One of the most commonly misunderstood aspects of the global supply chain is the difference between offshoring and outsourcing. A surprisingly large proportion of the general public confuse these terms. But they are distinct concepts.
Outsourcing refers to an organization contracting work out to a 3rd party, while offshoring refers to getting work done in a different country, usually to leverage cost advantages. It’s possible to outsource work but not offshore it; for example, hiring an outside law firm to review contracts instead of maintaining an in-house staff of lawyers. It is also possible to offshore work but not outsource it; for example, a Dell customer service center in India to serve American clients.
Offshoring is defined as the movement of a business process done at a company in one country to the same or another company in another, different country.
Almost always work is moved because of a lower cost of operations in the new location. More recently, offshoring drivers also include access to qualified personnel abroad, in particular in technical professions, and increasing speed to market.
Source – Forbes/Wikipedia