Nearshoring is a type of outsourcing, the main difference is that the external company is located close to you, but still in another country. Among the benefits of nearshoring are solving the time zone issue and helping to identify problems quicker.
What Is Nearshoring? How Is It Different From Offshoring?
Nearshoring refers to the relocation of business operations (usually production) in a neighboring country. An organization moves its operations to nearby countries from a country that is further away.
Geographic proximity is important to reduce costs, and language barriers, as well as increase productivity in supply chains, customer services and other nearshoring benefits.
Nearshoring serves as an alternative to both: reshoring, which involves transitioning from international to domestic operations; and offshoring, which entails outsourcing operations to distant countries.
Offshoring specifically denotes the relocation of a company’s operations to a distant location, whereas nearshoring pertains to relocating operations to a neighboring country within the same region. In contrast, outsourcing refers to the practice of businesses contracting work to a third-party provider, who may be located either domestically or internationally.
Alignment of time zones
The primary advantage of nearshoring is collaborating with a nearshore partner due to the alignment of time zones. Nearshore outsourcing facilitates collaboration with individuals who likely share a similar time zone as your company’s headquarters. Even if there is a slight time difference, it is usually insignificant enough not to disrupt your regular operations.
Meetings can be scheduled at mutually convenient times, which is often challenging with the significant time differences associated with offshoring outsourcing. For example, the time zone differences between the United States and Latin American countries are minimal.
Offshoring may pose more challenges due to the substantial time zone difference. However, it could be beneficial if your business operations require 24/7 coverage for their processes.
Operating across different time zones allows for round-the-clock operations and service provision, regardless of standard working hours. Outsourcing models work very well if your priority is not regular business processes.
Work Culture
When a company comes to hiring talent, work culture plays a vital role. It often prioritizes candidates whose values resonate with their own, ensuring a smooth integration into their team. For this reason, cultural proximity between countries is a key factor, with closer nations often sharing more similarities.
Conversely, offshoring can pose challenges if the worker’s cultural background diverges significantly. However, regardless of the outsourcing model, cultural fit issues may arise.
Opting for nearshore outsourcing facilitates the formation of cohesive remote teams, minimizing cultural barriers and enhancing collaboration.
Language skills
When you look for partners in other countries, you look for skilled workers. When considering outsourcing options, one crucial factor to assess is the language proficiency of potential candidates. Hiring these workers is more cost effective, as it reduces other labor costs such as training or translators.
By leveraging the talents of nearby regions, companies can access cost saving solutions without compromising quality or communication effectiveness. With the availability of skilled workers proficient in English, another of the benefits of nearshoring is that it becomes a strategic choice for organizations seeking to optimize their operations.
Travel
Today’s technology means that people do not have to meet physically for a company to function. This is not only evident in the administrative realm; it can also be applied in the logistics sector.
For instance, at EP Logistics, we offer services such as packaging, storage, and transportation of goods for your company. You no longer need to travel from one country to another to oversee all the processes.
However, in case you need to interact face-to-face with some remote workers, nearshoring is advantageous as it reduces travel cost. Hence, as a US company, it is beneficial to have allies in nearby countries and to take advantage of Mexico’s nearshoring wave.
Top Advantages Of Nearshoring
There are several benefits of nearshoring that you can leverage with a 3PL through the services that we offer at EP Logistics. For example, best cost-benefit ratio, increased nearshoring supply chain and reduced environmental impacts.
Best cost-benefit ratio
Having a 3PL helps you meet the transportation and warehousing needs you may have in a nearshoring model. EP Logistics offers warehousing, logistics, and transportation services by land, air, and sea. The experience we provide, along with our trained staff and technology, will enable a better cost-benefit ratio in each of your operations.
The proximity of the countries and the similar schedule are elements that are part of the benefits of nearshoring and allow us to offer quality services at a lower cost.
Better Control
Another benefit of nearshoring is having a similar culture that allows for mutual understanding. This helps to better understand the motivations of the employees and how to communicate.
In addition, you can hire the services we offer at EP Logistics to better control all logistical processes, customs brokerage services and maintain the best quality in your operations.
Reduce transportation costs and environmental impact
The greater the distance between two countries, the greater the environmental impact of transporting the necessary products or inputs.
One of the benefits of nearshoring is the proximity between countries, which helps to make the company greener and reduce its carbon footprint.
At EP Logistics, we use our technology to find the most efficient transportation routes to reduce your company’s delivery times, costs, and environmental impact.
Access to new talent
As a company expands its borders, one of the primary benefits of nearshoring that comes first is access to people with talents that are not easily found in your home country.
This may be due to socio-cultural context, education received, or other factors that may not exist in your country. In addition, foreign people can greatly enhance your understanding of new markets and provide insights that can help improve your entire team.
The benefits of nearshoring are related to the time zones of the allied countries, geographic and cultural proximity, and the reduction of economical, time and environmental costs.
Get a quote from EP Logistics for our logistics, warehousing, transportation services, and everything your company needs.
FAQ´s
How To Approach Nearshoring for Success?
To be successful with nearshoring, it’s important to have a 3PL that can advise you on legal issues, understands cross-border transportation, and effectively manages warehouse legal conditions.
