Outsourcing Offshore vs. Offshoring

Although offshoring and outsourcing are often used interchangeably, and despite the fact that the two concepts appear to be the same, there are real differences between them. In general, offshoring does not refer to hiring a freelancer for a one-time project to complete a script or website. That process is better described by outsourcing offshore because all that is happening is, a business owner is temporarily hiring an individual from a foreign country to undertake the necessary task. Offshoring on the other hand, usually refers to companies that send whole manufacturing departments or functions to another country. To better understand outsourcing offshore vs. offshoring, let us review a few examples.

Typically, in the States and Canada, there has been a huge movement in the last twenty-five years to move manufacturing facilities offshore. The automotive industry was rife with plant closures, and subsequent relocations to Mexico. Wiper blades companies, brake shoes, and other car parts factories were systematically closed down because of the allure of cheaper wages. And then, major television manufacturers started assembling their products in Mexico, as well. But, those products are not sold in the Mexican marketplace. They are destined for sale in Canada and the US. So, although there is no water separating these countries, offshoring is still the right expression to use, since it basically means taking the manufacturing process from one country and moving it to another. The end result is that jobs are eliminated in the countries for which the products are destined for consumption.

As time passed, however, a shift in the global labor pool took place, and countries like China, Taiwan and Bangladesh offered skilled services for a faction of the costs of Mexican workers. Thus, Mexico was no longer attractive as a location for offshoring. Canadian and American companies swiftly built plants in China, and now almost every label in these two countries reads "Made in China". Further, many clothing items for children and women are sewn in Bangladesh. Again, the workers are not making the items for sale in their own countries, but rather, the products are exported back to the US and Canada.

Moreover, it used to be common for the bigger grocery stores to have sections dedicated to international foods, edible products from other countries. Today, it is normal to see food products in any aisle from countries like India, Turkey and Greece, all merchandised with items from home. And while these items are not necessarily produced by local companies, it does show the growth of the foreign marketplace, and the impact it is had on Canadian and American living. The word "foreign" has effectively been replaced with "global".

Another major point that should be examined when looking at the differences between outsourcing offshore vs. offshoring is the fact that the employees participating in offshore outsourcing are not always employees of the home company. Company outsource to other companies in another country, but those employees are workers hired by the foreign businesses. Companies that practice offshoring usually have their names on the plants, and therefore, if they reduce the workforce or close the plants, the local people lose their jobs just like the domestic workers did when the companies went offshore.

As you can see, the simplest way to describe outsourcing offshore vs. offshoring is that outsourcing offshore can refer to one person or large support departments, whereas offshoring usually refers to sending the whole manufacturing process to another country.