Outsourced vs Offshored

[DepricatedZero]

I keep seeing this mentioned, most recently by IJoe in another thread. It's an off the cuff statement but...I suspect it's deeply lacking understanding. Sort of a Decimate vs Devastate thing.

I keep seeing people complain about Outsourcing, in the context that it's somehow a bad business practice, evil, anti-social, etc. To put this in context, here's the relevant bit that prompted me:

Most Americans support Social Security and Medicare and other social spending programs, they want the troops to come home from the Middle East, they like the public education their kids are getting, they want taxes raised on the top 1-2%, they want strong regulation on the financial sector, less outsourcing of jobs, strong protection of the environment, gay marriage legalized... on just about every issue

Since I respect Joe and doubt he meant what he said as such, rather than asking, "what's wrong with outsourcing?" I'll ask, "do you mean outsourcing, or do you mean offshoring?"

There's a very, very important distinction here. Outsourcing is simply modularization - that is, hiring an outside source to perform a function in your business model, in order to get a higher quality of that function for a lower cost than one could obtain alone.

Offshoring, on the other hand, is the act of going to another country to obtain labor at a cheaper rate, often disregarding quality.

I am an outsourced employee. I work for Company A, who is hired by Companies B, C, D, E, F, G, and H to perform their function within their business environment. They charge companies B-G a fraction of their operating cost, and in turn Companies B-G pay a fraction of what it would cost for comparable service.

I can see nothing unethical in that, and I can fathom no way that that is job destroying.

I'm pretty sure people mean Offshoring most of the time they say Outsourcing - it's an unfortunate conflation, and isn't helped by shows like Outsourced that reinforce the confusion. A quick google search of "Outsourcing vs Offshoring" will lead to a heap of articles and discussions reiterating pretty much the same thing.

Outsourcing good, Offshoring bad.

 

[Welshidiot]

@DepricatedZero

Thank you for making that distinction so lucidly.

 

[Prolescum]

I agree with the scammingdolt above, however, I've never heard it referred to as anything other than out-sourcing, so either this is a recent addition, or it just hasn't reached corporate Britain. Alternatively, I could just be really out of touch...

 

[Welshidiot]

I agree with the scammingdolt above, however, I've never heard it referred to as anything other than out-sourcing, so either this is a recent addition, or it just hasn't reached corporate Britain. Alternatively, I could just be really out of touch...

I heard it a long time ago, but I believe moving investments and savings off-shore also gets called "off-shoring", or it does in the UK at least.

I don't think you're out of touch Prole, it's more like what DZ said, in as much as the phrase/word "out-sourcing" gets used in that context far more often than "off-shoring", and we just tend to forget about the latter, or maybe never even come into contact with it in the first place.

 

[Prolescum]

I heard it a long time ago, but I believe moving investments and savings off-shore also gets called "off-shoring", or it does in the UK at least.

Ah yeah, okay.

I don't think you're out of touch Prole, it's more like what DZ said, in as much as the phrase/word "out-sourcing" gets used in that context far more often than "off-shoring", and we just tend to forget about the latter, or maybe never even come into contact with it in the first place.

Well I haven't worked for a large corporation for years, so I probably am. Damned Golgafrinchans and their silly word salads

 

[ImprobableJoe]

Fucking semantics... :lol:

 

[DepricatedZero]

Fucking semantics... :lol:

lol hey I'm an outsourced worker but I live in the heartland

 

[kenandkids]

The most common way that I hear this said is "outsourced elsewhere" or "outsourced to workers in other nations." Both of those are technically correct.

 

[DepricatedZero]

They are. I didn't mean to target Joe specifically, it's a weird pet peeve of mine, every few months it grows to a head and I say something to someone about it.

They're not mutually exclusive, it's just a weird annoyance of mine.

 

[Welshidiot]

They are. I didn't mean to target Joe specifically, it's a weird pet peeve of mine, every few months it grows to a head and I say something to someone about it.

They're not mutually exclusive, it's just a weird annoyance of mine.

I think it's a valuable distinction to make, perhaps our experience isn't particularly representative DZ, but I've found that "out-sourcing" is often additionally assumed to mean "off-shoring" too.

 

[Netheralian]

Offshoring, on the other hand, is the act of going to another country to obtain labor at a cheaper rate, often disregarding quality.

That's a bit of a gross generalisation. (not the cheaper labour rate of course). I have worked with a number of companies that offshore certain departments and I can't say that quality is necessarily affected at all.

Outsourcing good, Offshoring bad.

This is only true from a local/community perspective. Offshoring is clearly good for your companies bottom line (or they wouldn't do it) and most likely good for the location to which it has been outsourced (i.e. jobs).

 

[ArthurWilborn]

This is only true from a local/community perspective. Offshoring is clearly good for your companies bottom line (or they wouldn't do it) and most likely good for the location to which it has been outsourced (i.e. jobs).

It allows the business to grow and expand, hiring more people in other departments and expanding the tax base, so a lot of time it's good for the locals too.

 

[Andiferous]

So where is "protectionism" in all this?

 

[Aught3]

So where is "protectionism" in all this?

Uh, protectionism is beneficial for local interests until the industry is advanced enough to stand up to international competition. At least, that's how it works in modern capitalist economies.

Btw, thanks for the topic - always good to get clarification on a point.

 

[Arcus]

Outsourcing good, Offshoring bad.

Well, another sweeping generalization.
I work in a company which has offshored and centralized certain customer service and back office functions from around 50 local affiliates in the EAME region, mostly Western Europe, to Central Europe. It has indeed removed a few thousand jobs scattered around the region and created a few thousand jobs in Central Europe. The two main reasons for offshoring are generally cost savings due to centralization and a lower cost work force. However, most of the jobs removed had salaries around 80% the local median and the new ones created have around 120% the local median. All previous employees had the opportunity to follow the job, most chose not to, and not everybody were offered a new position.

Offshoring usually create high paying jobs in lower income countries, though service quality may suffer if not performed wisely and the lack of closeness to the market often creates a disconnect. Offshoring is a part of the globalized economy and unavoidable unless you wish to revert to a more mercantile global economy with less competition and thus higher prices for goods and services.

If you have a job which is in danger of being offshored you are being overpaid or underperforming. Someone else is willing to do the same job for less money or you might work in a company which overspends on decentralization.

 

[DepricatedZero]

Outsourcing good, Offshoring bad.

snip

that's not actually my opinion, that's me pointing out what's most likely meant when people say outsourcing is bad..

Keep it in context with the rest of the post.

 

[Arcus]

that's not actually my opinion, that's me pointing out what's most likely meant when people say outsourcing is bad..

Keep it in context with the rest of the post.

Wasn't meaning to attack, and apologize if it was taken that way. More a clarification to your other excellent clarification.
As you pointed out, the terminology tends to first get muddled, then the words get muddied.

 

[impiku]

Outsourcing good, Offshoring bad.

Well, another sweeping generalization.
I work in a company which has offshored and centralized certain customer service and back office functions from around 50 local affiliates in the EAME region, mostly Western Europe, to Central Europe. It has indeed removed a few thousand jobs scattered around the region and created a few thousand jobs in Central Europe. The two main reasons for offshoring are generally cost savings due to centralization and a lower cost work force. However, most of the jobs removed had salaries around 80% the local median and the new ones created have around 120% the local median. All previous employees had the opportunity to follow the job, most chose not to, and not everybody were offered a new position.

Offshoring usually create high paying jobs in lower income countries, though service quality may suffer if not performed wisely and the lack of closeness to the market often creates a disconnect. Offshoring is a part of the globalized economy and unavoidable unless you wish to revert to a more mercantile global economy with less competition and thus higher prices for goods and services.

If you have a job which is in danger of being offshored you are being overpaid or underperforming. Someone else is willing to do the same job for less money or you might work in a company which overspends on decentralization.

Good post.

 

[DepricatedZero]

that's not actually my opinion, that's me pointing out what's most likely meant when people say outsourcing is bad..

Keep it in context with the rest of the post.

Wasn't meaning to attack, and apologize if it was taken that way. More a clarification to your other excellent clarification.
As you pointed out, the terminology tends to first get muddled, then the words get muddied.

Right. Just the first part made me think you were taking it out of context(saying it was a sweeping generalization). Generally speaking I'm for globalization, and in turn offshoring. It's a good post!

 

[kenandkids]

All previous employees had the opportunity to follow the job, most chose not to, and not everybody were offered a new position.

So they faced the option of moving to a new nation, not everyone can btw, or losing the job... Bullcrap, for the most part. Millions of jobs have been sent to poorer nations from America, and Americans were not invited to go with them. The entire reason for moving the jobs was that these poorer places provided a cheap source of labour and no, they don't generally receive better pay than their regional average.

If you have a job which is in danger of being offshored you are being overpaid or underperforming. Someone else is willing to do the same job for less money or you might work in a company which overspends on decentralization.

So it is the fault of people wanting to be part of the middle class who must of course be under-performing and then you admit that it is a "race to the bottom" in wages...