Nearshoring

Nearshoring or "nearshore outsourcing," is a concept for the form of outsourcing in which business processes are relocated to locations which are, generally, cheaper and yet geographically nearer.

Nearshoring can also be ranged against offshoring or offshore outsourcing, which imply relocation of business processes to cheaper locations, typically quite far from the parent location.

Major nearshoring destinations for US businesses are Mexico and Canada, and in Western Europe, include Ireland, Eastern Europe and the Maghreb.

Companies that give preference to nearshore outsourcing over offshore outsourcing are thought to do so for a variety of reasons: One is cultural differences. Arguments in favor of nearsourcing might be simple - shared cultural values and similar mindset. For example, Germans would typically be more comfortable working with a French person rather than with someone from an Asian country, mainly for the stated reason of cultural differences. Western Europeans are accustomed to having greater freedom in applying their sense of humor at work, which is typically unacceptable in Indian or Japanese culture.

Another point companies have to consider is the commuting time burden. Certain projects demand frequent traveling from both the customer and the provider end of venture. In dedicated centers, special officers are often appointed to manage the engagement, and when the load of change requests becomes unbearable, extensive personal communication is an effective way to clear the path for further development, hence onsite visits, both ways.

Effective over-the-phone and email communication is key to the success of any project, and outsourced projects are no different. So in selecting a supplier resident in a near time zone, may improve the efficiency of day-to-day information exchange.

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