Outsourcing Vs. Subcontracting: What’s the difference?

Outsourcing and subcontracting are two buzzwords in the IT industry that make their rounds quite frequently.

Both are completely different from each other but are more often than not confused to be the same.

What makes outsourcing different from subcontracting is an art of subtlety in itself. They have very superficial differences that set them apart from each other and hence the terms are used interchangeably.

Over the years, subcontracting and outsourcing have seen a drastic boom in the market as more and more companies move from on-site working and in-house team building.

Let’s find out what sets subcontracting and outsourcing apart:

Outsourcing

Outsourcing is a business strategy or model adopted by companies as a cost-cutting measure. It is when a company hires out an entire department, job role or team to a third-party vendor or outsourcing company permanently and lets them lead the charge. More often than not, companies turn to outsourcing to cut down on costs, access a global talent pool and save up on time. The roles or departments that are hired out through outsourcing are for prolonged periods of time until they meet a set target or complete a set project.

Even outsourcing has different types depending on the mode of working. Let’s check out a few:

• Onshore outsourcing: The onshore outsourcing process involves a company delegating a branch or part of a business function to an external service provider that is also located in the same country.
• Offshore outsourcing: The offshore outsourcing process takes place when a firm delegates a part of its work to an external service provider that is located in a distant country.
• Nearshore outsourcing: The nearshore outsourcing process involves a firm delegating a part of their work or a business function to a third-party vendor that is located in a neighbouring country.

Subcontracting

Just like outsourcing, subcontracting too is a process of hiring out but involves delegating projects and specialised tasks to an expert rather than hiring an entire department or team. If your company is inept at performing a certain task or doesn’t have the talent or resources, you’d be better off subcontracting that particular task.

It is cheap, effective and time-saving. Let’s not forget you get access to an experienced professional who can work on your project.

Conclusion:

Outsourcing and subcontracting are two very different terms yet similar in meaning and nature. Both are very effective means of getting projects and tasks done in a short amount of time. If your company is facing fiscal issues or a talent crunch, you can always turn to subcontracting or outsourcing your enterprise development solutions.