Reasons Corporations Relocate Operations Overseas
Corporate outsourcing to international countries has been a popular topic amongst the public and politicians through the past decade. A lot of people may be confused about why companies might relocate their operations overseas. Below is a short list of common reasons given for corporate relocations.
Labor Costs – most workers in international countries will work for less money than their U.S counterparts. This is because cost of living is typically much less expensive overseas and the labor force is not used to increased standards of living.
Taxes – many countries attempt to attract businesses by offering them low tax rates and a generally friendly business environment. Many countries even offer themselves out as sort of a tax haven where corporations can park their money without being chipped away at by the federal government.
Regulations – many companies claim that they move their operations overseas because the regulations are more reasonable in other countries. Manufacturing practices that would not be allowed or that would be penalized in the U.S are allowed to take place without restrictions in some countries.
Talent Pools – a lot of businesses complain that there are simply not enough qualified applicants for open positions within the United States. Whether this is true or not is difficult to measure statistically, but companies will often move to China or India to harness a high tech workforce.
Focus on Core Business – moving manufacturing overseas can allow a company to focus most of its attention on core business aspects like sales and marketing in order to increase revenue and profits.
Reduced Costs – corporate relocations ultimately come down to reducing costs and making more profit, as that is the primary motivator of all for-profit businesses. Relocating overseas has that benefit for many corporations, and they will continue to do so until that benefit expires.
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