Associate Professional in Human Resources Training Practice Exam 2026 – Comprehensive All-In-One Guide to Exam Success!

Offshoring primarily involves establishing operations in a foreign country to take advantage of lower labor costs. This can include setting up a subsidiary or a branch in another country where labor is less expensive compared to the home country. By doing so, companies can reduce their overall expenses while maintaining or enhancing their operational capabilities. This strategy is often employed in industries such as manufacturing and customer service.

The other options reflect different concepts. Hiring local employees for lower wages might describe local labor market strategies but does not encapsulate the essence of offshoring, which specifically pertains to moving operations abroad. Transitioning to higher-paid American employees directly contradicts the purpose of offshoring, as it generally seeks to reduce costs rather than increase them. Increasing domestic labor costs is also at odds with offshoring's intent to minimize expenses by leveraging cheaper labor in other countries. Thus, establishing a foreign subsidiary for lower-paid employees correctly captures the essence of offshoring activities.