Offshoring Definition
Offshoring is the practice of moving a company’s business processes, such as manufacturing or services, to another country. This is often done to take advantage of lower labor costs, and tax benefits, or to access a larger talent pool.
How Does Offshoring Work?
Offshoring typically involves setting up a subsidiary or outsourcing the work to a third-party provider in another country. This can involve hiring new employees in the offshoring location or transferring existing employees to the new location.
Key Features of Offshoring
It includes cost savings, access to specialized skills, and the ability to operate 24/7 due to time zone differences. However, offshoring also comes with challenges such as language barriers, cultural differences, and potential legal and security risks.
Best Practices for Offshoring
Best practices for offshoring include thorough research and due diligence before selecting an offshoring location or partner, clear communication and expectations, and ongoing management and oversight of the offshored processes.