Nearshoring

Nearshoring means sourcing service activities to a foreign, lower-wage country that is relatively close in distance or time zone (or both). The customer expects to benefit from one or more of the following constructs of proximity: geographic, temporal, cultural, linguistic, economic, political, or historical linkages. Similar terms include nearsourcing and nearshore outsourcing. 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.

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. Examples of nearshoring: American clients nearshoring to Mexico, Austrian clients nearshoring to Slovakia, 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. Nearshoring is the process by which an activity is transitioned from an onshore location to a geography which is closer than an offshore location. Typically, this would be a short flight away.

Softtek, a Mexican company which provides nearshore outsourcing to the US and the European Union has trademarked the term "Near Shore." Major nearshoring destinations for US businesses are Mexico, Central America and Canada, Western Europe, Ireland, Eastern Europe. Some other companies concentrate on serving independent software product development companies in the North America regions. Most organizations give preferences to nearsourcing over offshore outsourcing for a variety of reasons (both internal and external), including physical and time zone proximity, cultural affinity and other ones.

Sense of humor, the directness of communications have always been important cultural elements of successful interactions and a constant point of frustration when crossing cultural barriers. Being different from the start can easily create tremendous hurdles in a project. But proximity can be a potential access to the extended market. Besides a nearshoring company's staff can possess engineering and technical talent and you are much more eager to feel free talking over project pitfalls due to the similarity of school and university education in neighboring countries.