Nearshoring
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Nearshoring (also known as "nearshore outsourcing" and "nearshoring") means sourcing service activities to a foreign, lower-wage country that is relatively close in distance. Nearshoring is becoming competitive with outsourcing to farther areas since the recent rise of fuel costs.[1] The customer expects to benefit from one or more of the following constructs of proximity: geographic, temporal, cultural, linguistic, economic, political, or historical linkages. [2] The service work that is being sourced may be a business process or software development. As with offshore, the term "nearshore" was originally used in the context of fishing and other ocean-based activities and later adapted by the business world.
[edit] Overview
Nearshoring is a derivative of the business term offshoring. Offshoring is a business activity that involves shifting work to a foreign, distant organization in order to reduce production costs. In contrast, nearshoring is understood to mean that the business has shifted work to a lower cost organization within its region. [3]
A well-known example of near-shoring is American clients near-shoring to Central and South America, a development actively promoted by the Mexican and other Latin America governments. For the services sector US American companies are looking at Central America (Guatemala, Panama, etc.), South America (Argentina, Bolivia, Brazil, Chile, etc.) and the Caribbean. [4] In Europe, nearshoring relationships are being developed between Western Europe, on the one hand, and Central and Eastern Europe, on the other. Central and Eastern Europe became a major provider of outsourcing services for Western Europe companies with the work centers in Russia, Ukraine, Czech Republic, Poland, Romania, Belarus and the Baltic. These destinations not only offer low-cost, skilled labor forces, but also an attractive regulatory environment with a close proximity and cultural ties to Western Europe.[5]
Other examples include SAP corporation nearshoring to Bulgaria.[6]
The complexity of offshoring stems from different languages and cultures, long distances and different time zones, spending more time and effort on establishing trust and long-term relationships, overriding communication barriers and activities of that kind. Nearshoring doesn't necessarily overcome language or communication barriers, but the geographical proximity allows more flexibility to align organizations. [7]
[edit] See also
[edit] References
- ^ Rivero, Rafael; Sara Miller Llana (2008-09-11). "Is Mexico the new China? Skyrocketing fuel costs may lure manufacturing firms back to Mexico". Christian Science Monitor. http://www.csmonitor.com/2008/0911/p01s02-woam.html. Retrieved 2009-03-22.
- ^ Carmel, Erran and Abbott, Pamela (2007) [1]. Why nearshore means that distance matters, October, 2007; Communications of the ACM.
- ^ Reinhardt, Andy (2004-03-1). "Forget India, Let's Go To Bulgaria". Business Week. http://www.businessweek.com/magazine/content/04_09/b3872010_mz001.htm. Retrieved 2009-11-7.
- ^ Kanellos, Michael (2009-05-18). "Mexico sells itself as 'nearshore' outsourcing hub for US: Venga! Venga!". Silicon.com. http://services.silicon.com/itoutsourcing/0,3800004871,39158964,00.htm. Retrieved 2009-03-22.
- ^ Thomas, Meyer (2006-08-14) (PDF). Offshoring to new shores: Nearshoring to Central and Eastern Europe. Deutsche Bank. http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000201757.PDF. Retrieved 2009-03-22.
- ^ Reinhardt, Andy (2004-03-1). "Forget India, Let's Go To Bulgaria". Business Week. http://www.businessweek.com/magazine/content/04_09/b3872010_mz001.htm. Retrieved 2009-11-7.
- ^ Reinhardt, Andy (2004-03-1). "Forget India, Let's Go To Bulgaria". Business Week. http://www.businessweek.com/magazine/content/04_09/b3872010_mz001.htm. Retrieved 2009-11-7.
