However, to understand how exactly nearshoring is a smart outsourcing choice in the current climate, it is imperative to what this process actually implies. Nearshoring basically refers to the system of outsourcing the processing of a firm, especially information technology tasks, to another company based in a nearby country. In most cases, the countries of the two companies tend to share a border. By opting for nearshoring, a business can keep their operations close by and avail high cost-effectiveness. This close proximity facilitates lesser cultural discrepancies and time zone differences while providing a superior level of control to the business in regards to the decision-making processes.
Nearshoring and Offshoring
Nearshoring and Offshoring are quite similar to each other, and hence many people end up confusing them with one another. Offshoring is almost the same as nearshoring, but without the third party being in close proximity. This invariably means that a business shall build a development team that is set up just about anywhere in the world and functions independently. While offshoring has always been among the most popular outsourcing methods, with travel becoming trickier amidst COVID-19, the effectiveness of the work done through this system has suffered quite a bit. As maintaining regular contact between diverse locations has become a lot difficult now, nearshoring has emerged as a much more advantageous choice.
Advantages with nearshoring
- Travel distance: It becomes more expensive and time-consuming for companies to deliver shipments if they are further apart from their off or nearshoring Firms that are geographically nearer to one another are likely to share similar work hours, as a result of which problems can be fixed in real-time. They do not have to wait for long periods of time to get a response while making timely decisions a lot easier. This factor comes as a clear advantage during the times of a pandemic, where traveling between nations is unreliable and unstable, and office hours are not like how they traditionally used to be, with several employees working from home.
- Cultural Similarities: The concerns related to language barriers are way less in nearshoring than Offshoring, as neighboring nations are likely to have similar time zones and cultural practices. This comes as a great relief, as a language barrier can slow down communications and hinder the processes that otherwise would have been more competent. Organizations operating within close proximity can provide a somewhat secure environment in the current scenario when it is not clear when and where the next peak of COVID-19 shall take place. Such risks involved can be better managed through nearshore services, where all the associates, suppliers, and partners are located in close proximity.
- Lowering expenses: Costs are a major focus in any business, especially during uncertain times. Amidst the pandemic, cutting down on unnecessary expenses and putting emphasis on running a business as efficiently and cost-effectively as possible becomes the key goal. With nearshoring, certain processes can be delegated to third-party firms that are better equipped to deal with the relevant requirements.
Businesses that have managed to survive the worst of the pandemic have learned to adapt faster and become more efficient in working under increased pressure. While the process a person chooses for outsourcing would entirely depend on their distinctive company objectives, owing to the uncertainties of the COVID-19 pandemic, having outsourced operations nearby certainly has several definite advantages.
COVID-19 has also influenced certain long-held mentalities and beliefs to a major extent. For example, many firms used to believe that physical proximity is vital for carrying out competent business operations. But the pandemic demonstrated that it is possible to adapt and maintain proper operations, no matter the employee locations. As a result of this, several businesses are gradually trying to scour for the best nearshoring partner to augment their employee flexibility, deploy a workforce with superior flexibility and enjoy access to a larger talent pool. Some of the other benefits of the changes that have taken place due to the pandemic include superior diversity of delivery models, reduced requirements for physical workplaces, and more agile processes.