Offshore outsourcing refers to contracting business processes or software development to companies or teams located far from your headquarters, often with significant time zone and cultural differences. Typical offshore destinations for US companies include India, the Philippines, and Eastern Europe.

How it works:

Cost-driven: The main motivation is to reduce costs by leveraging lower wages in distant markets.

Asynchronous work: Offshore teams work while your local team sleeps, which can mean progress continues overnight but can also cause delays if communication isn’t managed carefully.

Cultural and language differences: Offshore teams may have different working norms or communication styles, so clear documentation and onboarding are key.

Best fit: Suited for well-defined, long-term projects where real-time collaboration is less critical.

Challenges:

Delays due to time differences

Risk of miscommunication or rework

IP and data security considerations

Harder to integrate teams into your company culture

Summary:
Offshore outsourcing means moving business processes to faraway countries for significant cost savings, but it can come with trade-offs in speed, communication, and control. Nearshore outsourcing is now preferred by many US firms who want the benefits of global talent without those downsides.