CX GUIDE – NEARSHORING
Nearshore Outsourcing: Everything You Need to Know (& How it Cuts Costs)
Why Leading Brands are Choosing Nearshoring Partners for their CX Strategy
Considering nearshoring for your customer experience partner? If so, you’re far from alone.
The nearshoring industry, particularly for customer service, continues to grow as more and more leading brands partner with nearshoring providers to help optimize and support their CX strategy.
With customers expecting more and placing more value on customer service, nailing the customer experience is a must in 2023. According to research from Zendesk, 80% of customers were willing to switch brands after just one or two bad customer service experiences, so there’s not much margin for error when it comes to customer satisfaction and retention.
With so much at stake, why are so many brands turning to nearshoring partners to support their CX strategy? And how can nearshoring help launch your CX strategy?
At ROI CX Solutions, we’ve been helping organizations and brands of all sizes define, strengthen, and execute excellent customer service through nearshoring for decades. In this guide, explore why nearshoring works, why now is the time to get in on the nearshoring trend, and how nearshoring can benefit your business.
What is Nearshoring?
Nearshoring is a BPO outsourcing solution that allows you to outsource work to less expensive regions without distributing your business operations too far geographically. With nearshoring, businesses outsource to a geographically nearby country, as opposed to hiring domestically or outsourcing to a distant region. It provides a balance of quality and affordability, allowing you to cut costs without losing a high level of service.
Why Nearshoring is the CX Industry’s Fast-Growing Trend
In 2023, many businesses are being forced to make cuts, reduce budgets, and optimize spend ahead of an economic downturn. Of course, these are necessary actions: between layoffs and the “Great Resignation,” hiring freezes and rising labor costs, inflation, and declining consumer spending, it’s a difficult market.
However, you can’t grow your business in a down market simply by cutting back—instead, you need to optimize so that your marketing, sales, and product become as effective as possible. Companies who manage to maintain and even grow their brand in economic downturns typically have three things in common:
CUSTOMER CENTRICITY
BUDGET OPTIMIZATION
MAXIMIZED EFFICIENCY
This is why nearshoring is growing exponentially right now—it’s one of the best ways to focus on delivering exceptional customer experiences while maximizing your budget and efficiency.
While focusing on customer success and experiences might seem tangential, it’s actually an essential strategy when the market turns. After all, your customers are your greatest asset. Keeping them happy is crucial for retaining customers and for growing your bottom line.
Companies that have excellent customer service grow revenue at a rate 4% – 8% higher than the general market.
92%
OF CONSUMERS
say that they’re more willing to make repeat purchases from companies who provide excellent customer service.
Happy customers become loyal customers. And loyal customers are repeat customers. By focusing on strengthening customer loyalty and experiences, you not only improve retention but you increase the CLV over time, maximizing profits and revenue while reducing spend.
Given uncertain economic conditions, optimizing revenue from your existing customers is an excellent way to quickly improve topline performance while cementing loyalty with your customers.
Nearshoring allows your organization to deliver exceptional customer experiences, improve retention and grow CLV while reducing costs and maximizing effectiveness. But is it the right move for your organization?
Ready to take the next step?
Nearshoring vs. Offshoring vs. Onshoring
For organizations looking to outsource, one of the first things to consider is location.
Offshoring
Offshoring refers to outsourcing where the work is handled in a country geographically far from the business it’s servicing.
Onshoring
Onshoring is outsourcing to a provider in the same country as the business it’s servicing.
Nearshoring
Nearshoring is a mix of both. In this case, the outsourced work is handled in a country near—but not in—the business it’s servicing.
For example, a company located in the US might work with an offshoring partner in the Philippines or India, or they might nearshore in Mexico or Latin America.
Each outsourcing location comes with its own benefits and drawbacks—let’s break down some of the key differences so you can understand which makes the most sense for your company.
Not only do exceptional customer experiences strengthen customer loyalty and satisfaction, they ultimately lead to increased word-of-mouth marketing, improved sales and profitability, and a stronger business model to weather future economic changes.
| Onshoring | Nearshoring | Offshoring |
|---|---|---|
| Typically the most expensive option | Almost always cheaper than hiring in-house or domestically | Typically the least expensive option |
| No cultural or linguistic barriers | Little to no cultural or linguistic barriers | Significant cultural and linguistic barriers can cause frustration |
| Easy to visit and provide in-person training or on-site supervision as needed | Easy to visit and provide in-person training or on-site supervision as needed | Higher level of trust needed since proximity means you’ll have less control |
| High-quality talent comes with a price tag | High-quality talent at more affordable rates | Expertise and quality can be hit-or-miss |
| Should have little to no data privacy issues | Should have little to no data privacy issues | Potential data privacy issues |
| Difficult to scale | Easy to scale as your business grows | Easy to scale as your business grows |
| May be difficult to find bilingual agents | Typically very easy to find bilingual agents | Typically easy to find bilingual agents, but the languages spoken may not be relevant to your audience |
| Difficult to offer round-the-clock support | Typically easier to offer extended hours or round-the-clock support | Easy to offer round-the-clock support due to varied time zones |
| Internal communication should be straightforward | Internal communication should be straightforward | Internal communication may be difficult due to differing time zones and cultures |
One of the biggest differentiators between these three options is simply price. While onshore call centers typically cost about $20 – $30 hourly per agent assigned to your brand, offshore call centers can be as little as $6 – $14 hourly per agent.
Companies that outsource offshore are often able to scale more quickly (and affordably), hire more agents (improving speed of response), and expand into new markets more quickly with round-the-clock support. However, offshoring comes with a number of drawbacks. Increased linguistic and cultural barriers mean that the quality of service is often lower.
said having to “repeat themselves or information” to agents was a major frustration with customer service.
said “long hold or wait times” while speaking with an agent was a major frustration with customer service.
Unfortunately, all of these interactions are more common with offshore outsourcing providers. While you might be able to hire larger teams and scale more affordably, your customer satisfaction and experience might decrease—undermining the very results you’re aiming for.
As a result, more and more businesses are opting for nearshoring options that provide the best of both worlds—quality service, communication, and flexibility at an affordable price that offers scalability.
Does nearshoring offer the benefits you need? Let’s break down some of the biggest benefits.
7 Benefits of Nearshore CX Partners
When you’re looking to outsource your call center or customer service, you don’t just need a team to answer phones, you need a dedicated partner who can take your customer experience to the next level. With a nearshoring partner, you get a lot of benefits to support your customer experience while still paying an affordable price.
Cost Savings
Nearshoring is almost always cheaper than hiring in-house or outsourcing to a domestic partner. By hiring in locations where the cost of living is much lower, you can reap the financial benefits of lower salaries.
AVERAGE OFFSHORE PRICING:
$6 – $14
/ hour / agent
AVERAGE NEARSHORE PRICING:
$10 – $20
/ hour / agent
AVERAGE ONSHORE PRICING:
$20 – $30
/ hour / agent
In addition, a good outsourcing partner will handle recruitment, training, salaries, benefits, equipment, office leases, software and other costs of maintaining and running a contact center and team. All of these overhead costs are much higher when working in-house or domestically.
Expanded Talent Pool
In addition, when you work with nearshore providers, you get access to an expanded talent pool for your contact center.
With in-house teams or onshoring providers, you’re restricted to the US labor market. Unless you have genuine restrictions, there’s no reason to limit your talent to one geographic region. When you work with nearshoring providers, you’ll have access not only to more workers but workers who have quality expertise, advanced training, and specialized skill sets.
At ROI CX Solutions, our nearshore solutions can provide your business with inbound, outbound, or lead generation services at an affordable price and high quality of service. With cloud-based and remote platforms quickly becoming the norm, there’s much less need for geographic proximity.
Nearshoring also means you’re not limited by the ebbs and flows of the US market. The current labor shortage, combined with the “Great Resignation” and increasing inflation in the US, has made hiring across many positions and industries more difficult. Nearshoring can eliminate many of those barriers.
Greater Flexibility
The majority of companies need some level of flexibility with their outsourcing contracts—nearshoring is a great way to achieve this.
Offshoring generally offers reduced flexibility. Time zones are disparate, communication is hindered, and contracts often lock you into long service terms. On the other hand, onshoring offers less flexibility in other ways—not enough time zone variation to allow for round-the-clock service or tight labor markets that make flexible contracts and nimble changes difficult.
Nearshoring offers a middle ground. With closer alignment on time zones, you’ll have more stability when it comes to communication and managing internal goals. However, you’ll still have some flexibility to offer extended or 24/7 coverage that would be difficult to achieve in-house.
Effortless Scalability
Similarly, nearshoring offers effortless scalability, which is essential for industries that have significantly varied customer service demands throughout the year.
For our clients, nearshoring has meant increased scalability and support and lower costs. They can scale up as they grow, or they can scale agent support up and down throughout the year to meet seasonal demand.
The cost of not being able to scale is steep. After all, most customers expect instant service and aren’t willing to wait on long holds when your call center is understaffed.
say that getting an immediate response is “important or very important” when they are contacting customer service.
would switch to a competitor after just one bad customer experience (and 80% would switch after more than one bad experience!).
The moral of the story? You have just ten minutes to meet customer needs and answer their concerns before they’re going to start thinking about switching to a competitor. Can your call center guarantee that year-round? In busy seasons? During the holiday rush? If not, then you need to be considering how scalability—or the lack thereof—is affecting your bottom line.
Cultural Alignment
Speaking of alignment, nearshoring also offers the benefit of a closer cultural alignment compared to offshoring.
Nearshore partners and employees will be located in regions that are geographically near yours. As a result, employees will typically have a high level of familiarity with your audience’s culture and communication styles. For example, many of ROI CX Solution’s employees who work in nearshore locations have either lived, worked, or studied in the US. With a better understanding of your audience, nearshore agents can provide a higher quality customer experience and connect more directly with your customers on behalf of your brand.
Additionally, as you align on work culture, communication styles, and overall workforce expectations, your partnership between internal teams and your outsourcing provider will be smoother as well.
Multilingual Support
Another major benefit of nearshoring is the higher likelihood of having access to bilingual agents—and having bilingual agents who are fluent in languages that matter to your customers. While most offshore agents will be bilingual, these languages may not be as relevant to your customers due to geographic distances.
Consider, for example, that Spanish is the second most commonly spoken language in the US, spoken by more than 41 million Americans. Nearshoring providers, often located in Spanish-speaking countries such as Mexico, Puerto Rico, or other countries in Latin America, give you access to agents who speak both English and Spanish fluently—giving your customers options to interact with your brand in the language most familiar to them.
While this may seem like more of a “nice-to-have” than an essential customer service feature, the data tells a different story:
say they “feel more loyal to companies that provide support in their native language.”
would switch brands if a competitor started offering support in their native language.
Not only is your customer experience and retention at stake, but you could also quite literally be handing off customers to your competitors by not offering multilingual service. This is especially important for industries where access and complicated vocabulary make speaking in a familiar language more essential, such as Healthcare or Insurance.
Better Quality Control
Finally, the old adage rings true: you do generally get what you pay for.
That’s no reason to run out and buy the most expensive version of every product or service you’re looking for, of course. But it is a reason not to scrimp on the cheapest version available.
With offshoring, you’re getting extremely affordable services, but you’re paying for it in terms of quality. With nearshoring, you get a balance of geographic proximity, cultural familiarity, industry expertise, and affordable labor for a team you can trust and quality you can count on. Plus, the increased geographic proximity allows you to have more control over day-to-day operations and quality as needed.
Market Expansion
Multilingual support is a necessary function of customer service for market expansion, but it’s not the only way nearshoring supports expanding into new markets.
For one, as you grow and expand into new markets, you’ll need to scale up your support to match your expansions. How do you do that affordably? Nearshore contact centers offer agent availability, expertise, and affordability. In addition, if you’re already working with a nearshore provider before you begin your expansion, you’ll have a trusted partner who already knows your brand, your team, and your goals and who can easily ramp up new agents as needed.
Is Nearshore Outsourcing Right for You?
For most companies, nearshoring presents the best blend of affordability and scalability alongside quality and flexibility. It’s especially beneficial for companies who need a combination of:
To learn more about nearshoring and how it can help your organization achieve your goals, connect with an expert from ROI CX Solutions today.
About ROI CX Solutions
ROI CX Solutions drives customer satisfaction and business success through outsourced customer service and global sourcing management. With decades of experience across our expert team, ROI CX Solutions has innovated results-driven performance and improved customer experiences for brands across a variety of industries. With flexible, customizable solutions, state-of-the-art technology, and world-class customer service representatives, we deliver results for your business—and your customers.