Undershoring is a term that refers to the practice of relocating business operations or services to a cheaper offshore location, but within the same country. It is a combination of the words "under" and "offshoring." Undershoring primarily involves companies moving their operations or services from high-cost areas within their own country to lower-cost regions or countries, making use of the cost advantages while remaining within the jurisdiction.
Undershoring is often undertaken by companies seeking to reduce costs, as it allows them to take advantage of wages, taxes, and other financial incentives offered in lower-cost regions of their own country. By moving operations or services to undershore locations, businesses can often maintain closer control and oversight, as well as reduce logistical complexities compared to when operations are moved overseas.
This practice has gained popularity due to the potential cost savings that can be achieved without the challenges associated with offshoring to a foreign country, such as language barriers, cultural differences, and time zone disparities. It is often used by companies in industries such as manufacturing, customer service call centers, software development, and back-office functions, among others.
However, undershoring can also be a subject of debate, as it may lead to job losses in higher-cost areas or regions within the same country. Critics argue that it contributes to the widening income inequality and creates imbalances in economic development between regions.
