Outsourcing versus Offshoring - What is the difference?

Over the years, the term outsourcing has become synonymous with offshoring.

The “outsourcing” of jobs to another country is something we hear on TV and read in articles and has developed a negative connotation. The two examples used on the Merriam-Webster website add to confusion:

• “The company outsources many of its jobs to less developed countries.”

• “The work was outsourced to a factory in China.”

These examples should really be under the term offshoring.

Wikipedia’s first sentence describing outsourcing says it best:

“Outsourcing is the contracting out of a business process, which an organization may have previously performed internally or has a new need for, to an independent organization from which the process is purchased back as a service.”

Interpreting the word in this way shows it in a positive light; something that is helping the business become more efficient by helping them focus their resources on what they do best. The business spends its time and energy on what it business does best. Let others perform the functions that they do best.