Nearshore vs. Offshore Outsourcing - How They Impact Your Business

You want your business to succeed and remain competitive without exhausting your resources. However, it’s not always easy to remain highly competitive when you conserve IT and customer support resources.

Organizations like yours are constantly looking for ways that allow for maximum profitability with limited use of resources, and outsourcing is one solution companies are turning to.

There are different types of business process outsourcing (BPO) with nearshore and offshore being the two commonly used models. These methods share some similarities, but there are also stark differences.

Nearshore vs. Offshore Outsourcing for Businesses

The term outsourcing gained prominence in the 1990s as a way to define the product of services in an outside country to lower a project’s financial and labor costs. It was originally associated with oil drilling and taxes. It was a viable way for companies to realize a larger profit margin.

The growing popularity of the internet and the business opportunities and problems it represents has pushed organizations to start looking at outsourcing for their customer service, IT, merchant processing, and accounting needs. It is frequently more cost-effective to have a specialized, external team work on your project.

What Is Nearshore Outsourcing?

If you use nearshore outsourcing for elements of your business process, you’re still sending the work to an outside team located in another country. However, nearshore denotes that the foreign country taking on your business process is located nearby. The similar time zones and cultural affinities make communication easy between the nearshore outsourcing provider and your business.

Pros of Nearshore

There are advantages to using nearshore outsourcing for your BPO. It frees up your company’s customer service, IT, or accounting departments so that your internal talent can focus on tasks that are crucial for operations and strategy. Outsourcing is also a cost-effective way to hire labor, sometimes costing as little as 1/3rd the hourly rate that an in-house employee would require. Since the time-zones are similar or the same, you don’t have to worry about communication problems.

Cons of Nearshore

Even though there are advantages to nearshore outsourcing, there are also a few downsides. While nearshore outsourcing is less expensive than keeping the project onshore, the cost can sometimes be higher than traditional offshoring.

What Is Offshore Outsourcing?

Offshore outsourcing is the act of contracting a distant foreign country to execute on elements of your business process. The offshoring model is like nearshoring in that certain elements of your operations are handled by an external team.

The primary difference is that the home country of your contracted offshoring provider is further away. Different time zones, native languages, and cultural norms can make communication between the company and the outsourcing team difficult. For some businesses, the cost savings are worth it despite the breakdown in communication.

Pros of Offshore

One of the main advantages of outsourcing call center and IT tasks offshore is the cost. Hourly labor rates are considerably lower than if you outsourced onshore or nearshore. However, price creep in jurisdictions like India and the Philippines has significantly eroded the price gap, making it less affordable to pursue an offshore model.

Cons of Offshore

There are a few disadvantages when you outsource projects offshore. One is the time difference. Offshore labor may have to work through the night to support daylight business hours in the US. It is often difficult to arrange meetings for updates with offshore agents without interrupting someone’s schedule.

Language barriers can also exist that result in project delays, higher customer attrition, or increased prices. If travel to meet the outside team is required, it can mitigate the savings your company planned when the project was initially outsourced.

Balancing Nearshoring vs. Offshoring BPO Options

When you’re trying to decide between one outsourcing option over another, consider the following factors:

  • Cost Savings – This is usually what leads people to consider outsourcing in the first place. Can an offshore or nearshore BPO company provide the required services at a lower price than you can internally?
  • Communication – Think about communication between you, your outsourced BPO provider, and your customers. Will your in-house talent have to schedule 2am meetings to interface with and offshore team, or can they talk during standard business hours? Are your outsourced agents native English speakers, or will there be communication barriers with your customers that may lead to attrition?
  • Retention – What is the turnover like at your BPO provider? Will your customers be sent to a random pool of high-turnover offshore agents, or will they interface with dedicated, full time nearshore agents that are highly-trained and enjoy careers with their employer?

AtPoint Provides US-quality BPO at Offshore Rates

When you’re ready to outsource one or more elements of your business process, finding the right team is critical to your success. Fortunately for you, the search is over. The qualified professionals at AtPoint can help.

AtPoint is a nearshore BPO company that uses a quality process to help our service professionals leverage the latest management techniques.  While our call centers are in Jamaica, we are headquartered in Houston, Texas.

Contact AtPoint today to learn how we can meet your customer service, statement production, tech support, accounting, and outbound marketing outsourcing needs.

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