It’s no secret that many of today’s top companies use outsourcing to save money and operate more efficiently. Many types of businesses can benefit from outsourcing. But is nearshore outsourcing or offshore outsourcing better?
Nearshore outsourcing is gaining popularity as the best choice for companies who want to cut costs, while still working with agents who understand American culture and live in similar time zones. We’ll discuss nearshore outsourcing advantages and disadvantages to help you decide if it’s the right option for you.
What Is Nearshore vs. Onshore Outsourcing?
So what is nearshore outsourcing, and what is onshore outsourcing? And how do either of these compare to offshore outsourcing? Let’s define these three common terms before we get too far into weighing the pros and cons.
Nearshore outsourcing is when a company hires a third-party to operate a certain aspect of their business in a nearby country. In the U.S., nearshore countries include Mexico, Chile, and Costa Rica.
Onshore outsourcing is when a company hires another company within the same country for certain services. For example, a business based in California might hire a company in Texas to run their customer service department.
Finally, offshore outsourcing is when a company hires a business in a faraway country to run some aspect of their business. For the United States, offshore countries include India, the Philippines, and Vietnam.
Nearshore Outsourcing Advantages
With several types of outsourcing to choose from, you may be wondering which type is right for your company. While each type has its benefits, nearshore outsourcing advantages are increasingly numerous. Many companies are choosing nearshore outsourcing because it strikes a good balance between offshore and onshore and includes:
1. Efficient Cost
Every company strives to save as much money as possible while maintaining quality. So perhaps the most appealing aspect of nearshore outsourcing companies is their inherent cost-efficiency.
While offshore outsourcing is cheaper on the surface, nearshore outsourcing gives companies more bang for their buck while giving them talented agents at a lower cost in comparison to onshore outsourcing.
2. Easy Communication
It’s not difficult to imagine the hurdles of doing business with a company in a faraway country. Outsourcing to India or Vietnam often means companies have trouble communicating. These countries are in a different time zone and not as many people there speak English fluently. But nearshore outsourcing companies eliminate many of these communication hurdles, making it much easier for businesses to run smoothly.
3. Similar Time Zone
When companies outsource to a country in another time zone, they might be going to bed when the outsourced company is just heading to work. This makes it more difficult to oversee operations and ensure the quality of the work. But nearshore countries are close enough that companies can choose to outsource to a country in the same or similar timezone, allowing for easier communication and oversight.
4. Shared Culture
Understanding American culture is a key part of delivering high-quality service. But many outsourced companies are so far away from the United States, the workers have difficulty comprehending the nuances of our society. Luckily, nearshore countries are very close to the United States and are therefore much more familiar with the details of American culture.
5. The Best Talent
By opting to outsource to a nearby country, businesses are able to get the best talent for their customer service, tech support, or manufacturing. Workers in these countries often have more training and speak better English, so they’re able to perform at a level similar to their onshore counterparts—at a reduced cost.
What Are the Drawbacks to Nearshore Outsourcing?
Though nearshore outsourcing benefits are plentiful, there are some drawbacks to this option, too. If cost is your company’s main concern, offshore outsourcing is certainly going to be the cheapest upfront. But it’s important to remember that every business choice has hidden costs you may not realize at first. As we discussed, offshore outsourcing does include some inefficiencies that may cost your business in the long run.
Nearshore outsourcing is not always a perfect replacement for in-house or onshore outsourcing, either. Some companies may not have the same quality of service as others, so it’s vital that you do your research before choosing which company you want to work with.
Is Nearshore Outsourcing Right for You?
Nearshore outsourcing is an excellent option for many businesses looking to cut costs without sacrificing the level of performance. It’s more convenient and streamlined than offshore outsourcing, and more affordable than onshore outsourcing. Whether you choose nearshore outsourcing in Mexico or Costa Rica, it may be a great step to help your business grow.