Common Misconceptions about Nearshoring/Offshoring

Nearshoring and offshoring have become widespread practices for companies seeking to scale effectively with global talent. But, while these two approaches have gained popularity in recent years, several misconceptions are still associated with them. Before we dive into them, let’s define nearshoring and offshoring.

What is Nearshoring?

Nearshoring refers to relocating some of a company's business operations to a nearby country, allowing them to access lower labor costs and operating costs while maintaining high quality, proximity, and cultural similarities.

What is Offshoring?

On the other hand, offshoring refers to relocating some of a company's business operations to countries like the Philippines or India, which are further away. Like nearshoring, companies can access lower labor costs and quality and provide their customers with around-the-clock support.  

5 Common misconceptions about nearshoring and offshoring

1. The only perk is cost savings

While cost savings is one of the primary reasons companies engage in these practices, it is not the only reason. Nearshoring and offshoring also enable companies to:

• Access global talent with specialized skill sets  
• Improve efficiency  
• Increase productivity
• Reduce the time to market
• Focus on core business tasks
• Seamless scalability

As Robert Cadena, CEO and Co-founder of Lean Solutions Group, said during an interview with South Florida’s Business RadioX

‍“Nearshoring and offshoring is not only about cost savings, but also about the quality of the employee that is going to be doing those specific tasks, how much better they get as time goes by, and what other positions you can fill as you scale your business.”

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2. Communication barriers

One of the biggest concerns is communication. However, many companies have overcome this challenge by using video conferencing via Google Meets, Zoom, Teams, chat applications, and project management software to facilitate effective communication with their external partners. ‍

3. Intellectual property theft

Many companies fear that their external partners may steal their intellectual property. However, reputable companies have strict policies and measures to protect their client's confidential information and intellectual property.

4. Nearshoring/offshoring always means a loss of business control

While outsourcing can sometimes result in companies relinquishing some control over their business processes, it also allows them to focus on their core competencies and strategic goals.  

At Lean Solutions Group, we have created a co-managed business model allowing you to control your employees and use your client portal to have a complete overview of their performance. We have designated employees that become your POCs and whom you can speak freely with and make decisions.

5. Offshoring means a loss of quality

Quality depends on a wide range of factors, including the skills and expertise of the outsourcing provider, the infrastructure quality, and the processes and systems used to manage the relationship. Most of these companies have stringent quality control measures in place and employ highly skilled professionals who can deliver high-quality work.  

Nearshoring and offshoring are effective strategies to reduce costs, increase competitiveness, and improve efficiency. These practices can be highly beneficial if approached with a strategic and informed mindset.  

It's essential for companies to consider their outsourcing strategies carefully and to work closely with their outsourcing providers. Working with companies with workforce optimization experience will ensure you obtain your desired outcomes.  

Want to start optimizing your workforce with Lean Solutions Group? Let's get started today. Contact us.

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