Offshoring
Topic: Globalisation and MNCs · NCERT: Beyond NCERT
Meaning
Offshoring means moving a firm's production or service work to another country, usually to cut costs. It answers the question where the work is done. The firm may do the work itself in its own foreign unit, or hire an outside firm abroad to do it. India has gained a lot from services offshoring because it has low wages and skilled, English-speaking workers.
Example
A US bank opens its own unit in India to handle accounts and analytics. This is called captive offshoring. India's Global Capability Centres (GCCs) are MNC-owned units that do R&D, analytics, engineering and finance work in India.
Don't confuse with
- Outsourcing: answers who does the work, which is an outside firm. A US bank hiring an Indian BPO is both offshoring and outsourcing, called offshore outsourcing.
- Reshoring: bringing offshored work back to the home country.