Nearshoring/Near sourcing is a derivative of the business term offshoring in which an activity is replaced to locations which are geographically nearer. A BPO operation which is situated in a country or geographic location that is relatively close to a companys main operation as opposed to out source, which could be in a different continent.

Examples of nearshoring: US clients nearshoring to Canada and Mexico, Austrian clients nearshoring to Slovakia, Japanese clients nearshoring to China.

The complexity of offshoring stems from different languages and cultures, long distances and different time zones, spending more time and effort on establishing trust and long-term relationships, overriding communication barriers and activities of that kind

Examples of Nearshoring

Most organizations prefer nearsourcing over offshore outsourcing for a variety of reasons (both internal and external), including physical and time zone proximity, cultural affinity and other ones. Major nearshoring destinations for US businesses are Mexico, Central America and Canada, Western Europe, Ireland, Eastern Europe. Some other companies like OutsourceNearby concentrate in the North America regions.

Time Zone Proximity

Frequent traveling from both the customer and the provider end of the venture are in demand by outsourcing a project to a distant country. Effective and efficient communication through email or over-the-phone is a core step to success on the way of working over an outsourcing project. So selecting a supplier in a close-by zone may improve the efficiency of day-to-day information exchange.

Similar Mindset and Cultural Affinity

Important cultural elements of successful interactions are important. Right sense of humor, the directness of communications has always been challenge in ourtsourcing operations. There is some amount of frustration when crossing cultural barriers. This could easily create tremendous hurdles in a project. But proximity to the customers can be a potential access to the extended market. A nearshoring company’s staff can relate themselves more promptly to the customers requirement. They will possess engineering and technical talent in the similar knowledge pool and may feel free talking over project pitfalls due to the similar education in neighboring countries.

Short term, Cost effective Resources

Outsourcing companies need to provide short duration resources for project implementation, project management requirements, and short troubleshooting etc. In such cases companies need not invest in expensive resources of their own country for starting and delivering a project. Nearsourcing organizations provide such services and appear in a customers location in a short period of time thus reducing time and cost. Nearshoring sourcing model serves as a good alternative to enhance the outsourcing projects performance. Besides it reduces the risks of working with distant foreign companies. Close proximity to a service provider allows companies to develop intimate working relations and long term business relationship. Being in the same time zone is a huge advantage in software development.

Establishing Long term Business

International cooperation with partner companies during project development interaction may benefit through nearshoring in multi fold. Nearshoring offer additional services which are advantageous for both parties with a minimum of administrative overheads, but extremely flexible regarding time, place and content that is offered. IT and management consulting, eLearning and escrow services, with a bonus of additional establishments of business contacts are among them. It ensures efficient skills and supporting services in project management and business analysis, business process optimization, quality assurance, technical documentation and software localization.

Mitigation of Risks

Compared to domestic outsourcing, the nearshoring management appears complex with time, resources and budget. Managing teams, vendor relationships teams abroad is hard. Lack of initial proximity leads to lack of direct control. Additional management, indirect management and expenses add more than cost of the project. Information Security is at risk.There are many cases of information leak offshore. Due to cultural differences there is slack of copyright standards so piracy of software and data misuse are common. Customers demands may not be met satisfactorily, the express personal touch of a local person whom people can trust and work with may be lacking. Subsequently, lack of control leads to frictional sliding and lower quality.

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