What is outsourcing? How is it distinguished from off-shoring?

 Outsourcing is a business strategy where a company hires an external service provider to perform a task or function that is normally done in-house. The external service provider can be located in the same country or in a different country. Outsourcing can be used for a wide range of tasks, including manufacturing, IT services, customer service, and back-office operations.

Offshoring, on the other hand, is a specific type of outsourcing where the external service provider is located in a different country. Offshoring is often used to take advantage of lower labor costs or to access specialized expertise that may not be available locally.

The key difference between outsourcing and offshoring is the location of the service provider. Outsourcing can be done both domestically and internationally, while offshoring specifically refers to outsourcing to a foreign country.

In addition, offshoring typically involves moving the entire operation to the foreign location, while outsourcing can involve only a portion of the operation. For example, a company may outsource its customer service to a third-party provider in the same country, but offshoring its manufacturing operations to a country with lower labor costs.

In summary, outsourcing refers to hiring an external service provider to perform a task or function that is normally done in-house, while offshoring specifically refers to outsourcing to a foreign country. Both outsourcing and offshoring can be effective strategies for companies to reduce costs, access specialized expertise, and focus on their core competencies.

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