Offshoring

Question 1

What is offshoring?

Answer 1

The relocation of business activities from the home country to a different international location

Question 2

What is the difference between offshoring and outsourcing?

Answer 2

In offshoring the work is done overseas but in outsourcing someone else does the work

Question 3

Why do businesses use offshoring?

Answer 3

1. Manufacturing costs lower
2. Potentially better skilled and higher quality
3. To be closer to customers and demand
4. To overcome protectionism

Question 4

What are the disadvantages of offshoring?

Answer 4

1. Longer lead times for supply
2. Implications for supply chain management
3. Additional management costs
4. More exposed to changes in exchange rates
5. Language barriers and time zone