Graphical Distance

November 8th, 2011Uncategorized1 Comment

Types Of Outsourcing Based On Geographical Distance

Outsourcing is a general term for the process of transferring or delegating a business process to an external service provider. For most of you that don’t know, it can be classified based on the geographical distance between two parties namely, the client and the provider. The client is the party that acquires the services of another party to handle a particular task or business process. The provider is the one doing all the tasks depending on what services they offer. This has been a practice of a lot companies which is due to the fact that is has become successful and it gives both parties a lot of benefits. There is also an increase of highly skilled workers and improvement in resources of other countries which contributes to outsourcing.

The first type of outsourcing is called Inshoring or Onshoring. This happens when the client and the provider are in the same country or geographical area. Companies usually do this when there is another company that has better services or can do something that the client company can’t. A good example of Inshoring or Onshoring is companies in America, a company in Los Angeles might outsource their work to a company in Miami.

Another type of outsourcing is called Nearshoring. This is basically outsourcing to a foreign country near your own. The client and the provider are not in the same country but they are relatively close to each other in terms of their geographical location. For example, a UK based company outsourcing to Eastern European countries.

Lastly, there is Offshoring. Offshoring is when the client outsources to a provider located in a country that is of far geographical distance. Most companies prefer offshoring because of the low wages of other countries which gives the client more cost savings.

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    November 8, 2011 at 1:20 am

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