OFFSHORING

Offshoring means having the outsourced business functions done in another country, in order to reduce labor expenses. Other times, the reasons for offshoring are strategic: to enter new markets, to tap talent currently unavailable domestically or to overcome regulations that prevent specific activities domestically. The term is in use in several distinct but closely related ways. It is sometimes used broadly to include substitution of a service from any foreign source for a service formerly produced internally to the firm. In other cases, only imported services from subsidiaries or other closely related suppliers are included.

After its accession to the World Trade Organization (WTO) in 2001, the People's Republic of China (PRC) emerged as a prominent destination for production offshoring. Another focus areas has been India and Romania. The technical progress and reduction of transport cost (see Globalization: economy, finance and regulation) improved the possibilities of offshoring. 

 

Editor: Giovanni AVERSA