Inshoring
Encyclopedia
Inshoring may be thought of as the 'opposite' of Offshoring
. It is the business process outsourcing work domestically. This process typically applies to the US and the UK.
Inshoring and onshoring are subsets of insourcing. Insourcing generally delegates certain work to another company. This work may be done on shore by domestic labor, typically by ending a specific instance of offshoring. Going further, inshoring counter-balances a country's other instances of offshoring, typically by inshoring foreign direct investment (FDI) made by foreign firms setting up shop within the U.S.
So, onshoring is primarily a politico-economic term that a company can use to show it is simply not offshoring. It is argued that successful onshoring takes advantage of cost disparities within the domestic market. For example, for software companies not located in metropolitan areas with high costs of living, there is a real opportunity to compete on price with other domestic software companies. It simply costs less to do business in the Midwest than it does in New York or Los Angeles. So a New York or Los Angeles firm might choose to insource (or delegate certain work) not to an offshore company in India but to an on onshore company on the U.S. Midwest, which can undercut the competition on the coasts yet charge a premium locally to attract top talent to satisfy the coastal firm's work. If work can be shipped overseas, it can just as easily be shipped across the Mississippi.
Inshoring goes further politico-economically as previously noted, and may offer management advantages. A company in Silicon Valley may insource work to a Chinese technology manufacturing company, which would set up a small base of operations in Silicon Valley or in the U.S. Southwest. If located in Silicon Valley, the main management company could drive to the manufacturing operations, or vice versa, and they could iron out any design wrinkles quickly. However, such rich face-to-face interactions may exacerbate cultural communication differences, simplified with asynchronous planned e-mails focused on the project details. If insourced operations are located in the U.S. Southwest, face-to-face interactions are reduced somewhat, for better or worse. Whether located in Silicon Valley or the U.S. Southwest, the manufacturing operations would be far from China, for better or worse. Being closer to China is said to offer better access to knowledge and problem-solving of purely manufacturing problems, while being farther may allow the satellite location to act more autonomously and fit better with the Silicon Valley culture and work expectations. In sum inshoring attracts investment into a country, and may bring management advantages.
—Michael Sasso, "USF To Study Export Of Jobs And Its Effect On Bay Area," Tampa Tribune (Florida), May 4, 2004
"The business of finding low-cost substitutes for American workers is getting more complex — and so is the terminology. They don't just call it 'offshoring' anymore.
At a recent conference in the palatial Venetian resort, the people who help U.S. companies shift white-collar work overseas offered potential clients a Vegas buffet of outsourcing options: 'nearshoring,' for those willing to stray no farther than Canada or Mexico; 'inshoring,' for those who prefer to bring foreign workers to America, and 'rightshoring,' for those desiring a custom package of in-house and offsite, foreign and domestic."
—Warren Vieth, "Outsourcing Variations Have Some Appeal," Los Angeles Times, April 27, 2004
"It's 'inshoring' for Japanese autos. Amid the furor over the loss of U.S. jobs overseas, a movement is under way in the opposite direction, fueled by the foreign companies blamed for employment migration decades ago.
Steadily, the three big Japanese auto companies — Toyota, Honda and Nissan — are expanding their U.S. operations and adding workers. Honda is hiring 2,000 in Alabama to build sport-utility vehicles, and Nissan will add more than 2,000 in plant expansions in Tennessee and Mississippi."
—"In context," Saint Paul Pioneer Press (Minnesota), March 7, 2004
Offshoring
Offshoring describes the relocation by a company of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Even state governments employ offshoring...
. It is the business process outsourcing work domestically. This process typically applies to the US and the UK.
Inshoring and onshoring are subsets of insourcing. Insourcing generally delegates certain work to another company. This work may be done on shore by domestic labor, typically by ending a specific instance of offshoring. Going further, inshoring counter-balances a country's other instances of offshoring, typically by inshoring foreign direct investment (FDI) made by foreign firms setting up shop within the U.S.
So, onshoring is primarily a politico-economic term that a company can use to show it is simply not offshoring. It is argued that successful onshoring takes advantage of cost disparities within the domestic market. For example, for software companies not located in metropolitan areas with high costs of living, there is a real opportunity to compete on price with other domestic software companies. It simply costs less to do business in the Midwest than it does in New York or Los Angeles. So a New York or Los Angeles firm might choose to insource (or delegate certain work) not to an offshore company in India but to an on onshore company on the U.S. Midwest, which can undercut the competition on the coasts yet charge a premium locally to attract top talent to satisfy the coastal firm's work. If work can be shipped overseas, it can just as easily be shipped across the Mississippi.
Inshoring goes further politico-economically as previously noted, and may offer management advantages. A company in Silicon Valley may insource work to a Chinese technology manufacturing company, which would set up a small base of operations in Silicon Valley or in the U.S. Southwest. If located in Silicon Valley, the main management company could drive to the manufacturing operations, or vice versa, and they could iron out any design wrinkles quickly. However, such rich face-to-face interactions may exacerbate cultural communication differences, simplified with asynchronous planned e-mails focused on the project details. If insourced operations are located in the U.S. Southwest, face-to-face interactions are reduced somewhat, for better or worse. Whether located in Silicon Valley or the U.S. Southwest, the manufacturing operations would be far from China, for better or worse. Being closer to China is said to offer better access to knowledge and problem-solving of purely manufacturing problems, while being farther may allow the satellite location to act more autonomously and fit better with the Silicon Valley culture and work expectations. In sum inshoring attracts investment into a country, and may bring management advantages.
In the media
"Amen said the center hopes to broaden the study to get a handle on foreign-based companies moving work to the United States. This less-publicized form of globalization is known in corporate America as 'inshoring'."—Michael Sasso, "USF To Study Export Of Jobs And Its Effect On Bay Area," Tampa Tribune (Florida), May 4, 2004
"The business of finding low-cost substitutes for American workers is getting more complex — and so is the terminology. They don't just call it 'offshoring' anymore.
At a recent conference in the palatial Venetian resort, the people who help U.S. companies shift white-collar work overseas offered potential clients a Vegas buffet of outsourcing options: 'nearshoring,' for those willing to stray no farther than Canada or Mexico; 'inshoring,' for those who prefer to bring foreign workers to America, and 'rightshoring,' for those desiring a custom package of in-house and offsite, foreign and domestic."
—Warren Vieth, "Outsourcing Variations Have Some Appeal," Los Angeles Times, April 27, 2004
"It's 'inshoring' for Japanese autos. Amid the furor over the loss of U.S. jobs overseas, a movement is under way in the opposite direction, fueled by the foreign companies blamed for employment migration decades ago.
Steadily, the three big Japanese auto companies — Toyota, Honda and Nissan — are expanding their U.S. operations and adding workers. Honda is hiring 2,000 in Alabama to build sport-utility vehicles, and Nissan will add more than 2,000 in plant expansions in Tennessee and Mississippi."
—"In context," Saint Paul Pioneer Press (Minnesota), March 7, 2004