Types of Offshoring
Offshoring is divided into two parts :
1) Production offshoring: As the name suggests, production offshoring means when the manufacturing or assembly operation of any company moves to a different country. It is generally done to have benefits such as low labour costs, optimising production costs and enabling businesses to use global resources. For example, if A clothing company in the United States moves its garment manufacturing to a facility in Southeast Asia to benefit from lower labour costs and a well-established textile industry. In this way, they can produce the product for cheap but sell it for the same price.
2) Service offshoring: This is when the location of production remains the same, but its services are offshored to different countries. This can include many services like, in our previous example the clothing company can do service offshoring by selling their clothes in other countries this could be done online or by exporting them to other countries and also providing customer care and IT services as well. But their production place will remain the same. This can help in scaling service operations around the globe, getting access to talent, etc.
Offshore: Benefits, Disadvantages and Types
Offshoring is a process of relocating the company to another country, usually to reduce costs. In today’s era, when businesses are expanding globally, it’s an important strategy. Because it helps businesses in many ways, like saving money and getting access to talented people from around the world. But a lot of complex difficulties also come along with it, like language barriers, quality control issues, different time zones, etc. This article will help in understanding the concept of offshoring, its working benefits and challenges.
Table of Content
- What is Offshoring?
- Benefits of Outsourcing
- Disadvantages of Offshoring
- What do you need to do before you Offshore?
- Types of Offshoring
- Conclusion