Nearshoring: Advantages and advice

Published Julio 30, 2021

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In the business world, it is no surprise that some specific tasks are delegated to specialized companies. During the past decade, outsourcing to places far away was a boom. Mainly because of the increase in profits by reducing payroll expenses or the interest to become 24/7 companies. However, in the last few years, nearshoring (outsourcing to near areas) has become increasingly demanded due to its several advantages. 

Nearshoring refers to the practice of offshoring to a country located geographically closer to a company’s headquarters. Some experts call it “Offshoring 2.0”. This model reduces cultural problems or difficulties with the time zone.

Illustration of people across the globe interacting through technology.

Advantages of nearshoring

Nearby countries usually have a cultural resemblance while offering management the option of traveling to provide necessary oversight or even help build the company culture. Want to know more about the benefits? Take a look.

Cultural closeness

Because of the proximity between countries, there are some cultural connections. Latin America and the United States share many similarities counting movies, TV, and work culture. Such affinity enables teams to bond and even build trust. 

Another advantage is that today more Latin-American people speak English fluently. In Peru, for example, some universities require to learn the language and demonstrate proficiency to earn a degree. With this, it is easier to find people who can speak directly to current and potential clients.

Time Zone Compatibility

Similar time zones allow teams to work closely and collaborate throughout the workday. As a result, delays and bottlenecks are less likely to occur. Moreover, time zone compatibility helps clients work flexibly since they can respond to requirements almost in real-time, and the feedback does not take long to be heard and executed.

Another benefit of having similar time zones is people from the company can be able to travel easily. When needed, trips would not mean spending an entire day or more on a plane.

 Infrastructure Quality

Usually, teams located in Latin America have a superior infrastructure quality than other parts of the glove with less expensive rates. The internet connection in Peru, for example, is stable. In the same way, the country has a reliable communication infrastructure that prevents delays in work. 

Higher Return on Investment

Although nearshoring is often more expensive than offshoring, it offers a higher ROI since it focuses on proving value to the client. The costs in India might be $5 or even $10 less per hour compared to Latin America, but the challenges of working opposite schedules and the annual attribution rate of the country are points to keep in mind since they represent more expenses in the long run.

Bits of Advice

Meeting business goals in an offsite environment can be challenging. Even when the advantages are high, this practice is not a hundred percent safe from problems, especially during the first stages. Here we compiled a few pieces of advice to succeed with the nearshore model:

  1. Provide training when possible: It helps employees understand the company culture and the project objectives.
  2. Create schedules: Employees must be aware of what the company expects from them. This way, they can plan strategies and work towards your business goals.
  3. Focus on standardization: If you want differences in work style not to affect your objectives, it is crucial to establish standard procedures.

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