Inside Offshoring: Offshoring Versus Outsourcing

August 13, 2012

With all the talk lately about offshoring, many people are confused about the difference between that and a previous economy buzzword, outsourcing. In an interview with WGBH News' Phillip Martin, professor Jan Rivkin explained the distinction.

"Offshoring is the movement of business activity from the United States to some other location. That can be done within a company. So it’s still in-house, it’s not outsourced. But it is offshore.

"Outsourcing is moving an activity outside of the boundaries of one’s firm to another firm. That can be done within the United States. When Harvard Business School relies upon an outside company to provide meals on campus, that’s outsourcing the meals. We could have our own employees cook the meals and deliver them here. Instead, we have a separate party do that.

"So, you can have offshore outsourcing; you can have onshore outsourcing; as well as offshore activities still in-house."

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