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Sourcing & Suppliers

Offshoring

Offshoring is the practice of relocating sourcing, production or services to a distant country, typically to reduce cost.

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Offshoring moves activity to a foreign country — often one with lower labour or production costs, larger capacity or specialist capability. It can apply to manufacturing, component supply or back-office services. The main draw is cost, but access to skills and scale that are scarce at home also motivate the shift. It differs from outsourcing, which is about who performs the work rather than where.

Offshoring introduces longer lead times, freight and customs, currency exposure, time-zone gaps and greater supply risk, so decisions should rest on landed cost and total cost of ownership. Many organisations now blend offshoring with nearshoring or local sourcing so that a disruption in one distant region does not halt the entire supply chain.

Frequently asked questions

What is offshoring?
Offshoring is relocating sourcing, production or services to a distant country, typically to reduce cost or access capacity and skills not available at home.
What is the difference between offshoring and outsourcing?
Offshoring is about the location of work — moving it to another country — while outsourcing is about who performs it, handing an activity to an external provider that may be local or overseas.

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