In modern business, the Asia based offshoring model has been the choice for many companies for the past few decades. Cheap labor costs have made outsourcing to an offshore country an attractive prospect.
Many businesses are waking up to the benefits of nearshoring as an alternative to offshoring.
But what is nearshore manufacturing? And why is the nearshore alternative so attractive to so many companies?
In this article, we’ll look at three of the overlooked benefits of nearshore outsourcing.
What Is Nearshore Outsourcing?
Nearshore outsourcing is the practice of outsourcing work or manufacturing to workforces in a neighboring country. For example, for the United States, it may be beneficial to use workers in Mexico.
Coastline International Inc. is one example of a company that uses trusted partners in Mexico in its production.
1. Geographical Proximity and Time Zone Parity
Given the physical geographical proximity of Latin America to the United States, there are major benefits over locations further afield such as Asia.
Many businesses that have adopted an offshore outsourcing model have found it a struggle to manage operations that are so distant. Not only that, but the time zone differences can cause a strain on the workforce.
One problem faced by many businesses that use offshore teams in Asia is staff retention. This is particularly felt in the overnight shifts that are essential for supporting clients in the US.
Latin America, on the other hand, can provide real-time service. This means that employees can work during conventional business hours. This helps to reduce the strain on personnel and ensures lower attrition levels in Latin American workforces compared with those in Asian workforces.
Another factor that contributes to the lower turnover in Latin American workforces is that shared services jobs are quite new to the local jobs market. This makes the prospect of working with businesses from other countries attractive to a millennial workforce.
Geographical proximity and time parity enable a collaborative business model. Communication will become far easier
2. Cost-Effectiveness
While Asian countries may offer the cheapest labor costs out there, using workforces in Latin American countries such as Mexico is much cheaper than hiring employees in the United States.
But labor costs are not the only aspect of the price of nearshore outsourcing. Businesses also need to consider the cost of bringing their product to market. With closer proximity to the destination market, nearshoring offers a cost-effective solution.
3. Similarities Between Cultures
One of the biggest benefits of nearshoring is that the language barrier is often less of an issue. All too often, when dealing with partners overseas things get lost in translation. This can hinder your business operations.
Often, social culture and pop culture are more aligned also. This gives workforces working across the two countries great commonality.
Nearshore vs. Offshore Outsourcing
As we have learned from this article, there are many overlooked benefits to nearshore outsourcing. These include better staff retention, ease of communication, and improved cost-effectiveness.
Is it time you switched to a nearshore model?
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