Offshore Outsourcing: A Glossary of Terms

This glossary contains useful definitions of some of the terms used within this website and related primarily to Offshore & Nearshore Software Outsourcing. New definitions are planned to be added over time.

• Offshore Software Outsourcing

Also referred to as Offshore Programing and Offshore Software Development, Offshore Software Outsourcing implies relying on an external provider for software development, maintenance and other software-related services. The reasons for this practice may include cost savings, lack of in-house resources or expertise, and more.

• Offshoring

Offshoring is essentially just another name for offshore outsourcing, i.e. moving business processes overseas as a means to reduce costs. However, since outsourcing (contrary to offshoring) presupposes the use of an external service provider, a distinction between these terms can be drawn.

Offshoring in its turn can be further divided into Production Offshoring and Services Offshoring. The former involves sending manufacturing or production-related jobs to a more cost-effective location, usually overseas. A prime example of production offshoring are China and Taiwan. Services Offshoring means sending entire business processes like, for example, customer support to another geography. Examples of services offshoring include India, Eastern Europe (this is where Belarus belongs), and Russia.
Services Offshoring is similar to Business Process Outsourcing.

• Nearshore Software Outsourcing, Nearshoring

Fundamentally similar to offshore software outsourcing, this practice is different in that it relies on a geographically close location to move production or services (in case of nearshoring), or outsource entire business processes (in case of nearshore outsourcing). Examples of nearshore locations for the United States are Canada and Mexico, while Eastern Europe can me viewed as a nearshore partner for the EU nations.

• SMBs

An abbreviation meaning Small and Medium Businesses. These are independent privately-owned companies that have larger dominating competition in their field of operation. In today's digitized, networked economy, the Internet makes it possible for SMBs to successfully compete with larger rivals by unleashing the offshore outsourcing potential.

• Business Process Outsourcing

Similar to Services Offshoring, Business Process Outsourcing (commonly abbreviated as BPO) means hiring a third-party contractor to handle entire business functions from offshore. These functions can include customer support, data entry services, and call centers.