Outsourcing Vs Offshoring: A Quick Guide on Their Benefits and Differences

by | Jan 28, 2025 | Offshore RPO

  • Offshoring is the process of moving business operations or processes in another country, while outsourcing is the process of delegating tasks or functions to external vendors.
  • Both offshoring and outsourcing provide cost savings and operational efficiency, but each has unique benefits as well. 
  • Sysgen RPO is a leading offshore staffing solutions provider with the expertise and experience to help your US-based company stay competitive.

Despite the pandemic being over, its effects continue to be felt by US companies. Worker shortages are still a problem, with the overall labor participation being only at 62.7%. This is slightly below the pre-pandemic rate of 63.3%. 

Other major challenges include rising labor costs and talent shortages, which up to 75% of US companies have reported. Due to these staffing concerns, many US businesses have turned to outsourcing and offshoring to stay competitive. 

Continue reading this article to learn the key differences and benefits of each route.

Outsourcing vs Offshoring: What’s The Difference?

While outsourcing and offshoring have similarities, they are not quite the same. Outsourcing is the process of hiring consultants instead of employees to perform certain business functions. 

These “hired outside help” can be from the same country, or abroad. For example, a technology company in San Francisco might hire a Texas-based design firm to do their website, while also hiring a factory in China to develop product prototypes. 

Meanwhile, offshoring is the process of moving all or parts of your business abroad. For example, a US-based bank may offshore its customer service operations and accounting functions to the Philippines. 

Benefits of Outsourcing and Offshoring

Both offshoring and outsourcing aim to reduce costs while improving operational efficiency. However, each one does so differently, while having their own unique benefits. Let’s explore them below. 

Benefits of Outsourcing

  • Reduced Labor and Hiring Costs – By contracting out tasks instead of hiring full-time employees, companies don’t have to pay for benefits or leaves. This saves up to 70% on labor costs alone. Outsourcing also reduces hiring costs, as there’s no need to invest in training, tools, and facilities anymore. 
  • Access to Highly Skilled Workers – Many businesses do not have the resources to run a full-time IT or accounting department. By outsourcing these specialized tasks, companies can access the services of top talent without hiring them for a full-time position. 
  • Increased Efficiency – Outsourcing frees your team from time-consuming admin duties or highly complex tasks and allows them to focus more on your company’s core functions. This makes it easier to focus on growth or product/service improvements. 

Benefits of Offshoring

  • Lower Labor and Overhead Costs – Hiring remote teams in developing countries unlocks up to 70% savings in labor costs, thanks to the much lower cost of living in these areas. Additionally, most offshore locations like the Philippines offer tax incentives that make them highly cost-effective destinations.
  • Deeper Hiring Pool – Offshoring grants US companies access to a wider talent pool. This creates a talent surplus that increases the odds of hiring the most skilled or experienced candidates needed for the job
  • Better Operational Control – Unlike outsourcing, offshoring keeps you in control of the day-to-day operations of your remote team. This ensures that any proprietary information or trade secrets are kept in-house, lessening the risk of data theft. 

When to Choose Between Outsourcing and Offshoring

Outsourcing and offshoring are both attractive options that US companies can benefit from. Here are some things to consider when deciding between them:

Identify Key Internal Challenges

First, determine which parts of your organization hinder productivity and could benefit from specialist help. For example, a growing restaurant chain may need to outsource its accounting so it can put more resources towards expansion and advertising. 

Meanwhile, a fast food giant can offshore the manufacturing of its takeout packages to another country to access lower labor and manufacturing costs

Scope and Operational Control

Determine the scope and level of control needed to oversee parts of your operations. With outsourcing, you take a mostly “hands-off” approach as your partner firm will be the one to run core functions on your behalf. 

Meanwhile, offshoring still requires you to manage your operations abroad to ensure they are meeting goals and delivering the desired results. 

Talent: Consultants vs Employees 

When you outsource a task, the people assigned to work on it are not your employees. They are managed by an outside firm, which may mean they handle work from other clients as well. This divided focus may affect the quality of their output. 

With offshoring, your remote team are still your employees, and thus, solely responsible to you. This option gives you more control, as you are still responsible for your staff’s training and development to get the best results from them.

Time-Frame: One-Off Projects vs Long-Term Operations 

Generally speaking, outsourcing is better suited for one-time or seasonal projects, as investing in an in-house team to do them may not be financially justifiable. Meanwhile, offshoring is great for repetitive, large-scale tasks like customer service or data analytics.

Unlock the Benefits of Offshoring for Your Company

Outsourcing and offshoring are simple business concepts, but both require expert execution to pull off well. This is why it’s important to work with a trusted partner to minimize risks (such as miscommunication, and compliance violations) while maximizing the benefits. 

Sysgen RPO is a leading offshore staffing solutions company in the Philippines. We are one of the pioneers in this industry, with over 30 years of experience in helping US-based companies grow through an ever-changing business landscape. 

Our full suite of offshoring services was designed to address common labor challenges. These include Full Life Cycle Recruiting, Resume Sourcing, VMS Recruitment Support, Offshore Staffing, Recruitment Admin Support, and many more. 

If you would like to know more about how we can help you stay competitive in these trying times, contact us here. We’d be happy to answer all your questions and concerns about outsourcing and offshoring to the Philippines. 

Jo Rebustillo

LEARNING AND DEVELOPMENT MANAGER

Jo started her recruitment career in 2007. Since then, she has worked with several RPO and BPO companies in different capacities. She has worked as a Recruiter covering requisitions in US, AU, EU and APAC handling volume, non-IT and IT. She has led several teams as a Recruitment Manager, Account Manager, Service Delivery and Business Development. She has also led teams in different industries such as Media and Advertising, IT, Outsourcing, BPO, Manufacturing, Military, Healthcare and Sciences. She has built teams based on their strengths and developed leaders with strong ethical values as well as aiming to beat the average. She strongly believes in integrity, strive for growth, persistence and kindness as hallmarks of a successful person and company.

Nikita Magpantay

CLIENT RELATIONS MANAGER

Niki is a dynamic human resource professional with a focus on talent acquisition and HR business partnership, bringing her extensive expertise gained over 6 years. She is a versatile Recruiter specializing in diverse sectors including technical, banking and finance, logistics, sales, healthcare, and volume hiring. Niki, as an experienced HR Business Partner has proven success in aligning HR initiatives with business objectives, contributing to organizational growth. She seeks to foster positive employee relations and implementing effective engagement initiatives and business strategies while ensuring adherence to labor policies. Adept at combining a friendly demeanor with a dedicated result-oriented approach helps her bring a unique blend of empathy and strategic acumen to the workplace.

Intejar “Ram” Julkiram

CLIENT RELATIONS MANAGER

With 9 years of background in RPO, Ram is adept at managing and optimizing the recruitment process for clients, ensuring a seamless and efficient experience. His skills include a deep understanding of both the IT and non-IT industries, enabling him to provide tailored recruitment solutions for the team.

Shara Jane Bonifacio

CLIENT RELATIONS MANAGER

Shara Bonifacio boasts a rich and diverse career spanning more than 10 years within various industries in recruitment. As a highly skilled and effective communicator adept at engaging with people across multiple platforms, her passion lies in building lasting relationships. She excels not only in connecting with candidates but also in fostering strong ties with clients and stakeholders.

Throughout her career in industries such as Financial Services, Insurance Brokerage, Information Technology, Pharmaceutical, and Healthcare, Shara has showcased her results-driven mindset. Her penchant for challenges motivates her to continuously strive for excellence and growth.

Shara's leadership experience is a testament to her ability to guide and inspire teams, ensuring collective success and achieving organizational goals.

Evangeline “Gigi” Tilaon

CLIENT RELATIONS MANAGER

Gigi, an inspiring leader, possesses nearly 5 years of expertise in the art of Talent Acquisition and boasts a distinguished 15-year legacy of visionary leadership. She is renowned for her unwavering dependability and boundless supportiveness, qualities that radiate through every endeavor she undertakes. Gigi's leadership style is characterized by remarkable transparency and hands-on engagement, underlined by a profound trust in her team's exceptional talents. She confronts challenges with fearless determination, inspiring her team to achieve greatness. As a passionate outdoor enthusiast and a nurturing fur parent, Gigi advocates for a work-life equilibrium with extraordinary grace and enthusiasm.

Randy Owen Roman

CLIENT RELATIONS MANAGER

Randy brings extensive experience in the recruitment industry, spanning over 5 years. During his tenure, he has successfully managed a diverse portfolio of clients across multiple sectors, including IT, Financial, Retail, Light Industrial, BPO, Market Intelligence, and Healthcare. Randy is passionate about the outdoors and finds joy in activities like hiking and exploring nature. Equally, he appreciates the arts, indulging in music, movies, and series. As a leader, Randy exemplifies fairness and empowerment, consistently guiding and inspiring his team to surpass expectations.

Avielle Bernardino

CLIENT RELATIONS MANAGER

Avielle, with 7 years of Healthcare Recruitment, is not just a leader. She is a mentor and an architect of streamlined offshore program planning. She has an innate ability to optimize processes, ensuring they align seamlessly with our clients' and program-defined standards. She empowers her peers, nurturing exceptional performance and maintaining a high level of service quality. This dedication to efficiency has set a new benchmark within our organization. She actively participates in strategic planning initiatives, driving a culture of continuous improvement. This proactive approach ensures we stay ahead in a rapidly evolving industry.

Kris Florblanco

CLIENT RELATIONS MANAGER

Kris, with over six years in IT Recruitment and three years of team leadership, is known for dependability and supportiveness. Transparent and hands-on, she places trust in her team. An outdoor enthusiast, Kris faces challenges head-on to keep her team up and running.

Grace Marasigan

CLIENT RELATIONSHIP MANAGER

Grace, an empowering leader with six years in Talent Acquisition, is passionate about innovation and improvement. Balancing work quality and agility across various industries, her compassionate approach extends to her personal life as a committed vegan.

Ly Poticar

MANAGING DIRECTOR - OFFSHORE STAFFING

Ly brings 2 decades of expertise in the Recruitment and Staffing industry, covering various business verticals in both local and global recruitment. He has successfully led growth projects for SMBs and offshore expansion initiatives for Shared Services and other global enterprises. He seeks to continuously evolve his recruitment practices and client partnership agenda to provide innovative solutions and be a step ahead of the market trends. Ly has recruitment experience in the talent market for the following majors, as well as emerging industries: Tech – hardware/software/mobile/consulting/Web3, Online Gaming & Media, Digital Marketing, Finance – corporate/banking and fintech, Construction & Engineering, Energy, BPO, Manufacturing & Logistics.

Lara Belo

MANAGING DIRECTOR - ONSHORE RPO

Lara brings a decade of invaluable experience in the field of IT recruitment, catering to diverse and niche IT roles. With adeptness in team management, she has led successful recruitment teams. She guides her team in effectively sourcing, tailoring recruitment strategies, and connecting top-tier IT professionals with optimal career opportunities nationwide.

Her extensive background in business development and client relations has not only led to the acquisition of new accounts that have expanded over time but also positioned her as a trusted partner for numerous clients.

Ezalyn Caberto

MANAGING DIRECTOR - OFFSHORE RPO

Eza is an accomplished RPO leader. She has a proven experience in building and leading high-performance recruitment teams.

Eza is also experienced and active in offshore RPO's management, recruiting, and consulting aspects. She has implemented several successful offshore recruiting accounts that have grown over time.

Eza is also a successful mentor who has produced budding leaders in her field. As a mentor, she has a strong focus on supporting emerging millennial team players.

Candy Poblete

HR MANAGER

Candy has been an HR Practitioner for 10 years. Her extensive experience in managing end-to-end HR facets came from various industries. She’s a champion in handling employee relations and labor relations. As a strategic thinker, she is adept at aligning HR policies and practices with the company’s goals and objectives, safeguarding the organization from legal complications, and providing employees with a secure and fair environment.

Anna Katrina Roa

VICE PRESIDENT OF FINANCE AND ACCOUNTING

Katrina, a De La Salle University graduate with a BSC in Accounting, plays a vital role in maintaining the company's financial health. She generates reports, manages budgets, and oversees the accounting department.

With over two (2) decades of experience in the recruitment industry, she is well-versed in its financial dynamics. Her expertise allows her to adeptly address the unique financial needs of recruitment businesses, making her an invaluable asset to the organization.

Jimmy P. Roa

CEO AND CHIEF RECRUITMENT OFFICER

Jimmy is a business executive in the field of BPO, RPO, IT Staffing, Technical Recruiting, Virtual Recruiting, Remote Staffing, and CAD Outsourcing. Having been involved in these industries for the past 30 years, Jimmy knows what works and what doesn’t. Aside from being the CEO of Sysgen RPO, he is also CEO of Sysgen – an IT Staffing firm which he founded in 1991.

Keen to working with clients who are willing to practice the “One-team Concept”, Jimmy has been mainly responsible in growing the Sysgen Group to what it is now.

He believes that clients are partners and that a true alliance is essential in achieving overall goals of cost savings and process improvement.