What is the difference between offshore and nearshore? – Nearshore Outsourcing Webinar: Q&A
Benefits of nearshore outsourcing for IT managers
Here are some benefits of nearshore outsourcing of tasks:
Lower costs
A company can frequently save money on wages and other costs by outsourcing some tasks to a business in another nation. A business might outsource its IT division to a nation with lower average wages or living expenses. Additionally, outsourcing companies frequently manage employee salaries and benefits and own their own facilities, saving the client company money on rent, health insurance, life insurance, and other expenses. The client company may instruct the outsourcing team about its goals or mission, but the outsourcing team is in charge of hiring and onboarding new employees.
Efficiency
By streamlining operations, nearshore outsourcing enables business leaders to concentrate on their core offerings and long-term objectives for expansion. An organic skincare company, for instance, might have minor IT requirements that are best met by an on-site IT manager and an external team of IT support specialists. With this structure, the IT manager can give the contracted team small jobs to complete while they concentrate on strategic projects and communication between the two parties.
Access to expertise
By utilizing a nearshore outsourcing model, a business can get in touch with qualified specialists. Nearshore outsourcing can deliver expert service to smaller businesses without the need for a new department or hiring procedure. Many outsourcing companies employ a full staff of professionals in their fields, such as IT or customer service, and give them stable employment supporting a number of client companies. A smaller business might not have enough funding to hire an entire IT team on-site, but it might be able to afford a contract with an outside firm that offers the same service.
What is nearshore outsourcing?
The practice of contracting with companies in close-by nations to carry out specific tasks for a company is known as “nearshore outsourcing.” Company executives may decide to contract with companies that specialize in outsourcing certain teams or departments. Depending on the size of the client company and the type of contract between the main company and the outsourcing firm, employees at these companies may support one or more client companies. Some businesses employ an on-site manager to serve as the liaison between the rest of the business and the outsourced support staff.
Nearshore vs. onshore vs. offshore outsourcing
Here are some distinctions between onshore and offshore outsourcing, two other significant forms of outsourcing, and nearshore outsourcing.
Proximity
The distance between the business and the staff handling its outsourced tasks is the primary distinction between these three types of outsourcing. In nearshore outsourcing, the two organizations are located nearby but in different nations. For instance, a company in Canada might contract with a company in the United States to handle its IT tasks. This type of outsourcing is distinct from offshore outsourcing, which involves businesses in distant countries, and onshore outsourcing, in which a company outsources certain tasks to a company in the same country.
Onshore outsourcing is typically more convenient for businesses than nearshore outsourcing, but this isn’t always the case. If a foreign company is more conveniently located for outsourcing than a domestic one, a business near a national border may do so. For instance, a business on the east coast of the United States might opt to outsource work to a company in eastern Canada rather than one in California. Compared to offshore outsourcing, which may require traveling across oceans or continents, nearshore and onshore outsourcing typically involve less travel distance.
Work hours
Although technology makes it simple to communicate instantly across the globe, time differences between businesses in various regions can limit the opportunities for collaboration between the main company and its outsourced departments. It is always possible that an organization that outsources labor will have a team that is in a different time zone from the primary organization. Businesses that have offices in different time zones may not be affected by the time difference because they already operate on a different schedule. There might be a delay in answering messages or offering support when a support team works differently from the main business.
Companies that use nearshore outsourcing may be in the same time zone as their outsourced team or in a different one because time zones vary by country. Companies that use onshore outsourcing may be in a different time zone than their support staff depending on the size of their home country. For instance, an outsourced IT team in the Pacific Northwest may be three hours ahead of a company on the east coast of the United States. Typically, businesses that outsource to other countries have time zones that differ by several hours, which may affect the contracted workers’ work schedules.
Shipping logistics
Although many outsourced departments use technology to access the data and resources of their client companies, the two parties occasionally ship tangible goods to one another. To help the outsourced support staff better serve the company and its clients, for instance, if a company outsources its IT services to another company, the company may send the outsourced firm examples of the technology it uses in the office. This is crucial if the business makes use of unique hardware or proprietary software.
When an outsourced team is located in another nation, it can be challenging to deliver materials to them. Because the materials may only cross one or two borders and customs departments, businesses that use nearshore outsourcing may experience a simpler shipping process than those that use offshore outsourcing. Because the company and its outsourced teams are in the same country and use a single delivery system, onshore outsourcing typically results in the smoothest logistics experience.
Travel costs
Although a client company’s leadership team may occasionally request that an outsourced team travel to their headquarters for team-building exercises and other meetings, an outsourced team typically works in its own location. The leadership group of the client company may also visit the outsource office. Nearshore outsourcing may cost the client company more to travel internationally than onshore outsourcing does because it involves multiple countries. Offshore outsourcing typically involves the most expensive travel arrangements.
Tips for implementing nearshore outsourcing
Here are three strategies for developing a nearshore outsourcing plan:
1. Set specific goals
When both the company and the outsourcing firm are aware of the company’s top priorities, the nearshore outsourcing relationship frequently functions most effectively. Make a list of the important tasks you want to outsource to the company before hiring them. These tasks may be time-consuming or repetitive, or they may involve skills that go beyond what the company’s on-site professionals are capable of. For instance, the on-site IT manager might handle complex integration, while an outsourced IT team might be in charge of IT tickets, connection issues, and general inquiries.
2. Determine the outsource teams place in company structure
It can be helpful to designate a single person or team within the company as the manager for the outsource support team in order to maintain the relationship between an outsource labor provider and the client company effectively. To enhance the overall experience, that person can meet with the outsource teams leader and present client and employee feedback. Frequently, a company’s outsourced labor relationship is managed by a subject-matter specialist. For instance, if a business outsourced its IT services, the IT manager might hold monthly meetings with the outsourcing team to offer feedback and impart training.
3. Consider collaboration needs
Real-time collaboration between outsourced support teams, staff, and clients can be difficult to coordinate due to time zone differences. You might negotiate a contract with the company if you’re outsourcing certain tasks to one in another nation that establishes standard working hours for both companies’ employees. Support staff can then quickly respond to inquiries and hold virtual meetings to solve problems. You might also think about hiring a business with just an hour or less of time difference from the primary business.
FAQ
What is the difference between nearshore and offshore?
The practice of using workers or service providers from nearby nations rather than one’s own is known as nearshore outsourcing. The most frequently outsourced job categories are those in call centers, technical support, and software development.
What is nearshoring vs offshoring?
The term “offshore” means that the business you hired is located in a different country with a different time zone. Nearshore refers to your outsourcing partner who is located in a close-by, nearby nation.
