ɔhf ˈšɔhr.iŋ / Offshoring


Offshoring is the practice of moving business functions—whether operational processes or supporting operations—overseas.

The primary drive behind the relocation of work is cost-savings. Usually, the target country has at least one of the following, which attracts a company to transfer some operations abroad:

  • Labor is cheap.
  • Raw materials are more affordable.
  • Tax rates are lower.

A business has two options when implementing its offshore strategy:

  • To move some of its business operations overseas. The workers in its target country are considered its employees.
  • To outsource business operations to a company abroad. The workers do not work for the client but rather for the outsourcing company. This practice is called offshore outsourcing.
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