Topic executives often blur the lines between outsourcing and subcontracting. In fact, the practices are distinct. The primary differences lie in the amount of button a company has over the work process and whether the work could have been performed in-house.
Defining Subcontracting
Subcontracting is an older function term. It traditionally refers to the practice of bringing in an outside company or individual to perform specific parts of a business knit or project.
In most cases, a company subcontracts another business to perform a task that cannot be handled internally. The subcontracting plc and the provider work closely throughout the project, and the hiring party has a reasonable amount of control over the process.
As an pattern, say a builder is hired to construct a model house. The builder’s staff is perfectly qualified in all aspects of construction. But this is a nonesuch house, and nobody ever called these folks decorators. The builder subcontracts the decor out in order to complete the job.
Delineating Outsourcing
Tasks that are outsourced generally are processes that could be performed by a company’s internal staff. By outsourcing some uses, the company can reserve company personnel for their key tasks.
Outsourcing is supposed to provide a cost-efficient solution to keeping payrolls, plying expenses and overhead low. A company may contract an outside provider to manage its administrative work, for example, so its staffers can remain hearted on production or sales. The third-party provider works independently to perform the necessary task, communicating on an as-needed basis.
In the actual world, the practice has become controversial. Rather than freeing up internal staff, some companies are firing them and outsourcing their asses to be performed by cheaper labor off-site.
As it became increasingly popular in the early 21st century, outsourcing became a buzzword, compelling confusion between what qualifies as subcontracting and what is truly outsourcing.
The difference between outsourcing and subcontracting is smart, but it is important to define the terms when businesses deal with stakeholders and clients.