Why you need to know the difference between Nearshore and Offshore
Companies are constantly looking for the most cost-effective strategy to increase revenue while minimizing cost. In many organizations, these cost savings have come from outsourcing services that weren’t part of their primary service offering.
Organizations that chose to pursue this strategy looked at three different models for outsourcing.
Understand why companies offshore
While COVID-19 and the pandemic were definitely life-changing for many individuals and companies, change is in some respects inevitable. The world is currently in the midst of a transition to a digital economy, where services like artificial intelligence (AI), the Internet of Things (IoT), big data, and more will all come to a head.
This transition to a digital economy is what made services like offshoring possible. With an ability to shift work between countries using high-speed internet connections, businesses could offload simple and repetitive tasks to lower-cost countries, helping them increase their bottom line.
One of the primary benefits of offshoring is a reduction in cost due to a lower cost of living. However, while this method of outsourcing is a useful strategy in terms of cost savings, over time those savings have started to decrease and some of the downsides of offshoring services have become more obvious.
From a negative point of view, offshoring often causes complications in communication. This is primarily because these lower-cost countries are often located on the other side of the world. In addition to language issues, cultural issues can be a challenge also.
What is onshoring?
Onshoring is where a company uses a local service provider to do the same work. The primary reason that companies choose to onshore work is due to skills and specialization. This method of outsourcing is especially popular in the technology and software development sectors.
Onshoring does not generally offer the same cost savings as offshoring. However, while costs might be higher, usually the quality of service is better. This improved service can be directly attributed to location, as onshore teams often share the same language and work in the same timezone, improving management oversight.
What is nearshoring?
More recently, however, a new option has become more popular. For the US, nearshore locations like Mexico provide many of the same benefits available through onshoring while helping to minimize some of the downsides that are present with offshoring.
As the middle ground, nearshore outsourcing offers quite possibly the best of both worlds. Using a nearshore partner, companies are still able to gain access to highly skilled resources, but as the cost of living is lower, their rates are more reasonable than an onshore equivalent.
Another major benefit of nearshore resources is language and culture, which can help projects be more successful. In addition, as nearshore resources are often located in the same timezone or one that is reasonably close, managing the team and the work they are doing is much easier.
Nearshore vs offshore
Choosing the right option for your business depends on a variety of factors. While cost was often a consideration for companies that considered outsourcing, companies have come to realize that customers and customer experience matter.
To that end, using nearshore locations has started to gain more popularity with many businesses. Nearshoring is a mix of offshoring and onshoring. By using resources in the same timezone, many management issues can be addressed. Also, many nearshore organizations share the same language and culture as their partners, helping to further improve the overall quality provided.
Benefits of IT staffing from a nearshore location
For companies in the US, using a nearshore location like Mexico is ideal. There are many different reasons for this but some of the most relevant include:
- Increased pool of talent – by expanding your search for resources to nearshore locations, you are increasing your available pool of talent. With remote working now an accepted fact, the stigma of only being available on the other end of a screen no longer exists either.
- Location and timezone fit – a definite benefit of nearshore outsourcing is location. While the job might be outsourced there could be times when an onsite visit is warranted. In this case, having a partner that is conveniently located would be ideal.
- Culture fit – with business, organizations that share a similar culture and language are able to work together much easier.
- Lower cost – nearshore resources can be obtained at a lower cost of similarly trained onshore resources. This decrease in cost has little to no bearing on their skill, but rather is a function of the overall cost of living, which is often lower.
Which is the best option for me?
If you have decided to outsource, making a choice between onshore, nearshore or offshore does not have to be difficult. Outsourcing is aimed at making your organization more efficient and profitable, while still continuing to provide an exceptional level of support and service to your clients.
In many cases, the simple answer to all of these criteria is a nearshore vendor that will have your best interests at heart. Location is an important factor in making a decision, but regardless of the solution you choose, make sure that you keep your communication channels open.
For more information on how Near Contact can help you access the pool of IT skills you need, email us at firstname.lastname@example.org
About Near Contact
Specializing in digital transformation, software development, and mobile apps, Near Contact attracts and retains the top talent from across Mexico to support US enterprises and service providers. With over 20 years’ experience matching the right talent for each client and project, Near Contact’s flexible, hybrid outsourcing model offers fast access to a highly-skilled, scalable resource pool—delivering your project, your way. www.nearcontact.com