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Book a call ↗Offshoring means moving work to another country. The OECD defines it as companies either buying goods and services from foreign providers, or moving some in-house tasks to their own affiliates abroad (OECD definition, via UN ESCWA). What defines it is the location, not the type of contract.
For a US company, hiring a developer in Poland or a marketer in Portugal is a form of offshoring. Whether it also counts as outsourcing depends on whether the person works for you directly or through a provider.
Offshoring, outsourcing and nearshoring
| Term | The question it answers | Example |
|---|---|---|
| Offshoring | Where is the work done? | A US company hires an engineer in Spain |
| Outsourcing | Who does the work? | A US company hands customer support to an external provider |
| Nearshoring | How close is the other country? | A team chooses a country with a shared working window |
Eurostat measures the same idea under the name international sourcing, and splits it into insourcing to a foreign affiliate and outsourcing to an external provider abroad (Eurostat metadata).
What the EU data shows
Eurostat's latest survey covers 2021 to 2023 and enterprises with 50 or more people (Eurostat):
- 3.21% of these enterprises moved business functions abroad, up from 2.69% in 2018 to 2020.
- 73% of them sourced within the EU. Outside it, the top destinations were other European countries (26%), India (19%) and the UK (17%).
- The main reasons were reducing labour costs (34%), a decision by the group head office (33%) and reducing other costs (28%).
- Management and administration (47%) and ICT services (29%) were the functions most often moved.
What it means when you hire in Europe
Hiring individuals abroad is offshoring at its smallest scale, and the cost case is real: EU hourly labour costs vary several times over between countries, as covered in fully loaded cost. The work is choosing the structure. A person can join as an independent contractor, as an employee through an Employer of Record, or through a provider, which makes it outsourcing as well. Check permanent establishment risk for sales roles, and see nearshoring for time-zone overlap.
This is general information, not legal or tax advice. Rules differ by country and change, so confirm your case with a local lawyer or accountant.
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