What is Offshoring
Offshoring is a very important term in the business sector which is gaining global popularity day-by-day. Today we will discuss this important topic to understand what is Offshoring and how it is different from Outsourcing. So, let’s start our discussion with the “offshoring definition”.
Offshoring happens, when a company decides to move its assets or activities to another country. A company usually use this technique when the cost of production is cheaper in another country. So, by Offshoring a company can save a lot of expenses which could letter be used in its development purpose.
Advantages of Offshoring
The biggest advantage of offshoring is that it cuts the production cost. But beside this, there are also other advantages like by an outsourcing a company can easily accrue the skills and labor not easily available in the company’s home country.
Disadvantages of Offshoring
There are also many disadvantages regarding offshoring. For example, offshoring creates a language and cultural barriers which can be very difficult in many ways. Besides that, by offshoring, a company can also lose its operational control over that unit.
Examples of Offshoring
One of the biggest examples of offshoring can be seen in the IT sector in the past 20 years many American tech giants have shifted their production units to India where they have found a very suitable position to grow their business further. And the FDI has played an important role in it too. The main reason behind this is that India has a large number of English-speaking people who are very much technically proficient.
Another example of offshoring can be found in China. And in the past 30 years, many companies have shifted their production units in China because of the working conditions they have. The companies can found easy and efficient labor in here which is far cheaper than companies have in their home country.
Offshoring Vs Outsourcing
one of the main differences between offshoring and outsourcing is that in offshoring you shift the whole branch or unit of a company to a different country. But in outsourcing, you just hire a third party to do your job.
In outsourcing, you don’t have to directly engage in the production, the company you have hired takes care of all these things. But in offshoring, you must directly get involved in the production.
In offshoring, you have to hire new employees and train them in order to run your new business in that country. But in outsourcing, you don’t have to do this, the company you have given the work usually have the necessary manpower it needs to complete your order.
So, in above we have discussed what is Offshoring what a complete offshoring definition and examples. Which is enough to give you the complete knowledge about this topic.We have also discussed the difference between offshoring and outsourcing which will give you an extra knowledge about it.