Offshoring and outsourcing have become increasingly popular as businesses expand and become global. The concepts sound similar and from a first glance seem like synonyms for one another. However, offshoring and outsourcing are fundamentally different, with the main difference regarding internal versus external staff.
Offshoring is ‘the practice of basing some of a company’s processes or services overseas.’ Outsourcing is ‘the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company’s own employees and staff.’ While services that are outsourced can also be offshore, offshoring does not automatically equate to hiring or contracting a third party for services.
Let’s use ourselves and our sister company, Lucidica, as an example, to discuss the differences between the two. At Meeko, we offer offshore talent, by sourcing individuals from Ukraine and connecting them with global businesses. The people hired through Meeko are direct employees of the company which whom they work and are considered part of their internal team.
Outsourcing looks like our sister company, Lucidica, who asks as ‘IT Departments’ for their clients. They are considered a third party or contractor for companies who utilise their services. The engineers at Lucidica who service clients are not part of their internal networks, which is the main difference when defining these two concepts.
So now that we know how to apply these meanings with real-world examples, what option works best for your business? Well, that depends on the needs you are looking to service.
Expand your team offshore
For entrepreneurs who are looking to scale their teams with top international talent while keeping costs lean, offshoring is a great option.
Clients of Meeko are those who are looking to expand their internal team with hires from Ukraine, rather than work with an external contractor. So rather than expanding their local team, clients look to Meeko to assist with the hiring, onboarding and managing remote employees. They have full oversight of the employee, as they would with anyone else on their team.
While outsourcing and offshoring are both great options for companies looking to scale, it is important to understand your business’ priority:
- Is it to work with a 3rd party contractor or a remote employee in another country?
- Is your business looking to improve company culture while maintaining a lean financial structure?
- Or possibly offer your clients additional hours outside of the UK workday with the 2-hour time difference in Kyiv?
- Has Brexit made it increasingly more difficult and expensive to hire international talent?
Offshoring is a great way to address all of these pain points in a business and allow you to stay productive while we manage the fine print.
Featured photo sourced from Icons8