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Nearshoring

Nearshoring (also known as "nearshore outsourcing" and "nearshoring") means sourcing service activities to a foreign, lower-wage country that is relatively close in distance. Nearshoring is becoming competitive with outsourcing to farther areas since the recent rise of fuel costs.[1] The customer expects to benefit from one or more of the following constructs of proximity: geographic, temporal, cultural, linguistic, economic, political, or historical linkages. [2] The service work that is being sourced may be a business process or software development. As with offshore, the term "nearshore" was originally used in the context of fishing and other ocean-based activities and later adapted by the business world.

Overview

Nearshoring is a derivative of the business term offshoring. Offshoring is a business activity that is complex and risky because it involves working with a foreign, distant organization. In contrast, nearshoring is understood to mean that the business has reduced the complexity and risk of offshoring.

A well-known example of nearshoring is American clients nearshoring to Mexico, a development actively promoted by the Mexican government.[3] In Europe, nearshoring relationships are being developed between Western Europe, on the one hand, and Central and Eastern Europe, on the other. Central and Eastern Europe became a major provider of outsourcing services for Western Europe companies with the work centers in Russia, Ukraine, Czech Republic, Poland, Romania, Belarus and the Baltic. These destinations not only offer low-cost, skilled labor forces, but also an attractive regulatory environment with a close proximity and cultural ties to Western Europe.[4]

Other examples include Japanese clients nearshoring to China.

The complexity of offshoring stems from different languages and cultures, long distances and different time zones, spending more time and effort on establishing trust and long-term relationships, overriding communication barriers and activities of that kind.



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