What is offshoring?

Offshoring refers specifically to the practice of moving certain business operations or processes to a foreign country. This is typically done to take advantage of lower labor costs, favorable economic conditions, or other incentives that might not be available in the home country. By relocating operations abroad, companies aim to enhance their competitiveness, increase efficiency, or tap into particular skills that may be more readily available in other markets.

The definition of offshoring is distinct from other concepts. For example, while contracting work to an external party relates to outsourcing, it doesn’t necessarily imply that the work is being moved to a different country. Similarly, reducing operational costs locally focuses on optimizing existing operations within the home country rather than relocating them. Lastly, outsourcing within the same country entails hiring external firms for services but does not involve the movement of operations abroad. Therefore, the notion that offshoring specifically involves relocating operations to another country accurately captures its essence.