Offshoring

Offshoring refers to relocation of organizational tasks and activities from a firm’s home country to foreign locations. Offshoring has been applied as a business practice since the 1960s and it is described as early as 1966 by Raymond Vernon in the seminal product lifecycle theory. Here, Vernon describes how production is typically moved from industrialized countries to developing countries towards the maturity stage of the product lifecycle. Since the late 1990s, offshoring has emerged as a broad construct that comprises the relocation of tasks to foreign wholly owned subsidiaries (referred to as “captive offshoring”) or to external partners (“offshore outsourcing”). A foundational firm strategy model for offshoring is frequently portrayed as a choice between ownership and control on one side and the choice of location on the other.