Outsourcing/Offshoring

Outsourcing is a contractual practice in which one company (the main company) hands part of its business process to another company in order to cut costs and specialize on the main company’s best competencies. The contracting company implements part of the main company’s operations for profit and remains independent. If a firm outsources part of its business to a firm in another country, this type of outsourcing is called offshoring or offshore outsourcing. Outsourcing has several advantages and disadvantages for companies that contract portions of their business. These main companies save money by offshoring to companies in countries with lower energy and labor costs, as well as lower taxes and weaker government regulations. But the main companies have to make sure their business model and ...