Advanced Placement (AP) Human Geography Practice Exam

What does offshoring involve?

1. Domestic production of goods

2. Contracting business operations to a foreign provider

3. Outsourcing tasks to local vendors

4. Full relocation of a business abroad

The correct answer is: Contracting business operations to a foreign provider

Offshoring involves the practice of contracting business operations or services to a foreign provider, often to take advantage of lower labor costs or specialized skills available in other countries. This approach allows companies to maintain operations while benefiting from financial advantages that might not be present in their home country. The other options do not accurately describe offshoring. Domestic production of goods refers to manufacturing and producing items within the home country, which is at odds with the concept of transferring activities overseas. Outsourcing tasks to local vendors focuses on delegating responsibilities to businesses or individuals within the same country, while full relocation of a business abroad implies a complete move rather than just outsourcing specific operations to another country. Therefore, contracting business operations to a foreign provider reflects the core definition of offshoring.