As with buybacks, offset is usually carried out between a private firm in the developed world, and the government of a developing country. Direct offset occurs when, as part of the original contract, a certain portion of the product is produced or assembled in the sovereign nation, or when particular components are manufactured under a license system. 

Under indirect offset, the goods received goods received are unrelated to the goods or technology sold in the original contract. Thus, the offset products could include raw materials, light industrial goods.