Comparing nearshoring vs. onshoring business process outsourcing is a critical step when deciding on BPO solutions for your business. While many factors can influence the success of your chosen BPO partner, the location of their services can have a significant impact on your outcomes.
Because different geographical locations are associated with different operating costs, access to resources, and professional strengths, it’s critical to consider your business priorities when selecting a solution. By exploring the basics of both offshore and onshore BPO strategies, you can ensure your outsourcing efforts fully align with your organizational goals.
Understanding Onshoring and Nearshoring
Nearshoring and onshoring are two common outsourcing models that operate in different geographical areas. Both models have evolved over time to lean into distinct strengths and serve businesses with different strategic goals.
Definitions and Distinctions
Onshoring refers to outsourcing business operations to a local third-party provider that’s stationed within the same country as your business. That means if your business operates in the United States, onshoring would involve outsourcing to a BPO provider that’s also located in the United States. Typically, companies will onshore services to improve efficiency and scale their operations while limiting logistics and communication challenges.
So, what is nearshoring and how does it work? This model involves outsourcing to a provider in a nearby, neighboring country. For example, United States businesses often nearshore certain operations to Mexico. Businesses will often choose nearshore solutions as a cost-saving measure that doesn’t sacrifice quality and access to skilled labor.
Historical Context and Evolution
Initially, many companies used outsourcing to find the cheapest possible way to run their business operations. As a result, they had to make strategic decisions when comparing outsourcing to offshore companies in distant countries that had the lowest available labor costs. However, offshoring comes with a bevy of logistical challenges, including time zone differences, disruptive language barriers, a lack of cultural congruence, long lead times, and a lack of direct oversight.
Because of these difficulties, companies began exploring local solutions. Many businesses considered onshore providers who could offer a higher standard of service. However, these services often come with a high sticker price due to labor costs in the United States, which can defeat the cost-saving element of outsourcing for many businesses.
Nearshore solutions emerged as a balanced resolution that maintained affordability while also eliminating issues related to time zone differences and cultural and language barriers.
Benefits of Onshoring and Nearshoring
Businesses trying to save time and money have studied the differences between onshore BPO, nearshore BPO and offshore BPO and have successfully leveraged these models to scale and streamline their operations. However, they focus on different strengths, so it’s important to select the option with benefits that directly support your company’s strategic goals.
Economic Advantages
Onshoring is the more expensive option due to higher labor and infrastructure costs. However, it does have other economic benefits. Working with a local partner often involves fewer logistical challenges, so costs will often be more stable and predictable.
Nearshore providers also have an in-depth understanding of local regulations and compliance expectations, plus lower labor costs to provide major cost savings while still maintaining a high standard of quality.
Offshoring is typically the cheapest option for companies whose sole motive is to provide 24-hour service at the lowest possible cost.
Improved Communication and Coordination
Many companies assume that onshoring is the only option if they want top-tier communication, but that’s just one of the many myths about nearshoring. Communication is one of the main draws of using a local onshore solution, however nearshore providers require their agents to have high levels of English proficiency and fluency. Many nearshore agents grew up speaking English and even living in the U.S., so they share cultural similarities that make communication easily.
Additionally, you can find nearshoring options within your time zone, eliminating issues with lead times.
Because neighboring countries have shared time zones, cultural standards, languages, and talent pools, they can provide a similar level of service as onshore providers at a much lower cost.
Enhanced Quality Control
Nearshoring and offshoring both have high levels of quality control. The close local proximity of onshore options makes it easy to have strong operational oversight and ensure consistent performance.
Nearshore providers are also highly accessible for alignment meetings and quality assurance reviews. Their quality assurance protocols are comparable to onshore options without the domestic price tag.
Unlocking Long-Term Value Through Nearshoring
The outsourcing solution you choose can have a significant impact on your long-term business growth. Your provider will impact your ability to scale, uphold brand standards, and improve operational efficiency to increase your margins. Because nearshoring has many of the benefits of onshore outsourcing along with some of the advantages of offshore solutions, it has become the gold standard of long-term outsourcing solutions.
Balancing Cost, Talent, and Operational Agility
If you’re looking to achieve a balance of quality and cost-effectiveness, nearshore BPO may be the right outsourcing solution for your long-term goals. Nearshoring gives companies access to white-glove service without unnecessarily inflating their operational costs.
You can tap into impressive, skilled talent pools that speak the same language as your customers and understand local standards of professionalism and communication. You can still enjoy the enhanced efficiency, cost-effectiveness, and operational benefits of outsourcing to a country with lower labor and infrastructure costs.
Positioning Your Business for Future-Proof Growth
In many ways, nearshore outsourcing beats onshore solutions when it comes to long-term success. With nearshoring, you can set yourself up to scale successfully in the future without exceeding your budget or impacting your quality standards. You’ll be able to maintain tight control over your quality standards without being limited by the availability of local talent or the current state of labor costs in your area.
Explore How Nearshoring Can Redefine Your BPO Strategy
Both nearshore and onshore outsourcing options can help businesses scale, streamline their operations, and improve performance standards. However, only nearshoring provides these benefits at a lower cost while also offering the extra advantage of an international talent pool. By choosing a nearshore solution, you can strike the right balance of quality and affordability that effortlessly enables your long-term growth.
ConfieBPO’s nearshore call center and business process outsourcing solutions are designed to provide the highest quality at affordable prices. To start your nearshoring journey today, submit an inquiry online or give us a call at 800-684-2276.
