What is the difference between Outsourcing and subcontracting?

When the terms are analyzed in greater depth, we notice that outsourcing is a type of subcontracting, since it has certain particularities and is used in more strategic areas. We can say that the main difference between the concepts lies in their use, since subcontracting itself is applied to company sectors without added value, being further away from the institution's central objective, thus contributing indirectly.

To get an idea of the importance of both strategies in the business world, EZ.devs conducted a survey indicating that 85% of companies use outsourcing when it comes to technical support. Regarding digital channel companies, 29% of these companies apply subcontracting to manage their digital media. In the global market, the IT outsourcing sector already moves hundreds of billions of dollars per year and continues to expand, with more than half of companies believing that subcontracting reduces costs.

What is Outsourcing?

As mentioned above, outsourcing can be defined as a strategy in which a specific and strategic sector of a company is assigned to a specialized external company.

With this, the contracting company gains greater scalability and competitiveness in its field, in addition to reducing several operational costs, such as recruiting professionals and infrastructure expenses, for example.

A very common example of outsourcing applied today is the IT (information technology) area. Because it is an extremely dynamic area, with new technologies and resources being applied every day, maintaining a high level of competitiveness has become quite challenging for many companies, which find in Outsourcing the solution to this challenge.

What is subcontracting?

Subcontracting can be defined as the act of hiring external companies that will provide services supporting the core objective of the business. The range of services that can be subcontracted is large, but they are never related to structural and strategic sectors of the company and its core activity.

The main objective in these cases is cost reduction, freeing the contracting company from various recurring expenses.

Subcontracting is present in a huge number of companies, with some examples being: cleaning services, gardening services, software maintenance, and security. Although they are strictly essential services, they are not directly linked to the central strategies of the institutions.

What is the difference between Outsourcing and subcontracting?

As we can see, the main difference between these 2 terms lies in their purpose of application. Outsourcing, although it has cost reduction as one of its advantages, has as its main objective to actively contribute to the growth of companies, through contact with highly specialized professionals who will support strategic decision-making. For this reason, companies that provide outsourcing services need to have in-depth and up-to-date knowledge about the area in which they operate.

From the moment a partner is found that has the necessary expertise to handle situations in a certain area that are not natural to the contracting company, the company gains two benefits: increased internal productivity because employees have a more focused approach, and the quality of services that are not natural to the organization grows, since it has a partner specialized in these services.

Subcontracting, on the other hand, is commonly used in simpler and auxiliary company activities. These activities are related to areas not connected to the companies' core activity, but are essential for the smooth running of the business.

We hope our post has helped clarify the differences between Outsourcing and subcontracting.