---
title: "Offshoring vs Outsourcing: What Is the Difference?"
url: https://www.wisemonk.io/glossary/what-is-offshoring-vs-outsourcing
lang: en
---

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# What is offshoring vs outsourcing?

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**Offshoring and outsourcing are often used interchangeably, but they answer two different questions: offshoring is about where work is done, while outsourcing is about who does it.** Offshoring means relocating work to another country, whether the company does it in house or through a provider. Outsourcing means handing work to a third party, whether that party is local or abroad. A company can do one, the other, both, or neither, and getting the distinction right shapes decisions about control, cost, and risk.

## What is offshoring?

Offshoring is about location. It means moving a business function to another country, usually to access skilled talent, lower costs, or a favorable time zone.

- **In-house offshoring:** the company sets up its own team abroad, for example a captive center or a Global Capability Center.
- **Via a provider:** the company can also offshore by using a vendor located abroad, which combines offshoring with outsourcing.

## What is outsourcing?

Outsourcing is about ownership of the work. It means delegating a function to a third-party provider, who employs the people and manages delivery.

- **Onshore outsourcing:** the provider is in the same country as the company.
- **Offshore outsourcing:** the provider is in another country, which is where the two ideas overlap.
- **Vendor controls delivery:** the third party owns the team and is measured on agreed service levels.

## Two questions, four combinations

Because the two terms answer different questions, they can be mixed. The table shows how location and ownership combine.

| Setup | Location | Who does the work |
| --- | --- | --- |
| Captive center abroad | Offshore | Your own team |
| Offshore vendor | Offshore | Third party |
| Local vendor | Onshore | Third party |

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