Definition of Offshoring



Offshoring is the process by which companies relocate their business units to other countries where labour or resources are cheap which reduces their operational cost. Usually, companies from developed countries offshore to less-developed countries to reduce their production cost.

Countries with lower labor cost, cheap raw materials, skilled labor force or favorable tax conditions are hot destinations for industrialized companies to set up their offshore offices.

 


Example of Offshoring:

Apple’s offshoring destination is China which is famous for lower labor rates, skilled workers and cost-effective electronic manufacturing.

 

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