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Business Management: the differences between Outsourcing and Offshoring

outsourcing offshoring

In a business setting these are two terms that are frequently used, often interchangeably with each other. However, these are two very different practices, which haven’t hardly anything in common, except the fact that can link in the same operation

Outsourcing is the assignment of a business unit to third parties who take charge of the management, while the offshoring is the relocation abroad of a unit or an entire company.

Gruppo La Meridiana operates in the outsourcing within national borders, because believes strongly in the value of Italian work and in its potential. Addressing abroad, Gruppo La Meridiana can represent also an offshore outsourcing solution for companies that operate outside national borders and who want, instead, transfer a business unit in our country.

Entering into the specifics of each operation, the outsourcing is the transfer to a third provider one or more non-core business units, ie not strictly linked to the core-business-specific activity. In this regard, it is necessary a further distinction between outsourcing activities and external contract: the main difference is inherent in the fact that outsourcing the company fully put in hand unit to a third part because it is not physically able to develop the potentialities. The entire sector, which may includes the human resources employed, is transferred outside.

In the external contract, however, the company does a temporary contract with an outside company, which places its resources but does not detect those already present: its work forces operate simultaneously with those internal and, at the end of the contract, the exit of the external company does not cause any structural upheaval in the company.

Outsourcing is often used to implement the competitiveness of support activities to those specifications, creating a strong and professional support structure, able to keep up with the specific divisions of the company. Are collateral business units, as may be the IT and the security department, who, though not classified among the units of the core business, however, are a fundamental part of corporate development, which must be managed in a professional way by a competent structure. That’s why companies choose to turn to outside companies, who put their material and human resources to carry out the now-outsourced business units according to a specific production line dictated by internal management.

With the offshore, however, the company chooses to bring certain business units abroad, mainly with a view to optimizing costs, more rarely the resources. There are some units, in fact, that can also be displaced away from the corporate headquarters, even if within the same production process. This does not necessarily mean the start of a process of outsourcing, because the majority of companies continue to maintain the full control of the deployed units. However, in some cases it is possible that the company chooses to rely on a third company, based in the destination country to outsourcing the unit.

In this case, the resources of the client company would effectively translated into the supplier’s company, which would have the full management. The choice of take abroad one or more business units is crucial in view of the costs, because the countries that are usually chosen for this kind of operations are those where the cost of living, labor and raw materials are lower, allowing considerable savings in operating costs, but could involve a reduction in the general level of quality of the product or service.

Gruppo La Meridiana offers, to customers who choose to rely in it, a professionally impeccable structure, in which all those involved can ensure the highest level of professionalism and experience, that are also the result of a process of formation of a high standard. The group’s objective is to strengthen the company’s competitiveness, optimizing costs, while preserving and enhancing the quality of the service provided.

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