Outsourcing is when a company contracts with an outside provider for services or other business processes, rather than employing staff to do these services in-house. These services may be provided on-site or off-site. Typically outsourcing is done with an eye toward efficiency and cost-saving for the company. Outsourcing could be as simple as hiring a freelancer to edit a company newsletter or as large-scale as hiring an outsourcing company to handle all credit card issuing activities in a bank.
Offshoring is a form of outsourcing. Offshoring is when a company moves business processes or services to a country other than its home country or primary marketplace. This is usually done in an effort to cut costs. Typically the new country has lower labor costs.