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 is complex and risky because it involves working with a foreign, distant organization. In contrast, nearshoring is understood to mean that the business has reduced the complexity and risk of offshoring.[citation needed]
A well-known example of nearshoring is American clients nearshoring to Mexico, a development actively promoted by the Mexican government.[3] 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.[4]
Other examples include Japanese clients nearshoring to China.[citation needed]
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.
[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 on 2009-03-22.
- ^ Carmel, Erran and Abbott, Pamela (2007) [1]. Why nearshore means that distance matters, October, 2007; Communications of the ACM.
- ^ 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 on 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 on 2009-03-22.
