Businesses must understand these behavioral patterns and buying processes because it helps them figure out the needs of their consumers.
Several companies from various industries have relied heavily on outsourcing. It involves an external provider that undertakes a company’s specific processes or job functions.
Even though outsourcing is a familiar business strategy in the market, a lot of people are still confusing it with crowdsourcing. Both business practices aim to obtain work outside the premises of the organization. Although outsourcing and crowdsourcing have obvious differences, they both offer advantages for your business.
Let’s take a look into these significant differences and settle the debate on outsourcing vs crowdsourcing.
Outsourcing defined
Outsourcing is known as the business strategy of hiring a third-party organization to perform business processes. It can be a specific task, service, or an entire department.
The main aim of businesses when they outsource is to cut back on costs while increasing efficiency. This process has been the go-to of many companies from all industries.
Outsourcing is the number one business strategy that has augmented the global operations of software companies, government agencies, and other business or non-profit entities.
Contracting tasks and functions to another country has helped a lot of organizations save money and time to focus on their developmental needs.
Crowdsourcing defined
On the other hand, crowdsourcing is a process that actually involves outsourcing tasks to a group of people. The core difference between the two is that the tasks in crowdsourcing come from various sources.
Unlike outsourcing where organizations rent functions from a specific outsourcing company, crowdsourcing can be done in various ways. This is mostly done on digital platforms and social networking sites. It can either be paid or unpaid.
Since people are relying more and more on the information that users share online, the internet has provided an avenue for companies and individuals to engage in more meaningful and professional relationships.
That’s why organizations have used digital platforms for their crowdsourcing needs. People and businesses that want to find freelancers, creatives, and other experts can simply post their needs on dedicated platforms for crowdsourcing or social media pages.
Outsourcing vs crowdsourcing
To better understand the difference between outsourcing and crowdsourcing, here are the major areas to look into:
Goals
Both practices generate significant cost savings, but the ultimate goal of outsourcing companies is to save money without risking output quality. Trained industry experts are involved, so businesses are confident that the tasks they offload are in good hands.
Crowdsourcing, on the other hand, aims to work with a diverse demographic with different specializations and experiences. This gives businesses more options and ideas to work with because their sources are not concentrated in a specific crowd.
Specialization
Outsourcing reaches different locations; it can be within the country’s region or beyond other countries to fulfill their operational needs. The availability of workforce, technology, and industry-specific considerations play a role in the selection.
Outsourcing is also a good way for businesses to develop their internal functions while they contract non-core jobs to external providers.
Crowdsourcing, unlike outsourcing, is less formal and doesn’t involve contracting out to specific providers. Since ideas are only coming from a general crowd, it only involves a nonspecific demographic or group of participants willing to collaborate.
Quality
In outsourcing, businesses are in touch with a particular third-party provider called outsourcing companies. They require a service level agreement where they can hold the provider accountable for the functions they outsource.
In crowdsourcing, even if there’s a lot of people involved, no one can hold someone or a group accountable for their output. On the other hand, just like freelancing jobs, good quality of work requires a higher compensation in crowdsourcing.
Community
Outsourcing can be done by any business size, from startups to large corporations. Its ultimate goal is to acquire higher profits and reduce the internal cost of resources.
Meanwhile, crowdsourcing promotes a collaborative environment for an entire community on various digital platforms. It diversifies ideas and paves the way to innovation among in-house teams.
Knowing the difference
Crowdsourcing can be considered a type of outsourcing to a diverse demographic of participants. However, unlike outsourcing, crowdsourcing has different goals, happens in a different community or organization, and offers a different quality of work.
These two may be different but both practices offer gigantic opportunities for business. You can grow your network, audience reach, and profit—although in different ways—if executed properly.
Companies have been using these two business models to address their specific needs in operations, may it be a lack of manpower or talent, access to high technologies, or even expertise.
Now that you know the differences between these two business practices, you can now decide which of these two is more fitting to your business goals.
