The Benefits of Nearshoring - When and Why Choose Nearshoring Over Offshoring

The Benefits of Nearshoring - When and Why Choose Nearshoring Over Offshoring

Money used to be one of the greatest motivators for companies when they considered outsourcing certain business processes. For some, the only two conditions that had to be fulfilled were low costs and a competent workforce.

The trend grew quickly, but it didn’t take long for businesses to realise that this savings didn’t come at a price.

Namely, with the team being halfway around the world, establishing seamless collaboration was (and still is) sometimes borderline impossible. However, this didn’t necessarily mean the end of outsourcing but a new beginning - the beginning of nearshoring.

What is Nearshoring?

Nearshoring is a type of business processes outsourcing to companies in nearby countries. Most commonly, businesses choose to delegate IT-related activities such as web design and development, as well as customer support, and even human resources. Quite often, the country of choice borders with the country where the company headquarters are located to reap the most benefits of geographic proximity - the same time zone, minimal cultural differences, fewer language barriers, etc.

When does Nearshoring Trump Offshoring?

When you want to save money without compromising the quality of work

You don’t necessarily have to travel across the globe to discover workforce that is both more talented and affordable - and the growing number of partnerships in Europe serves as a proof of this concept.

By establishing strong business connections with nearby countries, you see fewer cultural differences and similar work ethics. As a result, communicating ideas becomes easier, with the end result arriving sooner than expected and at a higher quality. This means lesser use of resources and, consequently, lower cost of labour.

When you want to have greater influence over your team

Those who have tried their luck in outsourcing know the struggles of managing a team that works different hours than yours. The further you travel, the greater the communication lag you can expect, and the tougher it gets to fulfil the deadlines, especially some shorter ones.

Nearshoring means that the team is in the same or neighbouring time zone, which allows you to interact with any member in real time. This also provides you with greater influence and control over the project at hand. What is more, should the need for a live meeting arise, you will get to your time quicker and at a lower cost than if you had to visit them at a remote location.

Ask any CEO and they will tell you that the importance of face-to-face meetings cannot be stressed enough. Even with the increasing number of quality video-conferencing tools, seeing someone in person allows you to analyse verbal and non-verbal signs, which only additionally contributes to better understanding. Plus, by insisting on seeing your employees live shows your appreciation of them which tends to increase employee motivation, devotion, and overall productivity.

When you need top talent you can communicate with easily

However, it is not just about being in touch during your usual work hours. In some instances, breaking the language barriers and understanding cultural differences can seem impossible and both tend to lead to miscommunication.

Furthermore, this background may also affect the way offshore employees do certain tasks. First, it is quite possible that their process differs and in that way makes it difficult for you to keep track of their work. And second - it is not uncommon for the outcome to be different than what you might have initially expected. By choosing to work with nearshoring talent, you are likely getting a person who has the same or at least similar understanding of what needs to be done.

And when it is just about finding a “common language”, discovering a reliable translator is much easier when you need one for a language people speak in a bordering country.

Bottom line

It all boils down to cutting down the miles between your company and the remote team. It seems that the closer they are to your home, the easier it is to build stronger bonds through better communication.

No, nearshoring may not immediately seem like a cheaper option, but once you jot down the pros and cons, you soon realise that the cons do come with hidden costs, which arise from misinterpretation, lack of control, increased travel fees, missed deadlines, and more.

Taking everything into consideration, it is no wonder that more and more businesses are looking to relocate their offshore teams and turn them into nearshoring partners.

In the end, ask yourself - have you realistically weighed the pros and cons of both?

Last updated:9/24/2020 1:02:57 PM
Mike Parsons

Mike Parsons

Mike is an Australian business consulting specialist. He’s working with companies that outsource their IT maintenance. He often writes about technology, business and marketing and is a regular contributor on several sites.

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