Traditionally, organizations look to offshoring to cut costs for outsourcing services and often manufacturing. As economies shift, it is becoming less cost effective to implement offshoring services and companies are re-evaluating their outsourcing strategies. Offshoring is becoming a less common practice due to the difficulties in project management, longer lead times, complex transportation logistics and overall costs. There has been a shift to favor nearshoring to improve project cost and management.
So why consider nearshoring?
Nearshoring is becoming a more prevalent option for many growing industries as the advantages of offshoring are diminishing. Many organizations are favoring geographical proximity, speed to market, and lower costs as a more strategically beneficial option.
By nearshoring with neighboring countries, an organization is likely to avoid language barriers and cultural learning curves. Outsourcing closer to home will bring down any travel costs, which often isn’t taken into consideration with offshoring. Financially and logistically, many organizations are favoring nearshoring as a business strategy.
One of the biggest benefits to nearshoring is geographical proximity. Specifically for the United States, Latin American countries are becoming increasingly popular for nearshoring services. The belief that offshoring is a cheaper option is diminishing, as hidden costs and timely delays associated with offshoring are becoming apparent. Nearshoring services within a close proximity to the client country is expanding as a strategic alternative to offshoring over the next few years.
With nearshoring to Latin American countries, services are likely to be in the same time zone and you can have more control over the process without timely delays, making overall communication much easier. This major benefit helps facilitate better collaboration and quicker response times, in addition to project interaction and lower traveling cost.
Nearshoring services are proving much less costly that an offshoring alternative. Many organizations have discovered the hidden costs associated with offshoring. Travel expenses, supply chain and hidden costs the overall cost can ultimately make offshoring a much more expensive option. With outsourcing much closer, many of those costs are eliminated.
Outsourcing services can be a critical decision in saving your organization time and money. Many organizations are favoring nearshoring due to cultural similarities, shorter travel distances (thus less traveling costs), shorter lead times, better supply chain control and overall communication. Fewer logistical, cultural and language barriers exist. It’s becoming a more sensible alternative to nearshore services to a neighboring country instead of thousands of miles away.
- On February 28, 2014