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Is Nearshoring the Best Option for Your Company?

Charles Popick Newsletter

Offshoring - Outsourcing was the trend at the turn of the century. However, recent trending is pointing to a more close to home solution - Nearshoring. So, which one of these two options is a better choice for your business? Each solution is not as cut and dry as you may think and should be carefully considered depending on your business requirements and goals. Offshoring is the relocation by a company of a development process to a distant location. Cheaper locations are the most commonly chosen so that the overall business cost may be significantly decreased. For example, China or India are two of the most popular countries for western companies looking to outsource their manufacturing costs. However, in recent years, the cost of labor in those countries is on the rise and the governments are abandoning foreign currency conversion manipulations as a policy.

Nearshoring refers to a partner based in a country adjacent to the customer's own one or close to it, most possibly sharing a host of characteristics, including laws, economic bonds, accepted business practices, cultural background and such. The big advantage is the distance between the two entities. It allows for less expensive travel, a greater degree of control of development process, especially in critical situations.

Conclusion: In today's business environment the correct outsourcing solution will play a critical role in the success of your business. The choice of the right outsourcing model will ultimately depend on the maturity of your outsourced operations. If it is more mature, then Offshoring maybe the option, as the need to collaborate or communicate frequently is not needed. If it is less mature and there is a need to closely communicate, Nearshoring may be the best bet.

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