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When a company chooses to outsource business functions, the decision is often made from a cost-reduction standpoint. However, outsourcing and offshoring are often used interchangeably, although there are distinct differences between the two. Outsourcing is the process of transferring work to an external partner, often to reduce costs and increase productivity and efficiency. Offshoring is a form of outsourcing, the difference being that with offshoring, work is outsourced to workers in countries other than where a business’s primary operations are. While outsourcing to countries where the cost of living–and thus the cost of labor–can be attractive from a cost perspective, companies often make substantial sacrifices. Especially when it comes to something as critical as human resources, companies benefit by ensuring they utilize American benefit administrators instead. Let’s dive into the reasons why.