By Adina Moloman
Nearshore outsourcing is the practice of outsourcing work (an internal business process or part of a process) to a company in a neighboring country. Geographical proximity and cultural similarities result in easier access and communication.
Nearshore outsourcing offers many benefits over domestic and offshore outsourcing alternatives. In terms of cost and risk is somewhere between those two.
The benefits of Nearshoring vs. offshore:
Time zone /Geographic proximity/ Cultural affinityOutsourcing solutions provided by the near countries is a derivative of the business term “offshore outsourcing”, in which various business processes are relocated to foreign, lower-wage countries that is relatively close in distance and time zone than more traditional offshore locations.
The Nearshore procedure is to reduce the complexity and risks associated with remoteness between customer and provider in “traditional” offshore model and to leverage proximity of the Nearshore destinations with fewer language and cultural barriers and no time zone differences.
Technical skills and scientific background
Cost advantage One of the main benefits include being able to hire employees that will work for lower wages than would workers in their primary country of business. Additionally, the closeness of the company to which work is outsourced can save money on travel to that country.
Nearshore outsourcing limitations and risks:
For instance it has been a common complaint of US workers, especially as more technical jobs, like information technology jobs, are outsourced. Nearshore outsourcing of this type can lead to fewer job opportunities for US workers, and also a lower pay scale, since they are not only competing with American workers, but with foreign workers who will perform work more cheaply.
When the economical conditions of the neighboring countries are same. For ex: American’s providing projects to Canada pay the same as they do for American workers which won’t help them to save money instead add expenses for travel, legal affairs, etc. but the only gain is to open up trade between two countries.
Some worry about the security of their information in the host countries, for instance it had been registered situations of less protection of credit card information.
The possibility for copyright and patent violation in a neighboring country, where copyrights and patents may be difficult to enforce.
Many countries have preference to near shore Outsourcing and few examples are mentioned below.
Japan prefers China for nearshoring, Mexico and Canada provides nearshoring solutions and services to American transnational companies.
East Europe plays a significat role as a nearshore outsourcing destination for West Europe and India provides business process outsourcing solutions and customer services to their neighboring countries like Singapore, Malaysia and Middle East countries.