What Does Offshore Mean? What is the difference from the concept of outsource?

For those who encounter the question of what offshore means for the first time, although it literally means overseas, it can have deep meanings in the field of finance. Offshore is the commercial activities carried out by the manufacturer or operating company in order to operate outside its own country, especially in low-tax countries. Companies operating abroad carry out legal proceedings because they pay taxes.

Companies operating overseas can offer useful and different facilities to customers who want to invest and engage in international financial trade. They have different and special advantages in the countries where they operate. These advantages are as follows:

• Minimum wage

• Tax advantages

• Foreign exchange control

• High confidentiality

Offshore financial centers have low tax advantages due to investment advantages in addition to non-resident corporate companies and business services. The company operates specifically and carries out website maintenance, development, accounting and production overseas. The majority of corporate companies in different parts of the world move their call centers to foreign countries.

Offshoring may occur due to cheap labor. When it comes to what offshore company means, we can briefly say that it is the practice of continuing its activities by moving a certain part of the company's transactions or services abroad. The most important reasons for this are cheap raw materials, lower tax rates and lower tax rates. Although offshore generally refers to commercial transactions, states can also participate in offshore.

We can consider what offshore means in two applications:

1. Moving the company's services or operations abroad. The workers in the country it carries are the workers of that company.

2. Carrying out commercial activities abroad, that is, workers working in the company do not work within the company.

Additionally, it can be defined as offshore production or restructuring. It can import the products it operates into its own country. If he moves production abroad, he can sell the goods at home to consumers. To exemplify this, even though HONDA, the automobile giant operating in our country recently, produced in Turkey, it was also selling vehicles in its country.

If the manufacturing company moves abroad to sell or serve the goods it produces in local markets, this is not considered offshore. For example, Mercedes, one of the world's most important automotive manufacturers, operates in Turkey. It operates not to sell the cars it produces in Turkey in Germany, but to sell them in the country where it is produced, in Turkey.

What does outsource mean? What are the Differences in Offshore's Outsourcing Concept?

Outsourcing means outsourcing, that is, the procurement of goods or services in other areas from different companies by focusing on the company's main production or activity areas. There are different automobile manufacturers around the world. Automobiles consist of different parts and companies focus on their own issues and transfer other spare parts from other companies. In particular, it provides goods and services by creating a supply chain.

What are the reasons why the company uses outsourcing?

• Cost

• Flexibility

• Expertise,

With the increase in labor and raw material prices around the world, companies began to prefer countries with low labor force, low raw material prices and low tax rates. However, the concept of offshoring and outsourcing emerged and these activities began to expand around the world.





Production place

Companies produce in-house

Companies outsource products and services

Domestic Product.

Companies produce their goods and services within their own country and in their own country.

Companies procure their goods and services from other companies in their own country.

Foreign Products

Companies produce their goods and services in overseas (foreign) countries.

Companies procure their goods and services from other companies located in overseas (foreign) countries.

Release date : 27.02.2024 Author : Samet Views : 183 Category : General

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