In order to keep its manufacturing costs down, Electra manufactures its bikes in Taiwan because it is cheaper for the company that producing the bikes in the United States. The process of contracting the production of goods to an overseas company is called _______.

Outsourcing is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company's employees and staff.

Outsourcing can help businesses reduce labor costs significantly. The outside organizations typically set up different compensation structures with their employees than the outsourcing company, enabling them to complete the work for less money. In addition to cost savings, companies can employ an outsourcing strategy to better focus on the core aspects of the business.

Outsourcing can increase economic efficiency. When highly skilled people can outsource lower-value tasks and spend more time at high-value tasks, businesses tend to benefit.

It is crucial to maintain open and constant communication with the outside company. Control is key to success, so the quality of the product does not diminish.

When outsourcing to a foreign country, it is called international outsourcing or global outsourcing.