Offshoring is the practice of moving business functions—whether operational processes or supporting operations—overseas.
The primary drive behind the relocation of work is cost-savings. Usually, the target country has at least one of the following, which attracts a company to transfer some operations abroad:
Labor is cheap.
Raw materials are more affordable.
Tax rates are lower.
A business has two options when implementing its offshore strategy:
To move some of its business operations overseas. The workers in its target country are considered its employees.
To outsource business operations to a company abroad. The workers do not work for the client but rather for the outsourcing company. This practice is called offshore outsourcing.
