Written by Denisse MexiaPublished Oct 19, 2020
Nearshoring is a category of outsourcing in which you transfer certain business operations to a nearby country to benefit from lower wages while maintaining a similar cultural context, time zone, and geographical proximity.
That being said, the main difference between Nearshoring and Offshoring is geographical location. Nearshoring is in countries that have borders with your home country, while offshoring is usually thousands of miles abroad, like in India or China.
Time zone and geographical proximity are a key roleplayer when deciding to outsource any business operations process. Most offshore companies are located in China, India, and other Asian countries, meaning that while we sleep here in North America, they work, and vice versa. This makes it difficult to communicate concerns, give live feedback, and transmit urgency to certain tasks. It can be frustrating!
On the other hand, nearshoring companies are in the same time zone and have geographical proximity which enables lots of benefits that range from company visits to cultural similarities. With nearshoring, remote workers can be just two hours away from your HQs, making communication much easier than offshoring to the other side of the world.
Due to geographical proximity, nearshoring offers cultural similarities that offshoring companies just can’t beat. Countries that host nearshore companies tend to share similarities, principally in cases like the US and Mexico, where the US social customs, business culture, and pop culture are closely aligned, as well as English proficiency. And when it comes to cultural alignment, northern border states in Mexico have more cultural similarities to the US than any other country in Latin America.
When offshoring business processes, probably the main concern companies have is “will my quality be the same?”. Given cultural differences and styles of making business, probably quality standards will not be met, unless you give extensive training, which translates into more costs, and more effort and time.
With nearshoring, that shouldn’t be a problem. Business culture alignment is more accurate than when offshoring, and language is not a barrier. Training is easier meaning fewer costs. Northern Mexico has vastly prepared young professionals full of energy that are constantly seeking opportunities. The labor pool in Mexico of young and well-prepared professionals is oversupplied. Ustonish has some of the highest-paid professionals in Baja, keeping them motivated and engaged with clients.
The whole point of why companies outsource their business operations is to get more margin on their profits by reducing operation costs, so they can grow, or venture into new projects. Countries like China, India, and The Philippines in Asia are known globally for their low labor costs. Offshoring companies leverage on low wages to provide their services, but the quality is compromised.
When nearshoring, costs are not as low as offshoring, but they are still competitive costs, delivering savings of at least 30% to US companies. Cost reductions of 30% is still a significant number for many companies, and the best part is that quality is similar to the US!
Ustonish is a nearshoring BPO (Business Process Outsource) company located in border city Tijuana, Mexico. We specialize in administration & operation, software & tech, marketing, and we also have custom made services. Start your 30-day free trial here.