If you’ve ever asked What is nearshore outsourcing? you’re in good company. Broad market publications and marketing professionals frequently discuss nearshore vs. offshore outsourcing advantages.
Over the past 20 years, the market for offshore outsourcing has expanded. Nearshore outsourcing helps businesses to save money and become more competitive. Sophisticated investors use nearshore outsourcing companies to achieve greater innovation, collaboration, risk mitigation, and operational effectiveness.
What Is Nearshore Outsourcing?
Nearshore outsourcing typically identifies Mexico and Canada as nearshore options for the U.S. market. However, nearshore outsourcing can refer to mean any location for outsourcing that’s near the primary market, such as Eastern European nearshore outsourcing to businesses in Western Europe.
The term near is relative, however. Nearshore is defined as the delivery of services from a nearby or adjacent location. Other near-sourcing firms refer to time zone, such as services delivered at a location up to three time zones’ distant from the contracting business. For instance, a near-sourcing firm in Argentina could perform services for a client in New York City but not in Alaska.
Keep in mind that the precise definition of nearshore depends on the buyer and its boundaries concerning the provider’s proximity.
What Should I Look for in Nearshore Outsourcing Companies?
Most businesses want to make doing business easier. Cultural affinity can help. For instance:
- Geographic distance is a factor. A U.S. client in Southern California, Arizona, Nevada, New Mexico, or Texas may have greater cultural affinities with a Mexico-based nearshore provider than an Indian vendor.
- Cultural familiarity is a factor. Mexican firms are typically familiar with the U.S. way of life, communications styles, and customs.
The Mexico nearshore provider can also serve as adjunct staff. When necessary, it’s a relatively simple task for the Mexican provider to visit the U.S. client. Visas are usually no problem and, when necessary, it’s relatively easy for a Mexican citizen to obtain a TN visa with a one-year renewable term.
What Are the Nearshore Advantages?
Cost savings is usually the top reason that a business uses nearshore providers. Depending on the business’s offshore provider’s location, the business can save more than half of its current budget.
For instance, a Mexican nearshore provider offers substantial cost savings when compared to Indian providers. Although costs of Mexican labor are typically a little higher than those in India, communication, travel, due diligence, and contracting costs are usually lower. A higher percentage of tasks can be assigned to a nearshore provider and result in lower costs.
How Do I Make a Nearshore vs Offshore Comparison?
In the past, only large companies used offshore outsourcing. As offshore markets for these services matured, clients were more price-sensitive. Some businesses realized the difficulty of executing assignments with an offshore provider. They needed to work through internal process changes and the realities associated with remote teams.
Nearshore providers offer many significant benefits. Smaller businesses can take advantage of nearshore providers. There’s less attrition when client and provider are “near.”
Of course, the reasons to choose a nearshore provider are associated with more than provider costs. Five factors can help clients and providers to identify a match:
- What is the degree of interaction anticipated or required?
- What is the need to balance geographic “risk”?
- What skills must the provider have?
- What care is necessary?
- What services does the provider offer to facilitate entry into a new market?
Nearshore providers offer a wide range of services. As more businesses take products to the global markets, the business’ processes or applications must be supported around in clock – sometimes in multiple languages. Until quite recently, only substantial global firms had the resources to arrange follow the sun outsourcing models.
Nearsourcing provides mid-sized companies with the muscle to expand services or products to new markets.