With nearshoring being a more attractive option to many businesses around the world, it makes sense that offshoring is slowly becoming a thing of the past. It’s not just the positives of nearshoring that make it a superior alternative, though, as offshoring has started to show more signs of unreliability in recent years.

In this article, we take a look at the key differences between the two forms of outsourcing, while also discussing the advantages of nearshoring and the challenges of offshoring!

Key Differences Between Nearshoring and Offshoring

From an operational perspective, there are two direct comparisons that make nearshoring a more attractive option than offshoring.

1. Communication and Time Zone Alignment

With offshoring, there’s a high probability that the vendor is in a different time zone than the business itself. If the time difference is more than a few hours, this can pose serious communication problems, meaning that messages and replies are often delayed by a full business day.

Adversely, with nearshoring, both parties are likely to be working at the same time, meaning replies can be much faster. This can help to save time and overcome the painfully slow communications that often arise when outsourcing a project.

2. Proximity and Collaboration

In some projects, physical collaboration may also be required. This can involve the vendor going to the location of the main company, or vice-versa, with there also being an opportunity to meet in the middle. All three of these scenarios can be costly and time-consuming with standard outsourcing, particularly if the two parties are on opposite sides of the world.

Nearshoring allows the company and the vendor to meet conveniently, with shorter travel methods being available at prices that won’t break the bank.

Advantages of Nearshoring

Of course, there are also plenty of advantages to nearshoring that make it more popular in recent history, with two of the most prevalent examples being:

Reduced Supply Chain Risks

The concept of nearshoring allows businesses that produce physical items to reduce the risk associated with their supply chain. This is achieved in various ways, such as:

  • More control over the supply chain.
  • Faster transportation of raw materials and finished products.
  • Increased visibility into daily operations.
  • Greater quality control checks.

Increased Effectiveness

Using similar parameters to the ones mentioned above, companies can also increase their productivity. This is true for businesses offering a service, too, with communication being streamlined between the vendor and the main company. This allows projects to have a shorter turnaround, increasing workload, effectiveness, and profits as a result.

Challenges of Offshoring

Finally, fresh challenges have hit offshoring methods, which was the final straw for many businesses. The two most notable challenges right now are:

Rising Labour Costs in Offshore Markets

It’s no secret that the price point was the main attraction to offshoring. Nowadays, there are more and more businesses looking for workers in skilled sectors, such as Cybersecurity, with there simply not being enough remote employees to cater for demand.

This has led to prices gradually increasing, to the point where they are virtually identical to nearshoring alternatives. If businesses are paying a similar price, why wouldn’t they want to benefit from the advantages of nearshoring?

Geopolitical Instability

Offshoring to specific countries around the world can also come with huge geopolitical instability. Here are a few examples of potentially damaging factors that stem from this instability:

  • Financial losses due to changing laws in different jurisdictions.
  • Compromised security due to certain protocols not being followed correctly.
  • Increased costs due to political influence.
  • Disrupted supply change due to tension between regions.

Conclusion

In conclusion, many companies are now opting for nearshoring, as opposed to offshoring, due to the increased quality, reliability, and transparency. The principal appeal of offshoring was always the price point and in recent times, the two outsourcing methods have become very close in terms of costs. For many businesses, this has been the determining factor for making the switch.

Here at BOST, we can help take your company to the next level with nearshoring in Macedonia. Get in touch with us today for a free quote or to simply discuss how we can help you move forward!