Common Misconceptions of Nearshoring Delegating services to other countries is a common practice that most business owners employ in their quest for expansion.
By Steve Taplin
Opinions expressed by Entrepreneur contributors are their own.
If you run a business, you probably want to maximize its operation to obtain the best results and ensure productivity in your practice. Delegating services to other countries is a common practice that most business owners employ in their quest for expansion. Most of the software development duties assigned to other countries are non-core work or quality assurance testing.
What is nearshoring?
Nearshoring or nearshore outsourcing is the process of transferring non-core tasks to nearby countries for strategic implementation. This business practice has become familiar over the years, with most entrepreneurs withdrawing their services in offshore countries. Outsourcing to nearby companies can provide various incentives to a software development company, including reduced travel costs and flexibility. With the rising expenses needed to operate in various home countries, companies opt to delegate tasks to neighboring countries and still enjoy the same benefits they would from offshoring.
How does nearshoring differ from offshoring?
The primary difference between nearshore outsourcing and offshoring is the distance or location proximity. Unlike nearshoring, where the countries involved are closer to home, offshoring involves setting up a department or a small team in far-away places. For instance, companies in the United States may outsource to countries such as the Philippines. While offshoring guarantees you benefits such as 24-hour operations due to the difference in time zone, other factors may limit the effectiveness of your operations, including travel costs and cultural differences. Allocating services to countries in Latin America is an example of nearshoring, since these countries are a few hours away from the US.
Besides many business ventures employing nearshore outsourcing in their practices, a lot of people still harbor myths about nearshoring. Having a deeper understanding of nearshoring and knowing the truth about the same will help you benefit from the many advantages of this business practice. Below are the common misconceptions that people have about nearshoring.
Related: Four Reasons Your Startup Should Consider Outsourcing
Misconception 1: Nearshoring offers poor services
In most cases, the team from nearby countries offers to work on the same services but at a reduced amount, causing you to doubt their quality of work. Most companies may think twice before working with people from different countries and question their competency, skill and education level. While this is a crucial factor to consider, you should understand that, like any other country, nearshoring companies ensure their workers are qualified and certified before hiring them. Most of these people working in these companies are graduates from universities with top-tier skills and up-to-date licenses. Like other job opportunities, a thorough interview is a part of assessing whether one is a good candidate or ideal for that position.
Misconception 2: It is risky to do business in nearshore countries
Failed operations are an everyday experience for most business owners and a significant part of the growth in any venture. When transferring operations to surrounding countries, you may hesitate due to uncertainties of the economies in those countries and, other times, their political influence. Although these factors can affect the operations in nearshore countries, they should not limit you from making that move. Most people may also be doubtful about nearshoring as setting up new departments in a different country may seem overwhelming and costly. Contrary to this, you may only need a month or more to get started, and you will enjoy your value for money in no time.
Related: What Work Should You Outsource?
Misconception 3: Communication can be challenging
Most clients may fail to hire teams in nearshore countries due to the differences in their language. Other companies think that tasks such as customer service can be complex as the team may not effectively communicate with customers. However, most companies today ensure that their workers are conversational with English. Some countries, including Brazil and Argentina, have even implemented policy frameworks such as English to facilitate effective communication between people, especially in workplaces.
Misconception 4: Higher costs are required
The teams in nearshore countries may charge the same or lower fees than those of their offshore counterparts. Since most governments support the outsourcing industry, business owners may not need additional expenses to offer their services. A significant advantage of nearshoring is the location proximity between the two countries. Most of these countries are hours away from each other, allowing easier access without incurring much money on travel. This also means that you can closely monitor how work is running and make any adjustments if needed. The close distance also facilitates more significant interaction between employers and employees. Because of the accessibility, employers can easily make the nearshore team feel like they're a part of the leading business, which may drive them to become more productive.
The multiple benefits of nearshoring, including close affinity, allows you to have more control in your business besides offering added advantages, including cost-effectiveness. Nearshoring may be the right option to help your business reach the next level.
