A few days back it was off-shore outsourcing that was making
waves and now it is near-shore outsourcing. Not a very new phenomena except for term; near-shoring involves shifting work to people in neighboring countries rather than to distant off-shore locations. Discussed in this article is new trend of near-shore outsourcing and its future implications.
The near-shore outsourcing trend
To a large extend outsourcing meant shifting of back-end operations to cheaper off-shore destinations like India, Philippines and China. But trend seems to be changing swiftly. Businesses today look more concerned about security and stability rather than mere cost savings and this is why most of them are adapting to new wave of near-shore outsourcing. Proximity for travel, cultural affinity and developing infrastructure are a few other reasons for near-shoring getting boost. Relatively lesser known outsourcing destinations like Mexico, Canada, Costa Rica, Romania, Slovakia and Chez republic have chances of emerging as major winners of this new trend in years to come. Discussed below are major factors that may be responsible creating this twist in tale.
Major factors in aid of near-shore outsourcing
1.) Cultural Link
The cultural link factor is a major plus in aid of near-shore outsourcing. Countries located in near-by locations are likely to have a similar cultural background than off-shore countries and many businesses today find this to be an important factor. Most are of opinion that having a close cultural link helps in reducing common problems and conflicts that can arise when teams having differing cultural backgrounds work together.
2.) Proximity and time zones
Proximity is another big factor that favors near-shoring. Business travel to neighboring courtiers is much cheaper, quicker and can even eliminate need for procuring visas or other documentations. Proximity also means better and cheaper communications, faster work and better understanding. In addition as compared to off-shore destinations time zone in near-shore countries will almost be same which aids in work coordination.
3.) Increasing costs in other off-shore destinations
Cost cutting was major driving factor behind off-shore outsourcing. But most firms today feel that cost of operation in off-shore destinations like India and China is rising. This includes cost of communication, infrastructure and quality control among others. The per-head employee cost ratio in off-shore and in some near-shore destinations also do not differ significantly. These factors will surely aid near-shoring and help it gain more impetus.
4.) Declining resources
India which currently occupies number one position as an outsourcing destination is experiencing a decline in its pool of educated and capable employees. Many companies feel that securing quality labor will be a problem in these countries in times to come if not at present. This factor though not seen as significant, can play a major role in boosting near-shore outsourcing in future if other probable destinations like China and Philippines are not able to come up with efficient labor solutions.
