Differences Between Nearshoring and Off-shoring – (Advantages of Outsourcing)

Building an in-house team is an expensive and time-consuming affair. Through outsourcing, you can add competent people to your team without wasting time and resources on the hiring process.

Outsourcing talent makes a lot of sense to avoid recurring overhead or messy layoffs. When the project is over, you can simply part ways with your outsourcing partner.  Even for continuous processes, companies with established standards and practices can reduce your burden.

Companies have mainly two options: Nearshoring and Offshoring. Knowing the difference between can be a pivotal aspect to your business.

Nearshoring

Definition: Nearshoring means outsourcing/transferring business operations to a nearby country, preferably a neighboring one or on the same continent, like Costa Rica, Columbia, Mexico, Brazil, etc. 

Nearshoring refers to hiring a team in another country within the same time zone. It includes nations in similar time zones. This allows businesses to work closely with a team that understands your language while still getting the benefits of offshoring. 

For example, a company based in New York City hires staff in Brazil. Here, both the client and the provider are in different locations but nearby. Both are only one or two time zones away.  

• Accessibility 
  Clients prefer the close proximity and feel comfortable with the option of going to the office locations and seeing the team which will work with them physically. Also, there is an opportunity to visit as many times as possible. Companies do not mind making several trips a year. 

• Effective and simpler communication
  Communication is simple while opting for Nearshoring teams as the teams are in the same time zone. There will be fewer cultural obstacles, making communication fast and effective. 

• Similar working hours 
  The outsourcing team and you are working simultaneously. Staying connected and scheduling meetings is a simple confirmation. You can also schedule physical meetings if your project demands some in-person time, as traveling is much easier  within the same time zones. 
  

With an understanding of these differences, you can easily determine which one is right for your organization: Offshoring or Nearshoring.

Definition: Offshoring is the practice of basing business processes or services overseas to take advantage of lower costs, usually from developed countries to developing countries. Companies offshore their business processes to outsourcing in distant countries, usually India, China, or the Philippines, for a talent pool at a lower cost.

Offshoring refers to hiring people or moving business processes several time zones away. It can be an entirely new continent like Asia. For example, a company based in New York City hires a development team in India, or a company in Mexico wants to produce their goods in the US.  

• Cost-Effectiveness
  Cost is the prime benefit of Offshoring. Most companies look offshore to reduce operational costs, for example, Offshoring to places where labor, developers, manufacturing, or shipping are inexpensive and jurisdictions imply few regulations. Where, nearshoring solutions can reduce a company’s overall costs only by 30%, offshoring can increase the savings from 40% to 70%. 

• Better Support Coverage
  Offshoring means working in different time zones. However, most outsourcing companies will assign teams as per your time zones. After cost, this availability of 24 by 7, on-demand talent is the next big advantage.

• Talent from Across the Globe
  Offshoring gives you access to the talent pool available globally. You need not be limited to the people nearby, especially when your projects require advanced and specific skill-sets that are hard to find everywhere. Many developing countries like India and Philippines have highly educated professionals with a lower cost of hiring than the U.S. 
  

Often companies feel that nearshoring is a better option, but you should know that all of your business needs can be fulfilled more efficiently by Outsourcing. Outsourcing is a broad term. Outsourcing data entry and other services can be done in the same country or outside the country. In comparison, offshoring is the matter of outside the country only.

The prime objective of Outsourcing is not just cost reduction but to take advantage of higher quality human and technical resources without wasting time and money on hiring, training, or purchasing an in-house team or software. You can outsource to an experienced partner for tech support, financial or legal services, accounting services, data entry services, manufacturing, and so on.

Around 72% of companies prefer Outsourcing over in-house hiring. 24% of small companies prefer Outsourcing to increase business efficiency. As per the Deloitte global outsourcing survey:   

• The global business process outsourcing (BPO) market size is expected to rise at a compound annual growth rate (CAGR) of 8.5% from 2021 to 2028. It was valued at US $232.32 billion in 2020.  
• 83% of IT companies are ready to outsource their security to a Managed Service Provider (MSP) in 2021-22.  

As per Deloitte’s outsourcing statistics, the advantages of Outsourcing that make companies outsource their business processes and register such significant percentages include:

• The top reason for Outsourcing is cost reduction (70%).  
• Flexibility is important for 40% of companies.  
• Another reason is speed and efficiency (20%).  
• Agility matters for 15%. 
• Outsourcing initiatives make the company more appealing (32%). 
• It reduces the need for Transition Service Agreements (41%).  
• Outsourcing improves the operating income (39%).  

Outsourcing helps you focus on critical business activities and provide access to the highly qualified skill pool available globally. ARDEM is one of the leading outsourcing players and an efficient partner for established firms, providing excellent outsourcing solutions. Enabling core business functions and unlocking high efficiency are primary drivers to outsource to ARDEM.  

• Large Volume Processing with High Accuracy
  With our large, experienced teams, our clients can hire, train, and manage a large group of people, manage large fluctuations in daily work volume, and process every bill (all formats) with 100%  accuracy.

• Ability to Source Talent from Across the Globe
  ARDEM can provide the required skill-sets to clients across the globe. It helps solve the issues of poor communication, language barriers, and work delays in different time zones.

• Ability to Manage Remote Teams Virtually and Securely
  Our clients benefit from leveraged technology to get better processes faster and more efficiently. Our strong, well-defined process management and the appropriate technology make the solution more efficient.

• Robotic Process Automation
  70% businesses are currently implementing or are discussing the Robotic Process Automation (RPA) to improve outsourcing results. ARDEM is one of the outsourcing providers that have adopted the RPA for outsourcing solutions, including data entry solutions.

• Robust technology with cloud offerings
  ARDEM’s Cloud-based Collaboration Platform like Utility Manager and Invoice Manager makes it easier to add value to every single client’s working efficiently.  
  

 Thus, outsourcing solutions  to a specialized outsourcing service provider like ARDEM can add immense value to your business as ARDEM can support every business irrespective of size, type, or industry.

ARDEM provides Business Process Outsourcing and Business Process Automation Services to established companies to help them improve operational Efficiency and Reduce Costs.  For more information please reach out to us  at  pricing@ardem.com  or call us at 908-359-2600.