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The Benefits of Nearshoring

What is nearshoring? Simply put, nearshoring is the practice of outsourcing business processes to an adjacent country. It is different from offshoring, which is the practice of moving business processes overseas. It is not a new concept in the business world; in fact, more and more Fortune 500 businesses are using the nearshore model in lieu of or in addition to the offshore model.

The goal of both of these practices is to improve productivity, but why should you choose nearshoring over offshoring? Here are some of the benefits that make nearshoring a smart decision for businesses:

Geographical Proximity

Say you are a US-based business trying to increase your technology throughput, and you have two options: Mexico or India. Both are more cost-effective and scalable solutions than expanding in the US, but Mexico’s proximity to the U.S. means collaboration, interaction and site visits (in either direction) are easier, cheaper, and more pleasant. Mexico’s geographical proximity also means there are fewer (if any) time zone complications. You will get updates and be able to work on issues real-time and communication will not be delayed as it would be in India because you have the same working hours.

Cultural and Linguistic Similarities

Along with geographical proximity, cultural and linguistic similarities are a significant benefit of the nearshore model. The absence of such barriers leads to effective and efficient communication. Since the US and Mexico share a large number of business similarities, the acceptance and integration into your organization are much easier.

Cost

Even though countries like India and China have some of the lowest labor costs in the world, more often than not you get what you pay for. Mexico has a real advantage over other countries because of the exponential increase in productivity due to the geographical, cultural and linguistic similarities that result in lower employee turnover and higher productivity.

The utilization of global resources is both the present and the future of business, and we should always determine the most practical path regarding efficiency, effectiveness, and cost.

About Rory Brown: Mr. Brown is a Managing Partner of Nicklaus Brown & Co., the Chairman of Ad Genius, Goods & Services, Nearshore Technology Company, and a member of the board of directors of Desano. He received a Master of Business Administration from the University of Charleston and is a Certified Public Accountant.