4 Misconceptions About Nearshoring Debunked

Outsourcing has become an effective way for companies to delegate non-core work and maximize their operations. Even with most clients pulling back their services offshore, they still find another option to save through nearshoring.

Nearshoring destinations, such as Eastern Europe and Latin America, are rising to popularity with this outsourcing model. However, most businesses still hesitate to delegate their services to these locations due to the misconceptions of the model and country.

Debunking these myths and misconceptions is a great first step to encourage more organizations to outsource. Time to learn about nearshoring and the truth about its misconceptions in this article.

What is nearshore outsourcing?

Nearshoring refers to the transfer of business processes to nearby countries. This method increased its popularity with the increasing number of businesses pulling back their offshore operations.

With the towering cost of putting up operations in their home countries, organizations choose to delegate their business processes to a geographically closer location instead. They still enjoy the benefit they get from offshoring without having to travel miles away.

The United States is the leading market for nearshoring. Some of its popular destinations include Canada, Puerto Rico, and Mexico.

Nearshoring vs offshoring

One of the things that distinguish nearshoring from offshoring is location proximity.

Offshoring involves putting up a small team or entire department to assign a project in a farther country. Usually, businesses choosing to outsource to countries such as India and the Philippines get to benefit from round-the-clock operations with their time zone differences.

However, in-person collaborations can become a burden to them. Some factors contribute to this, including additional travel expenses and cultural boundaries.

Nearshoring, meanwhile, involves delegating an operation to a location near their home countries. In the case of the US, companies rely on Canada and Latin American countries for their operations since travel is cheaper and shorter – up to only a few hours away.

Nearshoring myths debunked

Unsurprisingly, myths on nearshoring services still exist. Companies still have doubts and misconceptions about this method, making them think twice and miss out on the opportunity to benefit from it.

Some of these myths include the following:

“Doing business nearshore can be riskier”

The risk of having a failed operation due to economic uncertainties and corruption makes global organizations hesitate in nearshoring their operations.

However, this should not be a hindrance in doing business in the region. While it’s true that Latin America grows at a slower rate compared to other parts of the world, outsourcing can help to change this.

The industry helps develop great talents and train them to become

“Nearshoring is expensive”

The truth is that nearshore services can offer the same or lower rates compared to their offshore counterparts.

In comparison, nearshore and offshore costs are almost the same. This is since the outsourcing industry is as well supported by the governments in the region. Even an average agent salary can compete with its outsourcing counterpart.

What’s more, clients can even save more on their travel time and expenses since they are collaborating with a nearby team.

“Nearshoring provides lower quality services”

Usually, companies will find the outsourced team’s quality doubtful since they offer low fees. They can as well be hesitant with the skills and education level of the employees since they’re in a different country.

Contrary to this, nearshoring companies provide top-tier talents with years of experience in their field. Most of them graduated from leading universities in the region and secured licenses that prove their skills.

The education system in nearshore countries may not be at the same level as in more developed countries.

However, their knowledge and competency can be at par with the developed ones, making them more suitable to work with their clients.

“Communication would be more difficult”

Another aspect that makes clients doubtful in hiring nearshore staffing is the communication barriers. They are hesitant that most customers might have difficulties in communicating and resolving their issues with them.

Contrary to this, nearshore destinations such as Latin America fare well in terms of English proficiency. Countries such as Argentina, Brazil, and Costa Rica have implemented policy frameworks in including the English language in their educational curriculum.

With this, they can easily adapt neutral accents in speaking, which makes it easier for customers to communicate with them.

Benefits from nearshore outsourcing

Aside from cost-efficiency and proximity, nearshoring could fare better for companies in terms of the following benefits.

Time zone compatibility

Companies working with nearshore staffing can boost their work efficiency and quality. This is since they can have better collaboration with their in-house counterparts by the day and still offer 24/7 service.

Better control

Latin America, for instance, has a close affinity with the culture in the US and Canada. This poses a great advantage for companies who want to have more control and influence with their outsourced team.

Better compliance

What’s more, nearshore destinations are more familiar with the business laws of their clients, such as in the case of the US and Canada. As a result, nearshore teams can have a better understanding and compliance procedure in place when working.

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Author: Derek Gallimore

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