Nearshoring Vs. Offshoring: Which One Is for You?
Business process outsourcing (BPO) is the business practice of hiring outside service providers to perform a critical business function or task. Businesses can choose to outsource within their country (onshoring) or to another country (nearshoring and offshoring).
Nearshoring means hiring an outsourcing provider from a nearby country usually sharing a border, or in the same continent as your country, such as, for instance, the Dominican Republic or Mexico. Offshoring, on the other hand, means hiring a team or service provider from a distant country – typically several time zones away and on a different continent. Some of the most popular destinations for offshore outsourcing include the Philippines, India, and China.
With about 300,000 jobs being outsourced out of the US every year, nearshoring and offshoring have defined the way businesses improve their ROI by leveraging experienced professionals while saving on costs. But when comparing nearshoring vs. offshoring outsourcing — which one is the right fit for you?
Keep reading to find out their main differences so that you can make an informed decision on the type of outsourcing that better fits your company.
#1: Nearshoring vs. Offshoring: Different Time Zone Coverage
Working across time zones can be challenging, particularly when trying out new ideas or working on large projects. Nearshoring solves this problem by having your outsourced employees in the same time zone as your main office. This allows for in-person meetings and trips while also facilitating digital collaboration. As a result, working between agents and customers becomes easier.
Although offshoring services operate in a different time zone from your main office, they don’t stay behind when it comes to supplying your company’s needs. They provide 24-hour customer service by having employees work on different schedules. Offshore employees working around the clock can also ensure availability in the event of an issue or a crisis. Additionally, your offshoring team can complete your main office’s unfinished tasks, allowing for continuous work on a project until it is completed.
#2: Nearshoring and Offshoring Are Both Cost-Effective
Nearshoring and offshoring are both cost-effective because of the wage differences between these countries and the United States. In addition, they offer significantly less compensation and benefits. By outsourcing outside your country, you can save money on Medicare taxes, Social Security benefits, health insurance, workers’ compensation, and other costs associated with US-based employees.
Utilities, infrastructure, and materials are also low-cost in developing countries like the Philippines and the Dominican Republic. This makes them more cost-effective for labor-intensive industries like manufacturing and call centers.
While offshoring services tend to be more affordable than nearshoring due to the significant wage disparity between Western countries and offshore destinations, they still outperform the United States in terms of service costs. Closer proximity to the service provider means lower travel costs and a shorter time to market. More importantly, because nearshoring operations are in the same or similar time zones, employees don’t need to work overtime or at night, which can save money compared to offshoring.
#3: Nearshoring and Offshoring Provide Knowledge & Expertise
Nearshoring and offshoring allow you to choose among a wide repertoire of affordable and competitive professionals.
For instance, nearshoring to the Dominican Republic gives you access to a multilingual, highly skilled workforce. The languages commonly spoken by agents are Spanish, French, English, Portuguese, and Italian. This particular aspect benefits US markets —especially because of its large Spanish population.
Likewise, offshoring allows companies to access talent pools they might not otherwise have access to. The Philippines, for example, has a remarkably high standard of education. More than 680,000 Filipinos graduate from college every year, with over 41 million people trained in the workforce. By offshoring, you can hire affordable and highly qualified experts in every department, from customer service to human resources and IT.
Outsourcing gives you the freedom to focus on your business’s core competencies while having experts render top-notch services to any of your departments.
#4: Nearshoring and Offshoring Avoid Potential Cultural Barriers at Work
Nearshoring in the Dominican Republic and offshoring in the Philippines can also help you avoid potential cultural barriers in the workplace.
Although the United States established diplomatic relations with the Dominican Republic merely in 1884, it has exerted influence on the country for a longer time through their shared history of 300 years. Their large bilateral trade, as well as their proximity, has created strong cultural and economic ties between these countries. As so, Dominicans are familiar with the language and lifestyle of the nearshoring client, which further strengthens successful corporate relationships.
American society has also had a significant impact on Philippine culture. The 48 years of American colonization in the Philippines influenced the country’s governmental, educational, and economic systems. This also positioned English as a dominant language alongside the official Filipino language. With a literacy rate of 94%, the nation is the world’s third-largest English-speaking country. American English is taught in all schools, and as such, Filipinos speak with a neutral American accent that is easy to understand.
Having cultural affinity and no language barriers can easily set forward a seamless corporate collaboration with effective communication and solid financial synergy.
So, when comparing nearshoring vs. offshoring outsourcing — which one is the right fit for you?
When deciding among outsourcing alternatives, you must first consider your company’s goals and values. If having shared time zones and ready access to visit your outsourcing country are important assets for your company, then you should consider nearshoring.
While nearshoring and offshoring are both cost-effective, offshoring can render slightly higher revenues due to a steeper wage difference. It can also provide a wider selection of professional options.
Concerning cultural and language affinities you can either nearshore in the Dominican Republic or offshore in the Philippines —they both have strong cultural ties with the United States. This will help you maintain efficient communication and a high level of productivity.
The good news is that Sourcefit provides both types of BPO services. We pride ourselves in helping large and small businesses reduce costs and increase productivity by providing process consulting and highly skilled and motivated employees at a fraction of the market price.
So, nearshoring vs. offshoring —which one is for you?
Find the Best Fit for Your Business
To learn more about nearshoring in the Dominican Republic, you can read our 5 Benefits of Nearshoring in the Dominican Republic article. We invite you to follow us on social media and to visit our website to learn more about our services.
About Us: Sourcefit is a widely recognized US-managed business process outsourcing company based in Manila, Philippines. We proudly serve over 100 clients with a workforce of more than 1,300 employees. Our global centers can serve multiple markets, and our staff is highly proficient in English, Spanish, French, and Portuguese. Whether you need a few or many employees, we can help you achieve your business goals and build high-quality offshore teams.
Latest Awards
Sourcefit’s commitment to excellence has been recognized through numerous industry awards and certifications.
We recently received the Fortress Cyber Security Award from the Business Intelligence Group. Sourcefit was also honored with the prestigious recognition of Best Outsourcing Solutions Provider in the Philippines during the 2023 Business Excellence Awards.
Other awards include: FT ranking of 500 high-growth Asia-Pacific, The Marketing Excellence Awards, Inquirer Growth Champion, HR Asia Awards, among others.
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