What Are Outsourcing and Offshoring? | NAPS

Outsourcing is when a company negotiates a contract with a third party to perform a specific function. When outsourcing a process or operation, ... Skiptocontent AllResults Pages News ManufacturinginMexicoMexicoManufacturingLocationsLaborinMexicoIndustriesinMexicoTheIMMEXProgramInfrastructureinMexicoPackaginginMexicoSecurityinMexicoWhyManufactureinMexico?MexicovsChinaManufacturingAssemblyinMexicoCallCentersinMexico3PLAlternativesforMexicoManufacturingNAPSOperatingModelNewOperationsinMexicoExistingOperationsinMexicoMexicoShelterCaseStudiesServicesinMexicoHumanResourcesinMexicoMexicoImport/ExportAccountinginMexicoEnvironmentalComplianceinMexicoMaterialSourcinginMexicoSiteSelectionAboutNAPSExperienceCareersOfficeLocationsKeyPersonnelTestimonialsContactUsFAQsMexicoManufacturingNewsMexicoManufacturingNewsMexicoNewsManufacturinginMexico:AutomotiveManufacturingManufacturinginMexico:AerospaceIndustryManufacturinginMexico:SolarIndustryMoreNews TOLLFREENUMBER: (800)551-8581 OUTSIDETHEUS: (858)794-7947 CLOSE WhatAreOutsourcingandOffshoring? December19,2016 Outsourcingandoffshoringareoftenusedsynonymously,however,thetermsinfacthavetwoverydifferentmeaningsandimplications.Outsourcingiswhenacompanynegotiatesacontractwithathirdpartytoperformaspecificfunction.Whenoutsourcingaprocessoroperation,itisvitaltofindacompanyorpersonthatspecializesinthetaskathand.However,offshoringiswhenacompanysendsin-housejobstobeperformedinanothercountry.AnexampleofoffshoringisforaUnitedStates-basedcompanytoproducetheirgoodsinMexico.Bothofoffshoringandoutsourcingultimatelysavecompaniesmoneybuttheyreducecostsinverydifferentways.   UnderstandingOutsourcing Outsourcinghasbecomeincreasinglypopularwithcompaniesasawaytoreduceoverheadcostsandincreaseprofitmargins.Outsourcingoccurswhenacompanyentrustsapartoftheirbusinessprocesstoanoutsidevendor.Outsourcingpossessesamyriadofbenefits,someofwhichare: Outsourcingcansavecostsbyaccomplishingthesametaskforlessmoney.However,justbecausethetaskisbeingaccomplishedforlessmoneydoesnotmeanthatthequalitywilldecline.Oneofthemostattractiveaspectsofoutsourcingisthereductionincostwhilestillreceivinghighqualityservices. Outsourcingcanincreaseefficiencybyentrustingbusinessprocessestothird-partyvendorsthatspecializeinthatspecificarea. Outsourcingallowscompaniestofocusonthecoreareasoftheirbusinessandimprovetheirbrandbyfreeinguptime,energyandresources.    UnderstandingOffshoring Offshoringiswhenproductionoperationsareperformedinanothercountry.Offshoringisoftencriticizedfortransferringjobstoanothercountrybutitcanbeextremelybeneficialforcompaniesandcanultimatelyimprovetheeconomiesinbothcountries.Offshoringhasthepotentialtosignificantlybenefitbusinesses.Someofthesebenefitsare: Companiesoftenoffshoremanufacturingorservicestocountrieswherethehourlylaborrateissignificantlylower.InMexico,forexample,thehourlylaborrateisonlyafractionoftheminimumwageintheUnitedStates.ForacompanytooffshoremanufacturingtoMexico,theywillaccumulateasignificantcostsavingsfromjustlaboralone. Inadditiontosavingmoneyonmanufacturingcosts,companiesoffshoringmanufacturingalsocreatesmoreskilledemploymentopportunitiesinadministrativeandoperationalroleswithintheUnitedStates. Offshoringreducesriskforcompanies,therebyallowingthemtobettersupportclientswhentheyneedit. Offshoringallowscompaniestomaintaincompletecontrolovertheoperationandproductionofthebusiness.Whileoutsourcingreliesonanoutsidevendortocompletetasks,offshoringreliesonlyonthosewithinthesamecompany.Forsome,offshoringallowsforamorecohesive,directionallyfocusedbusinessthanoutsourcingdoes. Offshoringcreatesnewrevenuesbyfosteringademandindestinationcountriesforproducts,particularlyhightechitems.   TheBenefitsofOffshoringinMexico OffshoringmanufacturingtoMexicoisachoicethatmoreandmorecompaniesaremaking.ThereareanumberofhugeadvantagescompaniesexperiencebyoffshoringproductionoperationstoMexico.OneofthemainbenefitsofoffshoringinMexicoisthesignificantcostsavings.Mexicohasaskilledlaborforcethatcancompletehigherqualityworkforafractionofthecost,whichaidsUnitedStates-basedcompaniesindrasticallyreducingoverheadcosts.AnotherbenefittocompaniesoffshoringinMexicoisthegeographicproximitytotheUnitedStates.BecauseofhowclosetheUnitedStatesandMexicoare,shippingcostsaresignificantlylowerthanifmanufacturingwasoffshoredoverseas,suchastoChina. Thisreductioninshippingandfreightcostsprovidesbusinesseswithevenhighercostsavings,whilestillproducinghighqualityproductsforconsumers.Inadditiontothesebenefits,companiesoffshoringmanufacturingtoMexicocanalsoresultinanincreaseinskilledemploymentopportunitiesforUnitedStatesworkers.WhilemanufacturingistakingplaceinMexico,askilledworkforceisneededintheUnitedStatestoperformadministrativeandoperationalfunctionstokeepbusinessprocessesrunningatanoptimallevel.ManybusinessesfindrunningoperationsintheUnitedStatesandmanufacturingandproductioninMexicotobebeneficialtobothcountries. Formanycompanies,acombinationofbothoutsourcingandoffshoringcanleadtotheperfectbalance.NorthAmericanProductionSharing,Inc.(NAPS)specializesinoutsourcedadministrationandcompliancemanagementservicesthathelpcompaniesthatareoffshoringsuccessfullyrunmanufacturingoperationsandmaquiladorasinMexico.ContactNAPStodaytolearnmoreaboutoffshoringvs.outsourcing. 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