Nearshore Outsourcing – The Twist in the Tale

The near-shore outsourcing trend

To a large extend outsourcing meant shifting of back-end operations to cheaper off-shore destinations like India, Philippines and China. But the trend seems to be changing swiftly. Businesses today look more concerned about security and stability rather than mere cost savings and this is why most of them are adapting to the new wave of near-shore outsourcing. Proximity for travel, cultural affinity and developing infrastructure are a few other reasons for near-shoring getting the boost. Relatively lesser known outsourcing destinations like Mexico, Canada, Costa Rica, Romania, Slovakia and Chez republic have chances of emerging as major winners of this new trend in the years to come. Discussed below are the major factors that may be responsible creating this twist in the tale.

Major factors in aid of near-shore outsourcing

1.) Cultural Link

The cultural link factor is a major plus in aid of near-shore outsourcing. Countries located in near-by locations are likely to have a similar cultural background than off-shore countries and many businesses today find this to be an important factor. Most are of the opinion that having a close cultural link helps in reducing common problems and conflicts that can arise when teams having differing cultural backgrounds work together.

2.) Proximity and time zones

Proximity is another big factor that favors near-shoring. Business travel to neighboring courtiers is much cheaper, quicker and can even eliminate the need for procuring visas or other documentations. Proximity also means better and cheaper communications, faster work and better understanding. In addition as compared to off-shore destinations the time zone in near-shore countries will almost be the same which aids in work coordination.

3.) Increasing costs in other off-shore destinations

Cost cutting was the major driving factor behind off-shore outsourcing. But most firms today feel that the cost of operation in off-shore destinations like India and China is rising. This includes cost of communication, infrastructure and quality control among others. The per-head employee cost ratio in off-shore and in some near-shore destinations also do not differ significantly. These factors will surely aid near-shoring and help it gain more impetus.

4.) Declining resources

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