Outsourcing or Offshoring: What's the difference, and which is right for you.
*this blog post focuses on using outsourcing and offshoring options for service-based businesses rather than manufacturing, production, or supply chain needs.
If you run a profitable service-based business then you understand and agree that you cannot do everything on your own. At some point, you hit a tipping point and realized that you would make more money, find more enjoyment, and could tackle bigger and better things if you delegated certain parts of your business elsewhere.
This is a huge milestone: The act of letting go of complete control and trusting another to manage certain aspects of your business AND getting to the point of understanding that you cannot grow without delegating some responsibility. It is in fact, a tipping point. It can be scary and requires quite a bit of trust. For those on the fence, or who may KNOW they need to let go but are researching the best ways to do so, we’re unpacking some available options.
Forbes classifies outsourcing as, “to move transactional activities to the experts in order to give an organization the capacity to focus on its expertise.” You can outsource many areas of your business in which you are not the subject expert. Many entrepreneurs hire a book-keeper or a CPA and this is a well known example of outsourcing their financials.
Willow & Oak clients outsource their marketing strategy and content marketing needs to us because they know we will create a thorough action plan that aligns with their growth goals, then execute that strategy efficiently and accurately to serve the intended audience.
The point is that they free up exponential hours of their time that can be used doing other things.
The pros of outsourcing: Expert level work, usually B2B, highly qualified professionals, minimal instruction needed, no micro-managing required, trust that the work will be above standard, can become an excellent referral partnership, less of a hassle and commitment than hiring an employee, in most cases it is less expensive than hiring an employee.
The cons of outsourcing: premium pricing.
Offshoring means to send your work overseas. Common examples of services sent overseas are coding & tech, administrative services, and personal assistant services. Offshoring is a great way to remove things from your plate at a fraction of the price you’d pay to a US based company.
For example if you need routine administrative tasks accomplished in a timely and efficient manner, this could be a great option for you. Another great reason is that if using a service based in India, for example, you can provide a task list to your admin, and it will likely be completed by the time you wake up in the morning.
Pros of offshoring (administrative needs): Inexpensive hourly rates, time zone benefits, you may feel good about providing work to someone in a developing country*.
Cons of offshoring (administrative needs): You really must be very specific and super clear about expectations, expectations may get lost in translation, many iterations of what may seem like simple tasks may be necessary, mixed feelings about providing work to someone in a developing country*.
Depending on your need and your budget, outsourcing or offshoring is a good fit at a certain point in time for any successful business looking to grow. Whether you want more capacity to build your business, network, or for your personal life, you’ll have the most valuable commodity available: Time.
*There is a global conversation happening about working conditions for employees in developing countries, both for the positive and the negative. No sweeping generalizations here, but if you're interested in offshoring, I'd invite you to do some thorough research before choosing a company. There are some wonderful companies, and not so wonderful companies... just like anywhere else.