What Is the Difference Between Outsourcing and Offshoring? A Clear Comparison
6.5 minutes
10 April 2025
If you’re looking to cut costs, move faster, or free up your team’s time, you’ve probably come across two popular strategies: outsourcing and offshoring. On the surface, they sound similar, but they’re not the same. They both carry different implications for how work is handled, who’s in control, and where the work actually happens.
If you’re considering either route, you first need to know what is the difference between outsourcing and offshoring. That’s what we will break down for you in this blog. You’ll also get a clear view of why companies outsource work, how offshoring fits into the picture, and what to consider before making a call.
Understanding the Basics of Outsourcing and Offshoring
Before you decide which direction to take, it helps to get the terms straight. A lot of confusion comes from people using them interchangeably, but they refer to two different strategies.
Outsourcing means hiring a third-party provider to handle a specific task, process, or function you don’t want to manage in-house. That provider could be located anywhere, in your country or overseas. For example, you might outsource your customer support to a specialised agency or hire an external team to manage your paid ads. The common thread? The work gets done outside your organisation, typically under a service-level agreement.
On the other hand, offshoring means moving some of your operations to another country, typically to lower your labor or operational costs. You’re not just hiring a vendor; you’re relocating work. That might mean setting up a remote team, working with a staffing partner, or hiring full-time remote employees in another region. For example, you're offshoring if you hire a full-time marketing assistant in the Philippines or set up a product support team in India.
A quick note: Offshoring is often mistaken for nearshoring, which is a different term in itself. If you want a quick breakdown of how they compare, check out our blog on Nearshoring vs Offshoring.
Difference Between Outsourcing And Offshoring
Once you understand the definitions, the practical differences become clearer. This matters when deciding how to structure your team, who to partner with, and where your work gets done.
Location
Outsourcing can be done locally or internationally. You might outsource work to an agency in your city or to a team overseas. Offshoring, by definition, always involves moving work to another country. So while all offshoring is international, not all outsourcing is.
Ownership and control
When you outsource, you're handing over a task or function to an external provider. You give them the expected outcome, and they manage the process. With offshoring, especially when hiring remote full-time employees or building a team abroad, you usually keep more control. They're still working for you, just remotely.
Cost structure
Both strategies can save you money, but the savings come from different places. Outsourcing helps reduce costs by avoiding the overhead of full-time hires. Offshoring typically lowers costs by tapping into talent in regions with lower salaries for the same quality of work.
Integration with your team
Outsourced teams often work independently. They’re brought in to deliver results and are not always looped into your day-to-day. Offshore team members, especially full-time hires, are embedded into your workflows. They join your Slack, attend your standups, and follow your processes.
Use cases
Outsourcing is the fastest route if you need a specialised function handled externally, like payroll processing or video editing. But offshoring gives you more flexibility and control if you're trying to build a long-term, cost-effective team across tasks like marketing, development, or support.
Why Do Companies Choose to Outsource Work?
Outsourcing (or offshoring) isn’t just a budget move, though it often starts there. You might outsource because you need speed, flexibility, or access to skills your team doesn’t have in-house. Here’s what drives most business owners to go this route:
Lower costs without long-term commitment
Hiring a full-time employee comes with overhead – salaries, benefits, onboarding, and equipment. When you outsource, you avoid those fixed costs. You pay for the outcome, not the headcount.
Access to specialised talent
Outsourcing gives you instant access to people who do one thing really well, whether it's SEO, paid ads, design, or software testing. You don’t have to train them or manage the learning curve. They’re already up to speed.
Faster execution
When speed matters, outsourcing lets you move without waiting to hire, onboard, or build internal processes. You can plug in a team that already knows what to do and how to do it.
Flexibility to scale up or down
If your workload fluctuates, outsourcing gives you breathing room. You can scale workstreams up or down without the risks that come with hiring or layoffs.
More focus on core work
You’re not in business to manage admin, bookkeeping, or ad ops. Outsourcing helps you keep your team focused on high-leverage activities, while specialists handle everything else.
Factors to Consider When Deciding Between Outsourcing and Offshoring
Both outsourcing and offshoring can help you grow more efficiently, but they serve different purposes. The right move depends on what kind of work you want to delegate, how closely you want to stay involved, and how you plan to scale.
Type of work
Outsourcing is often the most straightforward route if you’re looking to delegate a task or process that doesn’t need to be deeply integrated with your team, like copywriting, bookkeeping, or design. However, offshoring gives you more flexibility if you need full-time roles embedded in your day-to-day operations.
For example, at GrowthBuddy, we hire full-time remote talent that works for you but remains on our payroll so you get the commitment of a full-time hire without the hiring headache.
Level of involvement
Outsourcing typically means handing over a clearly defined outcome to an external team. Offshoring allows you to maintain more involvement – your team works full-time, follows your processes, and communicates with you directly. That’s ideal when consistency, context, and collaboration matter.
Cost and team structure
Outsourcing is usually project-based and works well when you need to bring in expertise on demand. Offshoring is better suited for long-term roles where cost savings can add up over time, especially when you’re building a team that operates just like your local hires, only remotely.
Hiring standards and quality
With outsourcing, you rely on the vendor’s team and systems. With offshoring, primarily through a vetted hiring partner, you get candidates who are interviewed, screened, and matched to your exact needs, giving you more control over quality from day one.
Compliance and admin
Offshoring through the right partner takes care of payroll, contracts, and local compliance for you, so you get the benefits of international hiring without the admin. Outsourcing vendors typically handle their own team’s compliance and delivery, making things simple on your end.
How GrowthBuddy Fits In
If you're leaning toward offshoring but don't want the hassle of sourcing, interviewing, and managing compliance, we can make it easy for you. At GrowthBuddy, we help you build high-quality remote teams without the overhead.
We find, rigorously interview, and embed full-time talent into your business who work your hours and follow your processes. They’re on our payroll, which means no international tax issues or legal red tape for you. You get top-tier professionals who save you at least 55% in payroll costs, and 6+ weeks of hiring time with every role.
If you want a reliable way to scale your team without scaling your overhead, offshoring through GrowthBuddy gives you the in-house control and quality of hiring without the sticker shock.
Conclusion
Outsourcing and offshoring give you ways to work smarter, not harder, but they’re built for different goals. Outsourcing gets the job done if you need quick, project-based support without adding headcount. Offshoring offers a scalable, cost-effective path if you’re hiring for long-term roles and want more control over who’s doing the work.
Whichever route you’re considering, the most important thing is knowing what you need, how involved you want to be, and what kind of team structure will support real growth, not just provide short-term relief.
And if offshoring feels like the right direction, we can help you do it right. Start by telling us what role you’re hiring for, and we’ll take care of the rest.