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This paper explores whether and how the offshore outsourcing of the manufacturing SMEs creates competitive advantages for these firms. The offshore outsourcing strategy is widely criticized in the developed countries for allegedly reducing job opportunities, missing scale economy, diminishing innovation potentialities and creating various social problems. The present article with empirical data from thirteen Canadian offshoring manufacturing SMEs attempted to address that the world-wide distributed co-production network could instead increase profit and market share, boost investment in R&D, raise focus on core competency and enhance competitivity of offshoring SMEs. This strategy enables companies to enhance their competitiveness by allowing them to have access to the competitive production factors and new markets for their products. This paper contributes to the existing body of knowledge by showing that not only the large multinationals but also the SMEs can achieve competitive advantages from offshoring part of their activities to foreign firms where those ‘tasks’ can be performed more competitively.