Offshoring is about relocating business operations to a different country, mainly because of the low labour prices, cheap resources, or governmental regulations, and so on. It is aimed at reducing the cost of manufacturing and other auxiliary services. For instance, a company specialising in making beds has manufacturing as their core business and customer service as a supporting function. In such a case, it makes sense to offshore it to a developing country.
They are mainly of two types:
While cost-cutting is the major objective, there are other benefits to offshoring such as:
There are obstacles to offshoring that are often overlooked, since the benefit of cost-cutting is a lot more attractive. These include:
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