Offshoring definition

Offshoring is the process of relocating a business or business process to another country in order to benefit from reduced labour costs or a more beneficial regulatory environment. A range of processes are commonly offshored, including manufacturing, IT, customer service and research & development.

Offshoring is controversial for a number of reasons, including reducing the economic benefits to the home country and the number of jobs available to locals, and potential exploitation concerns over mass employment of cheaper labour in the destination country. Service levels of companies offshoring customer service may also be affected, often due to the culturally-driven mismatch in expectations that can occur.

A related term is re-shoring or backshoring, which means bringing back a business process from an offshore location to the original country of operation.

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