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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.
Outsourcing vs. Procurement — What's the Difference?

Difference Between Outsourcing and Procurement

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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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Author Spotlight

Written by
Tayyaba Rehman
Tayyaba 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.

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