Labor arbitrage is an economic strategy that involves leveraging the differences in labor costs between two or more geographic locations to achieve cost savings. In the context of business process outsourcing, labor arbitrage refers to the practice of relocating certain business processes or functions to regions or countries where labor is less expensive while maintaining or improving the quality of the services provided. Labor arbitrage is a common practice when companies transfer tasks such as customer support, data entry, or software development to countries with lower labor costs.
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