Nearshoring vs Offshoring And Benefits of Both Practices

Have you considered looking elsewhere for your business’ employee coverage? There are plenty of options for your company to choose from in terms of employee hiring opportunities.

Two of the most popular options are nearshoring and offshoring. Many companies use either one of these strategies (or a combination of both) to meet their needs. Depending on how your business runs, you could also benefit from either or both of these options.

If you’re looking for more help for your business, you need to learn about the differences between nearshoring vs offshoring. Just keep reading to find out what the best choice for your organization is.

What Is Nearshoring?

Nearshoring is a kind of job outsourcing. The name includes the term “near” because it refers to outsourcing jobs to countries that are nearby yours.

For example, if you’re a European business that outsources its work to workers in another European country, that would be considered nearshoring.

The key to remember here is that the work has to be from a different country or region. You are not nearshoring a job or project if the work is coming from the country or region where your business is based.

Let’s look into some of the advantages and disadvantages of using nearshoring.

The Advantages of Nearshoring

You’ll be closer. If you and the other party aren’t too far from one another, you can have the option of having in-person meetings. This could be useful if your business has an important project coming up, you can meet with the other party with no problem.

You’ll be working in the same time zone. One of the biggest problems that companies have with working with employees outside of their country or region is synchronizing schedules. Fortunately, someone in a country or region nearest to you would have a similar time to yours.

This means that neither party would have to work night shifts or otherwise bend over backward to meet the needs or preferences of the other.

You and the other party working in the same (or near) time zones is also useful for work in general. If you need quick answers or immediate help, you don’t need to wait.

The Disadvantages of Nearshoring

You may have higher costs. Depending on where you live, neighbouring countries may have higher labor costs than countries further away. You’ll have to conduct research on the average labor costs in the country or countries that you’re considering nearshoring to.

You may have to work with different expectations. Since you’re working with a party in another country, you may find that there are several significant cultural differences.

While we support multiculturalism, we have to let you know that you’ll have to take working hours and vacation days into account when you’re considering potential employees. Another country may celebrate a different holiday than you do or expect a different kind of culture in their work environment.

The easiest way to work around this is by asking your potential employee(s) what they would like to see in the workplace. This can avoid any confusion or backlash in the future and keep both parties happy.

What Is Offshoring?

Offshoring is very similar to nearshoring. The biggest difference is that offshoring involves outsourcing a job to a country that isn’t nearby yours.

For example, a company working in North America may choose to outsource a project to a company in Asia. This would be considered offshoring.

Let’s look at the advantages and disadvantages of offshoring.

The Advantages of Offshoring

You’ll have lower costs. Nine times out of ten, offshoring is less expensive than recruiting other kinds of employment. This is especially if your business is based in North America.

You’ll have round-the-clock employees. If you offshore your business’ employees, you’ll be able to have someone working at all hours of the day and night.

Having employees around the clock is especially useful if your organization offers an online help desk or live chat. You won’t have to force overnight shifts onto your employees. Rather, you just have to offshore this task.

You’ll have a larger pool of people to choose from. If you open positions to the entire world, you’ll get to have your pick as to who you hire. You won’t be restricted to individuals in a certain area.

This can be especially useful if your company requires specially trained individuals, like those who are educated in technology.

The Disadvantages of Offshoring

You may have communication issues. Working with people all around the world can make communicating difficult. Unless you can find employees who are multilingual (or you happen to be multilingual), you may have issues crossing the language barrier.

We should also note that those who are multilingual aren’t excluded from communication issues. Being multilingual just makes it easier. There could still be cultural differences that make translation difficult.

You may not be able to meet with them. Unless you want to drop money on travel and stay, you can’t decide to meet up with your offshoring partner whenever you want.

You may have habitual differences. People in other countries may work differently than you do. Becuae of these differences, you may find that you and the other party will have to make working adjustments.

As we mentioned before, you should get these differences out of the way early. Ask your potential partner(s) what they’re expecting from their time working with you.