Nearshoring
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Nearshoring is the sourcing of service activities to a foreign, lower-wage country that is relatively close in some dimension of distance. The customer expects to benefit from one or more of the following dimensions of proximity: geographic, temporal (time zone), cultural, linguistic, economic, political, or historical linkages. [1] 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. Nearshore outsourcing is similar, but not identical to nearshoring because many cases of nearshoring remain in the same organization -- and therefore are not outsourced.
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[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, broadly defined. Softtek, the largest private IT company in Latin America, first coined the term Near Shore. See About Softtek Here[2]
Here are several examples of nearshoring. American clients nearshore to Mexico as well as to almost all nations in Central and South America and the Caribbean. [3] In Europe, nearshoring relationships are between clients in Western Europe and various providers in Central and Eastern Europe. Major centers are in Russia, Ukraine, Czech Republic, Poland, Romania, Belarus and the Baltic. These destinations are attractive because they are low-cost, have skilled labor forces, and less stringent regulatory environment. They also have strong cultural ties to Western Europe.[4] An example of nearshoring in Europe is SAP's large development center in Bulgaria.[5]
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 all of these barriers, but the proximity allows more flexibility to align organizations. [6]
Nearshoring has become a marketing differentiator for those nations and providers who wish to set themselves apart from sourcing centers in Asia, especially the dominant one -- India.
[edit] Recent Developments in Nearshoring
Nearshoring has received more interest due to the rise of fuel costs.[7]
[edit] See also
[edit] References
- ^ 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.
- ^ 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.
Mendia,Lily (August 2011).Is Mexico a great place for bpo outsourcing?
