01. What is offshoring?

Outsourcing has become increasingly popular with companies as a way to reduce

overhead costs and increase profit margins. Outsourcing occurs when a company entrusts a
part of their business process to an outside vendor. Outsourcing possesses a myriad of benefits,
outsourcing can save costs by accomplishing the same task for less money. However, just
because the task is being accomplished for less money does not mean that the quality will
decline. One of the most attractive aspects of outsourcing is the reduction in cost while still
receiving high quality services. Outsourcing can increase efficiency by entrusting business
processes to third-party vendors that specialize in that specific area. Outsourcing allows
companies to focus on the core areas of their business and improve their brand by freeing up
time, energy and resources

02. What are the types of offshoring? Explain each.

♣ Production Offshoring

When a company establishes its manufacturing unit in a different country, to import the
finished goods for selling it in the domestic market, it is termed as production offshoring.

For instance; a company manufacturing heavy machinery would set up its production unit in a
country where it has an optimum supply of iron, and the local labour is cheap and skilled in
such a task.

♣ Services Offshoring

A company performs service offshoring by setting up the units in other countries to carry out
service-related operations such as customer care, information technology, marketing, human
resource, accounting, sales and many more.

For instance; a software company relocates its research and development unit in a country
where the technical human resources are highly competent and comparatively cheaper than
the domestic personnel.

03. Is offshoring a good strategy? Why or why not. Explain your answer.

Offshoring is a good strategy bacause it was lower costs, Focus on business development,
Attain flexibility and business expansion, has Lower risks, and lastly Exercise more control. In
addition, Offshoring also become one of the most reliable and profitable business operations; an
acknowledged competitive strategy by a lot of successful enterprises.