Outsourcing, Insourcing or Offshoring?

The options to get work done in any business have expanded in recent times more than they have ever. With this expansion and availability of variety has put forward 3 mostly used terms that are Outsourcing, Insourcing and Offshoring. As the options for getting work done in any organisation have increased so has the confusion as to which one an organisation should go with.

The confusion arises from the fact that businesses are not well equipped with the meaning and pros and cons of each of these types and therefore are also not updated about which type suits what kind of business and what sort of function. Three of these terms often are used interchangeably however this isn’t appropriate and significantly affects the interpretation and the rightfulness of choice made between these three. Staying in grey about the differences and specifications of these types will lead to an unclear and unproductive decision.

This article will acquaint all the readers with the specifications, definitions and explanations of what Outsourcing, Insourcing and Offshoring mean. After knowing the meaning and functions of three of these, it can be ascertained that a business owner can then decide which of the organisation’s functions are to be outsourced, insourced or offshored.

Outsourcing:

The term is clearly indicative of what it implies. Even though it is clear, it can be interpreted differently by varied industries. In a general sense, the term Outsourcing means to get into a contract with a third party service provider for a task or business function that might be short or long-term in nature. In the last decade India has majorly come up as a highly competitive and trusted player in the Outsourcing service sector globally.

In fact the wave of outsourcing ran so harshly that organisations across many industries had to outsource functions to stay competitive and relevant in their own arenas. Even though a wide array of benefits were seen coming along with the Outsourcing wave, there were certain backlashes in terms of customer service and morale.

These drawbacks and issues generated the requirement of providing high-quality Outsourcing for the domestic companies and further raised the bar of service delivery in this segment. The confusion relating to this arises from the notion that Outsourcing means going overseas off jobs when in reality Outsourcing can take place even in the same town. Many people out there in the market hold this notion which significantly hampers the right function that Outsourcing is meant to serve businesses with.

Some outsourcing examples are: BPO outsourcing Services, Call Center outsourcing services, Website Designing & Development, Digital Marketing, SEO, branding, Outsourced Solutions.

Insourcing:

Insourcing is often done in order to control production aspects aiming at assurance of quality by internal entities. These entities are usually stand alone. In order to clearly understand the concept of insourcing, try considering this example of a soft drink producer- a soft drink producer building a plant to make the bottles in order to maintain costs and do quality control. This came up as a popular means of getting work done when international Outsourcing faced certain hurdles at a point. Companies enjoyed the control and the tax related benefits that they got while managing these critical processes.

Offshoring:

Offshoring explains to the process where in an entity sends a task to contractors based in another country particularly aiming to encash cost related savings that the other country can provide them with. However it should be noted that services that relate to customer satisfaction through conversation should be outsourced to a country where language barriers to not exist. At no point the cost savings would be worth making customers uncomfortable or dissatisfied with inability of the customer service executive to communicate efficiently.

Conclusion:

After understanding what Outsourcing, insourcing and offshoring mean in their true sense, it would be easier for you to decide which one you would like to opt for certain functions of your business on the basis of the cost related benefits, risks associated, requirement of skilled personnel and other factors like demographic specifications.