Offshoring is the practice of moving business operations (such as manufacturing and accounting) to another nation (Kahai, Sara, & Kahai,2011). However with outsourcing, a business can cut costs by shifting some of the work to outside vendors rather than finishing it in-house. It is a genuine cost-saving measure. Comparatively, Sub-contracting is where main business contractor hires extra persons or companies to assist complete a project. Relatively, in case of offshoring, there is the availability of skilled people and work is done in a higher speed via a global talent pool ratio to outsourcing where a business take advantage of specialized skills, labor flexibility, and cost efficiencies.
Companies may choose to implement offshoring because, a company experiences greater control through close physical collaboration (Kahai, Sara, & Kahai,2011). In this case, a company can oversee the conduct of work without delays or filters related to technology due to the presence of soft wire programs that permit the client to assess the work of its outsourcing partner. Furthermore, it is of significant advantage when it comes in economies of scale because, when an office or a workshop is set up abroad it is not only capitalizing on comparative cost, but also in the current economies of scale.
Companies may pose a threat to unions and push for contract limitation to reduce the risk of time and money. This is because; for a firm to create an airtight contract, it has to employ an expensive lawyer who can draft the contract (Dawling,& Zehndera, 2011). Additionally, contracts require more time that ends up drawing away some important activities that may be vital to business. Further agreements may increase the likelihood of lawsuit because the very person who deals with an organization signs a deal and this may create suspicion.
Work cited
Dawling, P., Hart, O., & Zehndera, C. A. (2011). Contracts as reference points—experimental evidence. The American Economic Review, 101(2), 493-525.
Kahai, S. K., Sara, T. S., & Kahai, P. S. (2011). Off-shoring and outsourcing. Journal of Applied Business Research, 27(1), 113.
