Which term describes moving production processes to a foreign location to reduce costs?

Which term describes moving production processes to a foreign location to reduce costs?

• A. Nearshoring
• B. Outsourcing
• C. Offshoring
• D. Insourcing

Answer: (C)

Relocating production to a foreign country to lower costs is offshoring. This term focuses on the location shift across borders to take advantage of lower input costs, such as labor or favorable conditions. It differs from outsourcing, which is about contracting the work to another firm (which could be domestic or abroad) rather than where the production happens. Nearshoring is moving production to a nearby foreign country to balance cost savings with logistical ease, while insourcing means keeping production in-house. Therefore, the best fit for moving production to a foreign location to reduce costs is offshoring.

Relocating production to a foreign country to lower costs is offshoring. This term focuses on the location shift across borders to take advantage of lower input costs, such as labor or favorable conditions. It differs from outsourcing, which is about contracting the work to another firm (which could be domestic or abroad) rather than where the production happens. Nearshoring is moving production to a nearby foreign country to balance cost savings with logistical ease, while insourcing means keeping production in-house. Therefore, the best fit for moving production to a foreign location to reduce costs is offshoring.