Nearshoring is a business technique that is gaining popularity as organizations attempt to cut labor expenses and boost productivity. But what precisely is nearshoring? And what are the benefits? In a summary, this blog post will cover the definition, advantages, and best practices of nearshoring.

What is nearshoring and how does it operate?

The practice of "nearshoring" involves moving specific business operations, like customer support or IT support, to a nearby nation. It is possible to accomplish this for a variety of reasons, including cost reductions (essential not just in the wake of the COVID-19 Pandemic), increased quality and efficiency, greater software supply chain resilience, and accessibility to more qualified IT employees. Nearshoring is typically carried out in cooperation with a third-party service provider who can oversee the procedure on your behalf.

Benefits of nearshoring

There are many benefits to nearshoring, including:

#1 Cost savings

By outsourcing to a nearby country, companies can often save up to 50% on costs compared to offshoring. This is because the cost of doing business in nearby countries is often much lower than in more expensive countries. In terms of e-commerce, we would be talking about shipping costs or supply chains in more detail – with software, it’s more about skilled labor in better hourly rates as a sustainable business model. 

#2 Quality and efficiency

Nearshoring enables companies to have better control over quality and efficiency of business processes, as they are working with a service provider who is located close by. This can be especially important for customer service or IT support functions, which need to be quick and responsive.

#3 Access to a larger talent pool

Another benefit of nearshoring is access to a larger talent pool. By locating your business activities with a software development company in a nearshoring location, you can tap into the local workforce, which often has more skills and experience than the offshore workforce. You don’t need to be limited to in house employees or high development costs any longer. 

#4 Faster turnaround times

Another advantage of nearshoring is faster turnaround times. Because the service provider is located close by, they can respond more quickly to requests and problems. This can be especially important for businesses that need to move rapidly in a competitive market.

#5 Smooth communication

Nearshoring also facilitates smoother communication, as there is less of a language barrier. This can be important for businesses that need to maintain close contact with their service providers. Since it is usually outsourced to neighbouring countries, nearshoring is also less risky than offshoring.

#6 Improved efficiency

Finally, nearshoring can improve efficiency by removing the need for long-distance travel and by allowing companies to work with local service providers. Also, if any problems arise, companies can quickly address them even via in person communication as the service provider is located nearby.


Best practices for nearshoring

There are a few best practices to keep in mind when nearshoring:

#1 Prepare in advance

Planning ahead and doing research are essential when thinking about nearshoring. Choose a service provider who can satisfy your needs after making sure you are aware of the cost savings and advantages of nearshoring. Additionally, make sure you have a detailed plan for moving and managing the business processes.

#2 Communicate often

Make sure to communicate with your service provider often, to ensure that all expectations are clear and that there is no miscommunication. This will help to avoid any problems down the road. Make sure you have a good communications strategy in place, and that everyone involved (including employees, service providers and customers) is aware of the changes. This will help ensure a smooth collaboration.

#3 Keep an eye on quality

It is important to keep an eye on quality, and to make sure that your service provider is meeting your expectations. If not, you may need to consider switching providers.

#4 Check references

When choosing a service provider, it is important to check their references and make sure that they have a good track record. This will help to ensure that you are getting the best possible service. If a particular nearshoring service provider does not have any references, you may want to consider a different provider.

#5 Make sure the service provider is located close by

It is important to make sure that the service provider you choose is located close by, so that communication and turnaround times are as smooth as possible. Also, it is helpful to have a local service provider in case any problems arise.

#6 Create the appropriate contract

A precise, succinct contract must be in place before dealing with a software service provider. This will make it easier to make sure that everyone is informed of their duties and expectations. Additionally, if a dispute arises, having a contract in place gives you recourse.

#7 Keep an eye on costs

It is important to keep an eye on costs, and ensure that the service provider you choose is within your budget. You may need to renegotiate your trade agreement or travel costs (if needed) if costs start to creep up.

Nearshoring can be a great way for companies to reduce their overhead costs, while still maintaining quality and efficiency. By following the best practices listed above, you can ensure that your nearshoring experience with business activities is a positive one.

How to get started with nearshoring

If you are interested in working with a nearshoring development team, there are a few things you can do to get started:

#1 Do your research

Before making any decisions, it is important to do your research and understand the cost savings and benefits of nearshoring. This will help you to make an informed decision about whether this option is right for your business.

#2 Choose a nearshoring service provider

Once you have decided that nearshoring is right for you, it is important to choose a service provider who can meet your needs. Make sure to do your research and compare different providers before making a decision.

#3 Establish clear expectations

It is important to establish clear expectations with your service provider, so that both parties are aware of their responsibilities and expectations. This will help to ensure a smooth working relationship and no hidden costs. 

#4 Be aware of scope creep

Scope creep can be a common issue in nearshoring relationships. Make sure to keep an eye on project timelines and budget, so that you do not exceed your original scope.

#5 Find the best communication channels

The best way to ensure a smooth working relationship with your service provider is to find the right communication channels. Make sure to communicate regularly and clearly, so that any issues can be resolved quickly and efficiently.