Nearshoring Cleared Up
One of the most effective models for companies to delegate tasks, work, and entire projects over the last few years has been outsourcing.
Yet outsourcing is not only one model in itself. There is offshoring, onshoring, and nearshoring.
It is nearshoring – working with companies in the orbit of a company in neighbouring countries and regions – that has gotten popular over the years.
For companies based in Western Europe, they are finding good nearshoring partners in Eastern Europe. While for companies in the US, Latin America has become a solid destination to look for partners.
Yet as an outsourcing model, there is still some confusion over what exactly nearshoring is and what countries are involved.
So let’s look at a few of the misconceptions that gravitate around nearshoring to help companies make more informed decisions when it comes to considering outsourcing.
Firstly, let’s see what nearshoring actually is.
Nearshoring is defined as the transfer of business processes to nearby countries and regions. For the last few years, with the rollback of offshoring operations, many companies have brought their business processes closer to home by changing to nearshoring.
As the associated costs of operating continue their upward march in their home countries, companies have been choosing to delegate parts of their business processes to partners that are located geographically closer.
For companies that are based in the United States, the leading nearshore markets are Mexico, Puerto Rico, and Argentina.
There are misconceptions that still exist when it comes to nearshoring. And for companies that have cloudy doubts, it makes them think twice about nearshoring and they miss out on the opportunity to benefit from it.
“It is a risk to do business nearshore”
Global organizations may hesitate in nearshoring their business processes from the risk of economic uncertainties in specific countries. Yet this shouldn’t be much of a hindrance to doing business there.
In fact, nearshoring to countries that do experience slower rates of growth can actually help change the state of things. By developing regional talent, the nearshoring industry can help grow and train talent and prevent brain drain.
“Nearshoring is expensive”
The services of nearshoring can provide either the same rates compared to their offshore counterparts or even cheaper. And this is because outsourcing as an industry tends to be nicely supported by the governments in the region.
Plus, clients can even save more on their travel expenses and time consumption since they are collaborating with partners in a nearby country.
“Nearshoring equals lower quality services”
When companies realize that very often the fees are lower for nearshoring they link this with a lower quality. There is also hesitancy around the education level of workers since they are located in a different country.
On the contrary, companies that provide nearshoring capabilities house top-tier talent that brings years of experience crafting their skills. It’s just that this talent was born on a different patch of land. They have graduated from the leading universities across Latin America (which also best most of the average universities across the US and Europe) and have been certified in their chosen area of expertise.
“Communication is difficult”
There is a hesitancy tied to a possible communication barrier that leaves clients in doubt about hiring nearshore. However, on the contrary, some countries in Latin America have some of the highest levels of English proficiency outside of the Anglophone world.
Argentina has the highest level of English proficiency in the whole of Latin America, more so than Mexico or Colombia. Other countries like Brazil and Costa Rica also have strong levels of English proficiency.
Companies in these countries can easily adapt to linguistic specifics and, actually, are fully comfortable working in English. In fact, many of these companies have policies about English being spoken both in the office and through internal communications