Nearshoring is a type of outsourcing staff augmentation where companies offload their responsibilities and job and move their business operations to a lower landed-cost region as compared to their native country. The country for nearshoring is usually near your geographic location. This practice is very common nowadays, especially due to high labor costs and production expenses. Companies do have the option to outsource their production and labor tasks to other countries, but they opt for nearshoring because of the proximity (distance) and cost factors primarily. Offloading work responsibilities to neighboring countries helps companies fetch more flexibility and stability in everyday processes as compared to their native land. Most companies prefer nearshoring over offshoring and traditional outsourcing models because this strategy works in their favor and is on their radar.
Nearshoring has benefits that traditional outsourcing models and their types cannot provide. Ever since the inception of outsourcing, the practice of moving businesses to neighboring countries has become a hot topic. In a world engulfed with politically charged world trade, where every country is increasing taxes and tariffs on other countries, nearshoring seems like a sane choice. The land and manufacturing costs, labor expenses, and other liaison complications make work impossible in such turbulent times. Therefore, it is wise to shift operations to neighboring countries at a lower cost.
Benefits of Nearshoring
1. Lower Costs
Local sourcing is a great way of saving money over time as compared to traditional strategies. To demonstrate this with an example, let’s consider nearshoring practice for the clothing industry. Clothing through nearshore reduces supply chain costs tremendously because local manufacturers are generally placed near the brands. This proximity helps in collaboration which saves costs on shipping, transportation, and other logistics.
2. Better Environmental Impact
Environmental impact is greatly influenced by local sourcing. It impacts the environment positively. With nearshore manufacturing facilities, transportation, carbon footprinting, and logistics are less complicated. These factors tend to have a positive impact on the environment. Moreover, local manufacturers or neighboring resources operate on a smaller magnitude; therefore, they have a smaller environmental footprint than big multinationals.
3. Process Transparency
When a business outsources responsibilities to nearby facilities, it can maintain a close check and surveillance over its operations. Nearshoring promotes transparency throughout the manufacturing process. Residing nearby allows companies to find out where and how the activities are taking place. They can see under what conditions the operations are being carried out. Information regarding work, process, labor, working conditions, etc., is hard to obtain otherwise. Businesses can make sure through transparency of operations that their tasks are ethically carried out. Process transparency is higher in the case of nearshore practice because of close proximity rather than offshoring practices.
4. Supporting Neighboring Businesses
Nearshore practice allows businesses to be ethically more responsible and carry out CSR activities that support neighboring or regional economies and businesses. The companies are lifting other regional talent and businesses as well. Without even realizing it, a business may be supporting a smaller artisan, a cottage industry, or a small-scale manufacturer by handing over your tasks to them. They create job opportunities, expand the tax base, and support local/regional talent by nearshoring PoE practice.
5. Control and Surveillance
When you choose to outsource tasks to developing countries or far-flung areas, you let go of the charge and control. A business no longer remains in control of its production and manufacturing process. Delegating software development facilities to far away countries does not ensure you quality and performance of the apps. A business is not able to keep control and surveillance over the app development process as much as it likes and wants. Therefore, to maintain control over the activities and processes, local sourcing is the best practice.
Outsourcing tasks can be tricky and hard to manage, but with the involvement of practices like nearshoring, it has become easier to manage business processes. Nearshoring promises control, transparency, check, quality assurance, performance, cost-cutting, and greater environmental impact, that no other sourcing strategy enables. In comparison to other sourcing strategies, nearshoring works in favor of the parent company by ensuring all these benefits. Go for local staff augmentation implementation and diversify your operations with more control and talent options.