Outsourcing vs. Procurement — What's the Difference?
By Tayyaba Rehman — Updated on October 29, 2023
Outsourcing involves delegating business processes to external parties, while procurement is the process of obtaining goods or services for business needs.
Difference Between Outsourcing and Procurement
Table of Contents
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Key Differences
Outsourcing is the practice of hiring external firms to handle specific business functions. Procurement, however, involves the process of sourcing and acquiring goods or services.
Through outsourcing, companies delegate tasks to third parties, often to reduce costs. In procurement, businesses engage in selecting and purchasing necessary resources.
Outsourcing can include services like IT support or manufacturing. Procurement typically focuses on finding suppliers and negotiating contracts for goods.
Companies resort to outsourcing for expertise and efficiency. Procurement is driven by the need to secure quality supplies at the best price.
Outsourcing often involves international partnerships. Procurement is about strategic sourcing, sometimes even from local suppliers.
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Comparison Chart
Purpose
Delegate business processes
Acquire goods or services
Focus
External expertise and efficiency
Sourcing and purchasing
Scope
Can be international
Strategic, sometimes local sourcing
Common Activities
IT support, manufacturing
Supplier selection, contract negotiation
Driver
Cost reduction, expertise access
Securing quality, price negotiation
Compare with Definitions
Outsourcing
Transferring responsibilities to external firms.
Outsourcing logistics streamlined their operations.
Procurement
Acquiring resources for business needs.
The procurement team secured a favorable contract.
Outsourcing
Hiring third parties to perform specific tasks.
Outsourcing their IT department saved them resources.
Procurement
Strategic selection of suppliers.
The procurement process involved thorough research.
Outsourcing
Contracting out business processes.
They considered outsourcing to focus on core activities.
Procurement
Negotiating and contracting for resources.
Their procurement efforts led to cost savings.
Outsourcing
Shifting tasks to external providers.
Outsourcing allowed them to access global expertise.
Procurement
Process of obtaining goods or services.
Effective procurement is key to their success.
Outsourcing
Delegating business functions to external parties.
The company chose outsourcing for its customer service.
Procurement
Sourcing and purchasing necessary supplies.
Their procurement strategy focused on sustainability.
Outsourcing
Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally and sometimes involves transferring employees and assets from one firm to another. The term outsourcing, which came from the phrase outside resourcing, originated no later than 1981.
Procurement
Procurement is the process of finding and agreeing to terms, and acquiring goods, services, or works from an external source, often via a tendering or competitive bidding process.Procurement generally involves making buying decisions under conditions of scarcity. If sound data is available, it is good practice to make use of economic analysis methods such as cost-benefit analysis or cost-utility analysis.
Outsourcing
To delegate (a task, function, or responsibility) to an independent provider
"Most retailers outsource the bulk of their manufacturing to Third World countries, where labor is dramatically cheaper" (James Surowiecki).
Procurement
To get by special effort; obtain or acquire
Managed to procure a pass.
Outsourcing
To relocate or transfer (jobs) to another labor market
"Although the absolute number of jobs outsourced from developed countries to China remains small, the threat that firms could produce offshore helps to keep a lid on wages" (The Economist).
Procurement
To bring about; effect
Procure a solution to a knotty problem.
Outsourcing
Inflection of outsource
Procurement
To obtain (a sexual partner) for another.
Outsourcing
The transfer of a business function to an external service provider.
Procurement
To obtain sexual partners for others.
Procurement
(uncountable) The purchasing department of a company.
Procurement
(countable) The act of procuring or obtaining; obtainment; attainment.
He was responsible for the procurement of materials and supplies.
I have a lot of experience in the procurement of construction materials and sub-contracts.
Procurement
Efficient contrivance; management; agency.
They think it done by her procurement. -Dryden.
Procurement
The act of procuring or obtaining; obtainment; attainment.
Procurement
Efficient contrivance; management; agency.
They think it doneBy her procurement.
Procurement
The act of getting possession of something;
He was responsible for the procurement of materials and supplies
Common Curiosities
What is outsourcing in business?
Outsourcing involves hiring external companies to handle specific business functions.
Can outsourcing lead to cost savings?
Yes, companies often outsource to reduce costs and increase efficiency.
Why is procurement important for businesses?
Procurement is crucial for obtaining quality resources at competitive prices.
What is strategic procurement?
Strategic procurement involves long-term planning and relationship building with suppliers.
What factors are considered in procurement?
Factors include price, quality, supplier reliability, and delivery terms.
What are the risks of outsourcing?
Risks include loss of control, quality issues, and dependency on external vendors.
How does outsourcing affect a company's workforce?
Outsourcing may reduce the internal workforce but can also free up resources for core activities.
How does procurement differ from outsourcing?
Procurement is the process of acquiring goods or services, while outsourcing is delegating tasks to third parties.
Can a company outsource its procurement process?
Yes, some companies outsource their procurement to specialized firms.
Can procurement involve international sourcing?
Yes, procurement can involve sourcing from both local and international suppliers.
How does outsourcing impact quality control?
Outsourcing can challenge quality control, requiring careful vendor selection and management.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
