Many people confuse off-shoring with outsourcing. Outsourcing is not about getting a cheap workforce to do as much work as possible at a cheap rate in a developing economy. You can outsource your social media management to Chicago if you want. The point is to get work off your desk or to get specialist skills that you don’t have yourself or within the team. Off-shoring, on the other hand, is purely about lowering costs by transferring some business processes abroad to increase corporate profitability.

Traditionally, only big companies are associated with off-shoring, but with the age of the internet, this is also accessible to smaller businesses.

For small businesses, the two certainly overlap, but it’s important to distinguish the difference to better identify your motives for outsourcing and therefore apply the best strategies. Now, it’s when you may want to look a little deeper to understand the difference between offshoring and outsourcing and hopefully it may help you to understand better. Although the two may sound the same and have some similar properties, there are some distinct differences between offshoring and outsourcing.

Offshoring usually offers a cost-saving advantage by getting work done in different countries. While outsourcing refers to the process of having work contracted out to a third-party company.

It is completely possible to outsource work without having to offshore it. The benefits of outsourcing are aplenty – you can take advantage of specialized skills from a different company, receive cost efficiency bonuses as well as improved labour flexibility. Basically, outsourcing helps to complete multiple jobs at a faster rate, reducing costs, while running it more effectively in terms of profitable operations within your organization.

Next, let’s talk a little bit more on the benefits of offshoring which include taking advantage of lower prices from skilled labour in a different country. In most cases, the offering of offshore options can also provide you with better availability of labour and materials as well as a much larger talent pool for getting things done.

Similarly, for offshoring, it allows your core staff to focus on more important tasks and to spend less time on tasks that don’t require immediate attention. Hence, this helps your staff to be more time focused on the bigger picture that will require more time to work on especially when it comes to making strategic decisions that will help your business to grow and develop.

You must be wondering how outsourcing first came about? It all started as early as 1980 and throughout the modern business world, this is something that happens quite often. Companies continue to grow and in order to have the skills that are necessary to continue building a company, specialized skills need to be sourced quickly and effectively in order to scale.

With both outsourcing and offshoring solutions working together, it’s possible to achieve high-quality value and expansion for your company. It is important however to remember to differentiate between the two in their full definition.

While you can outsource and offshore at the same time, offshoring doesn’t always mean outsourcing. Offshoring could be an extension of your local team but in a different country, a new labour supply or other aspects of production that can improve the overall performance of your company. Keep the main differences between these two in mind if you’re interested in making improvements in your company through a proposal to outsource or offshore.

Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! inspires entrepreneurs to build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.