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Outsourcing vs Offshoring

by Patrick on August 25, 2011

Outsourcing and Offshoring share a lot of similarities. They both save you from doing the work yourself, they can both save you money, and they can both help you expand your product line. They would probably be pretty good friends seeing as how they get along so well. The only problem is that they never get to see each other because they live in different countries.

Offshoring is, in fact, outsourcing, but it’s done in another country. Many businesses see cost benefits to this due to other countries having favorable exchange rates or inexpensive workers. This is why shoe companies build parts of their shoes all over the world; it’s cheap there.

A fun, patriotic alternative to offshoring is… you guessed it: outsourcing here in the USA. If overhead and taxes are eating your profits, consider sending the work not to another country, but another state. Different states have wildly different costs for things like land, electricity and labor, as well as different tax rates.

So maybe think twice before you set up a factory in Manhattan and expect huge profits. Why do you think there are so many huge companies in Texas? Texas has plenty of land, a very friendly tax structure, and excellent outsourcing companies. (cough… Paragon Innovations… cough cough)

Let’s talk about other benefits of keeping your projects here in the States. Like real estate agents love to say, location is tremendously important. First, if your outsourcers are in the US, you can get in touch with them during business hours. There’s no reason to call them at 3 in the morning; they’ll be asleep too. Another bonus of keeping them close is quick shipping time. You can have your prototype within hours of when it’s ready. You can also go visit them for much less than international plane tickets.

I’m not speaking out against offshoring; sometimes it’s necessary. Get the right service for the right job. I’m just saying that if you want something done, and aren’t opposed to having it nearby, convenient and easily managed, outsourcing in the United States might be for you.

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