Benefits of Nearshore Outsourcing

Top 6 Benefits of Nearshore Outsourcing and How To Take Advantage of Them

Nearshore outsourcing is rife with opportunities for your business. Here are the top 6 nearshoring benefits and how to take advantage of them.

Top 6 Benefits of Nearshore Outsourcing and How To Take Advantage of Them

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In today’s business landscape, companies are looking into cost-reduction strategies that still allow them to access top-tier talent.

That’s why many are turning to outsourcing as a cost-effective way to work. The global spending for the outsourcing market is expected to reach $731 billion this year, with more than 300,000 jobs being outsourced annually in the US.

The traditional model of outsourcing, when looking to reduce costs, was to hire offshore talent, often on the other side of the world. But this may not work for businesses that aren’t able to manage large cultural barriers and language gaps. A better solution is often nearshoring, which yields all the benefits of outsourcing outside the US but keeps challenges to a minimum. 

This article will explore what nearshore outsourcing is, what the nearshoring benefits are, and how best to take advantage of these benefits. 

What Is Nearshoring?

Nearshoring is a business strategy that involves outsourcing services, processes, or manufacturing to a nearby country or region, usually to reduce costs and improve efficiency. For example, a US car manufacturer might have some of its parts built in a factory in Mexico to take advantage of the lower hourly rates compared to the US and lower transportation costs compared to having the parts shipped from China. Or a US firm might use a software development team based in Costa Rica.  

What Is Nearshore Outsourcing?

Nearshore outsourcing, which this article focuses on and will explore further, follows the principles of outsourcing business services but focuses on hiring professionals from a nearby country to work remotely. It generally does not include manufacturing. It allows businesses to access top-tier talent with a similar culture, language, time zone, and work ethic. Nearshore outsourcing is an effective model for services and processes such as software development, customer service roles, and financial and accounting services.

Nearshore outsourcing is an excellent option for businesses looking to tap into the benefits of outsourcing outside the US without some of its challenges. Compared to offshoring (offshore outsourcing) or onshoring (domestic outsourcing), it remains the easiest and most advantageous route for most businesses. 

What Are the Top Benefits of Nearshore Outsourcing?

Advantages of Nearshore Outsourcing infographic
Source: Comarch

The top advantages of nearshoring include: 

1. Expanded talent pool

Hiring strictly from the US can limit a company’s scope, especially considering the current labor shortage in the country. In addition, some positions and industries are not attractive to US workers, especially if they involve repetitive mundane tasks, making it harder to recruit motivated staff. 

Nearshoring can solve these challenges, giving US companies access to a wider talent pool and skilled professionals in nearby locations. Some countries have an abundance of talent specializing in specific industries, allowing you to find professionals that suit your needs. 

2. Talent quality

The US job market is highly competitive. Workers are looking for higher salaries and enhanced employee benefits. This makes it incredibly difficult for small to medium enterprises to compete for top-tier talent. 

A solution is for companies to widen their net and look outside the competitive US market. Finding top talent from nearshore locations can help bypass the intense competition among employers while yielding qualified experts.

One of the clear advantages of nearshoring is that it allows companies, especially smaller businesses and startups, that may not have the budget to hire highly experienced US-based talent to partner with highly skilled workers within their budget constraints—giving business owners a competitive advantage. 

3. Reduced costs

Observed Cost savings from Outsourcing graph
Source: Sia Partners

Many companies are motivated to outsource to reduce the costs involved in hiring, onboarding, and maintaining in-office employees. The nearshoring model of outsourcing amplifies the well-established cost savings of outsourcing.

As nearshoring involves contracting with remote workers who live and work outside of the US, this usually means that they have lower costs of living, which translates into lower salary expectations. Companies benefit from this by paying lower wages for top-tier talent. 

And as nearshore outsourcing offers the same reduced costs as outsourcing in general, companies will benefit from lower overhead costs than they would incur by having in-house workers. Savings can particularly be made when outsourcing the processes that are outside your core operations, such as payroll, billing, and recruitment.

4. Similar time zones

A common challenge involved in outsourcing to partners outside the US is the time zone difference. Unless your company needs operations 24/7, coordinating with talent on the other side of the world can yield miscommunication and delays. As much as possible, you want your work time to overlap with your remote workers. 

Nearshoring helps ensure that the time difference is manageable. For example, most US companies nearshoring to Latin America will only encounter a two-hour or less difference from US time zones, which is much better than coordinating with someone 8, 10, or 12 hours ahead of your time.

A bonus of working across similar time zones is the ease of travel should you need an in-person meeting with your remote team. The geographic proximity means little or no jet lag and reduced travel expenses. 

5. Similar culture

Cultural similarity and compatibility are other advantages that you can reap from nearshore outsourcing. Because your nearshore outsourcing partner would be close to the US, there are few cultural differences to overcome. 

This makes communicating, coordinating, and working with your remote worker easier. Because of your similar values and beliefs, you can create a strong rapport and build lasting partnerships and relationships

6. Expanded market

The US has a competitive job market, often leading to trouble finding talent that suits your requirements perfectly. With nearshoring, your company can broaden its reach and service territory. 

Nearshoring allows you to access new markets, find countries that specialize in producing the talent you need, and get experienced, qualified, and valuable remote workers to onboard into your teams. 

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How To Take Advantage of Nearshoring Benefits?

Nearshoring offers opportunities for businesses to expand their talent market and access valuable professionals to join their teams. To truly take advantage of what nearshoring can offer, you should consider the following: 

Choose the right service provider

Nearshore outsourcing companies can help you find and reach out to remote workers based abroad. Look for a company that has the required skillset and experience and a good track record of finding companies placements that are highly skilled and reliable. 

For example, Near provides a holistic solution for companies that want to hire Latin American talent, handling everything from hiring and onboarding to payments and retention. We offer different payment and recruitment models to fit your needs, and we can take over as little or as much of the process as you would like us to. 

Set goals and expectations

When outsourcing talent, you and your remote worker must be aligned about the project or working relationship from the get-go. This helps avoid any miscommunication and potential disputes. 

This is where thorough and effective onboarding comes in. You need to discuss your project goals, lay out your expectations, and ensure that you and your remote talent are on the same page. 

Prioritize communication

Effective communication is key to working with remote talent successfully. You should communicate with them frequently, keeping them engaged and aligned with the project’s tasks and progress. Don’t forget to share the tools and software your company uses and provide proper training on navigating and utilizing each. 

Conduct evaluations

Just as you would with in-house team members, it’s important to monitor the performance of your remote nearshore team members too. Conduct periodic evaluations and provide your remote workers with feedback about their work. 

This can include regular performance reviews, feedback from team members, and tracking of key performance indicators. Make sure that you also discuss the performance and quality metrics with them so they know how they are being evaluated and what they need to do to meet and exceed expectations

Promote synergy and teamwork

Just because your remote worker doesn’t work in an office does not mean they work completely independently. They will likely need to collaborate and coordinate with other team members. You need to create an environment that promotes teamwork and synergy among your employees. 

Luckily, this is not a difficult job with nearshore outsourcing. You can leverage cultural compatibility and geographical proximity to find similarities and build strong trust and rapport among your team members. 

What Kind of Businesses Can Benefit Most From Nearshore Outsourcing?

The advantages of nearshoring are open to all businesses across all industries. However, there are some that benefit the most from it. For one, it’s a strong approach for companies with complex or dynamic software development projects requiring agility and flexibility. Getting access to top-tier talent in your field can ensure that more expertise is put into your project. 

Companies that operate in highly competitive or regulated markets that demand speed and innovation can also benefit from nearshore outsourcing. With high-quality talent backed by experience and specialization in their chosen industry, you can ensure they’re providing value to your business operations. 

Nearshore outsourcing benefits companies looking to reduce or optimize costs without compromising output quality. It helps them broaden their scope and bypass talent shortages and high turnover rates in their local markets. 

Final Thoughts

Taking advantage of the key nearshoring benefits allows you to reduce your operational and labor costs and have a better chance of finding skilled professionals who can help your business grow. Keep in mind that choosing the right service provider is crucial to ensuring a successful partnership that maximizes the benefits of nearshoring.

And you don’t have to find your perfect nearshore partner alone—Near can help you fill your open positions with highly skilled remote workers from Latin America in under 21 days. 

Don’t miss this opportunity to take your business to the next level—fill in this simple form to get a list of pre-vetted candidates you can interview for free. 

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