Nearshoring: A Smart Business Solution Closer to Home

Gimena Aguerreberry
May 31, 2021

Classical offshoring models have been losing importance every year in the software development industry, mainly due to the growing complexity of IT projects. Offshoring is being replaced by nearshore outsourcing, where U.S. businesses are shifting from offshore sites to places closer to home in recent years.

What do these businesses report? Their projects were completed just as efficiently, if not more so, thanks to the benefits of nearshore outsourcing.

Curious to learn all the benefits of nearshoring? Here, we're breaking down the reasons why this nearshore outsourcing model is better than any other.

Why Has the Industry Shifted From Offshoring to Nearshoring?

Many businesses used to utilize offshoring to cut costs for outsourcing services, especially in manufacturing. It once was the preferred alternative to employing teams in-house, which can be incredibly expensive.

In some cases, businesses would even move their entire company to their outsourcing destination to take advantage of a lower cost of business than in the United States.

However, this redistribution of roles to offshore locations is not necessarily the best option anymore. Offshoring services and entire companies don't impact the bottom line that business owners hoped to gain.

Now, what we're seeing is a movement toward nearshoring, which can still improve project and company costs and business management without going to the distances that were once necessary for this kind of benefit.

Businesses have found that nearshore outsourcing partners can also provide better services, communicate more efficiently, and offer higher-quality control in project management.

As a result, many enterprises choose nearshore outsourcing as their new go-to option since it presents far fewer uncertainties and lower levels of risk when you compare it to the risks of using an offshore outsourcing partner.

What Are the Benefits of Nearshore Outsourcing?

Using nearshore providers that are geographically closer, culturally closer, linguistically closer, and longitudinally similar offers fewer barriers to business processes all around.

However, not all nearshore locations are made equal. Certain countries have shown more promise in terms of security, time zone alignment, and cultural proximity. For example, the continent of South America as a whole presents appealing opportunities to United States businesses.

Here are some of the benefits you can expect when outsourcing to a nearshore company in a region like South America.

Proximity and Schedule

It's much easier to visit nearshore outsourcing partners when necessary, as they're usually in the same time zone and much closer geographically. Even when not meeting in person, being in the same or close time zones makes it much easier to communicate across all channels.

You'll enjoy easier scheduling for business meetings, conference calls, and project management overall easier.

Cultural Relevance

Nearshoring means you get to work with a team with fewer cultural differences, making it easier to understand one another and coordinate tasks and timelines. This helps bridge the gap between the main company and outsourcing partner, so the supply chains and business processes are more streamlined.

Cost

It's not as cost-effective to move certain business projects and departments offshore. This is because projects often need to be re-worked by the outsourcer due to lags in communications, time zone issues, and lack of local interaction with partners in locations such as Asia.

Now, nearshore locations can offer competitive pricing, providing more affordable services with less lag time and cleaner timelines. This has made several U.S. companies switch their outsourcing model to a nearshore one, working with people in countries such as Mexico, Colombia, and Uruguay.

Security

U.S. commpanies are also starting to see that South America is much safer than it used to be, particularly in the rapidly developing cultural centers and cities throughout the continent in countries like Argentina and Brazil.

Offshore centers also often required nearshore centers to create a more stable atmosphere. That is no longer necessary when all you need is a nearshore center. It wraps up all of your outsourcing services into one place that is close by.

South American countries have become more popular as of late for nearshore outsourcing. Most people who live in South America are bilingual, which is a benefit that can't be undervalued.

The countries that seem to be taking off the most include:

  • Uruguay

  • Chile

  • Argentina

  • Peru

  • Brazil

Mexico and Columbia are also starting to become more attractive offshore destinations.

The main drawback to offshoring in South America is the lack of personal security. While many of these countries have had issues with security, it does not encapsulate the entirety of the countries. There is a vast cultural difference between the country and city areas in these locations.

Nearshore outsourcing typically takes place in the cities, which can be very safe and secure. For example, Uruguay has very low crime rates that are close to those of the U.S.

Uruguay also has one of the highest-educated workforces in the continent. When U.S. companies want to utilize nearshore outsourcing, Uruguay offers hard-working people, fully fluent English speakers, cost-effective and competitive rates, and a similar time zone.

Need Nearshore Outsourcing For Your Business?

With fewer culture and language barriers, more companies are switching up their outsourcing strategies and moving toward a nearshore model. They keep their costs low, take advantage of a highly educated, English-speaking workforce, and have greater access to their outsourcing partners.

Without major time zone differences like that between the United States and Asian countries, American companies can keep their workday structure as it is, communicating as needed during normal working hours and adhering to home-based timelines.

Are you ready to explore nearshore outsourcing at your company? Contact our team at SOPHiLABS to get the outsourcing support you need and learn more about our Latin American nearshore centers.

We’d love to work with you.

We treat client projects as if they were our own, understanding the underlying needs and astonishing users with the end results.

"Nearshoring: A Smart Business Solution Closer to Home" by Gimena Aguerreberry is licensed under CC BY SA. Source code examples are licensed under MIT.

Photo by Aaron Burden.

Categorized under software development.