelancers, who in an attempt to market themselves within the outsourcing industry, may encounter a mob-like backlash against outsourcing and the people who support it. It’s also aggravating to people who promote outsourcing as a viable means of employing native workers.

Outsourcing is a Generic Term

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Outsourcing is the act of obtaining goods or services from an outside supplier. It doesn’t indicate who the supplier is, or where the supplier is located. Some types of outsourcing do. But to equate outsourcing with offshoring is likened to equating exercise with aerobics, or computers to laptops. Outsourcing, as generic as it is, is specific to an overall approach to completing a series of tasks. It’s not associated with a unique type.

Outsourcing is Not:

Outsourcing encompasses all of those things, similar to the way that art encompasses all paintings, drawings, and sculptures.

• Domestic Outsourcing (or Onshoring) – when both an outsourcing company and its independent contractor(s) are located in the same country.
• Offshoring (Overseas Outsourcing) – used by businesses that want to significantly decrease production costs and upsize their profits through labor provided from places such as India, Israel, and Asia.
• Nearshoring – that is, sourcing service activities to a foreign country that is relatively close in distance or time zone (or both).

Knowing this, it’s easier to understand the benefits of outsourcing, particularly to local businesses, freelancers, and the people who support them.

External Resources:

1. The Handbook of Global Outsourcing and Offshoring
2. IT, Software and Services: Outsourcing and Offshoring
3. Global Outsourcing and Offshoring