Freelancing vs Outsourcing: The Difference and When to Do Which

"I do outsourcing." In Bangladesh, many people who work online from home describe their job this way. Others say "I freelance." The two words are often used as if they meant the same thing, but they are really two sides of one coin. Knowing the difference between freelancing and outsourcing also makes career planning easier: when to work alone, and when to grow a business by getting others to do the work.

This article keeps the core advice from Sultan Muhammad Rashed's experience and lays it out with examples, tables and a practical plan.

The difference in one line

When someone independently does another person's work, that is freelancing. When someone has their own work done by an outsider, that is outsourcing.

Say an online store in the United States hands its product photo editing to a graphic designer in Dhaka. For the store, this is outsourcing; for the designer, it is freelancing. The job is the same; only the name changes depending on which side you stand on.

What is freelancing?

Freelancing means working for different clients with your own skills, without being any organisation's permanent employee. The freelancer decides which jobs to take, what to charge and when to work. A freelancer is self-employed, and the product they sell is their skill.

For a full guide on getting started and which skills to learn, read our What Is Freelancing and How to Start guide.

What is outsourcing?

Outsourcing is when an organisation has some of its tasks or services done by an outside person or company, to cut costs, reach skilled people and focus on its core business. Examples:

• A small business hands its bookkeeping to an accounting firm.
• A bank hires outside programmers to build a mobile app.
• A large company runs its customer service call centre through another firm.

Types of outsourcing

Freelancers in Bangladesh mostly do offshore outsourcing work for foreign companies. That is why "outsourcing" has become a synonym for freelancing here.

Freelancing vs outsourcing: comparison table

When to freelance and when to start outsourcing

Sultan Muhammad Rashed's advice is to change your role as your online career moves through its stages.

Stage 1: freelance at the start

Early on you usually have little money and little experience. So do the work yourself. Learn one skill well, build reviews and a portfolio through small jobs. Handing work to others at this stage makes quality hard to control, because you don't yet fully understand the work yourself.

Stage 2: when work outgrows you

At some point clients will keep coming, and there will be more work than you can finish on time alone. Instead of turning jobs away, share them with trusted, skilled colleagues. Your role becomes winning work, giving instructions, checking quality and staying in touch with clients. That is outsourcing, and it is how a freelancer gradually becomes the owner of an agency or team.

Stage 3: running your own business or managing marketing

If you own a business, or work as a marketing manager, you can't do everything yourself. Then the smart move is to have skilled freelancers handle design, content, ads or website work. Costs drop, you get skilled people when you need them, and you can focus on the core business.

For online sellers, a lot of this work is now handled by software. A platform such as eCommerce Autopilot, for example, combines a ready website, order and courier management, payments and AI help with product descriptions, which cuts down the hassle of finding separate people to outsource each task to.

6 rules for successful outsourcing

1. Give clear instructions: write down what you want, by when and to what standard.
2. Start with a small job: test anyone new with a small trial task first.
3. Keep a written agreement: record the price, deadline, number of revisions and ownership.
4. Check quality before delivery: never forward someone else's work unchecked; the responsibility is yours in the end.
5. Protect information: don't share passwords or confidential data beyond what is necessary.
6. Pay fairly and on time: it is the best way to keep good colleagues.

4 common beginner mistakes

• Treating the two as the same: if you tell a client "I do outsourcing", they may think someone else does your work. If you do the work yourself, call yourself a freelancer.
• Becoming a middleman without the skill: if you don't understand the work, you can't check its quality and you will lose the client.
• Passing work on without the client's consent: many contracts forbid handing work to a third party. Read the terms and ask if needed.
• Not keeping records: without noting what you received and what you paid out, you can't see your profit, and tax filing gets harder.

The Bangladesh picture

According to The Daily Star, Bangladesh has about 6 lakh (600,000) IT service exporters and freelancers, plus around 1,600 team-based freelancing companies. In other words, many freelancers have already reached stage 2, building teams and outsourcing work themselves. The move from freelancing to outsourcing is what turns personal income into a lasting business.

If you want advice from someone experienced on the next step for your career or business, you can visit the website of marketing and business consultant Sultan Muhammad Rashed.

Final word

The difference between freelancing and outsourcing is really a difference of roles: the freelancer does the work, and whoever has it done by an outsider is outsourcing. If you are new, build a skill and freelance first. When work grows, start outsourcing while keeping quality high. That is how a solo freelancer steadily becomes an entrepreneur.