What is the difference between Outsourcing and Crowdsourcing?

Outsourcing is a business strategy that came into force in the late 1900s when business owners realized the importance of delegation of tasks to optimize the full-potential of an entity. Earlier, people were skeptical about the use of such strategies fearing loose of control and authority over operations.

However, today, with advanced business models Outsourcing has captured a Global market size of over $92.5 Billion as of 2019. According to statistics more than 93% of companies globally have adopted cloud services to enhance outsourcing. [1]

Crowdsourcing on the other hand is the collective task of obtaining ideas, opinions, work or sourcing from a large number of people via internet.[2] A good example of crowdsourcing is the ‘local guide’ feature in Google maps that asks for your opinion every time you visit a new place. You can give ratings, add photos and reviews which would then be shown to anyone searching for that place on google.

Crowdsourcing is a part of crowdsourcing wherein people with similar interest raise money to support a common cause, a startup or charity. These are voluntary actions by people with little or no self-gain attached with it. Such sourcing is evidence that a digitally connected world is overpowering humanity as never before.

While essentially being procedures of getting work done from an outside origination or individuals that would have rather been done by In-house employees, Outsourcing and Crowdsourcing holds some significant differences. Let’s comprehensively understand the inherent similarities and dissimilarities for you to choose what best suits your business needs.

Difference between outsourcing and crowdsourcing
Key Differences between Outsourcing and Crowdsourcing

Subjectivity and Specialization:

Outsourcing activities are undertaken to seek expertise in the particular field. For instance, when a manufacturing company of US sets up its IT back office team in India, the Indian company provides specialization of Information technology to the hiring company, resulting in mutual gains.

Crowdsourcing on the other hand requires little to no subjectivity[3]. They are usually very non-complicated tasks that anyone can perform without being specialized in the field. A graphic design company may ask for design samples from students across the globe for a very small allowance. This way, the students get recognized for their work and the company gains thousands of design ideas from hidden brilliant minds.

Quality and Accountability:

When outsourcing, you are in touch with a particular company or freelancer and thus, can hold them accountable for the quality of work. This is not the case with Crowdsourcing. As there are a lot of people involved, there is low chances to track quality of performance and hold them accountable for it. In such strategies motivation of the crowd is driven by competition.

However, when you expect a good quality work from a professional you pay higher. In case of Crowdsourcing, less funds are required.

Community vs Organization

Outsourcing is undertaken by one organization to the other with the sole aim of making higher profits. It is a business deal between two corporations agreeing to work with each other for mutual gains.

Crowdsourcing on the other hand is a community of like-minded people that come together to achieve a common goal. It is not always for monetary purposes unlike outsourcing. Uber is a good example of crowdsourcing enabling drivers meet people who need rides.

Conclusion

Outsourcing is strictly an output or work-based strategy whereas crowdsourcing involves a larger scope covering ideas, opinions, funds and work. It is due to the digitization and connectivity of the world that a USA based company can get work done from an India-based freelancer. It allows room for innovation and creativity. From conglomerates to start-ups, everyone can make use of these strategies for enhanced business operations.


[1] https://fortunly.com/statistics/outsourcing-statistics/#gref

[2] https://www.investopedia.com/terms/c/crowdsourcing.asp

[3] https://www.taskus.com/blog/future-sales-differences-crowdsourcing-outsourcing/

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