Nearshore Outsourcing: When Does It Make Sense?

Do any of the following scenarios sound familiar?

• You’re growing faster than you can manage and service levels are starting to decrease as a result.
• You’re outsourcing already to an onshore partner but need to scale faster (or more affordably).
• You need specialized help and your in-house team can’t meet all of your needs.
• Your call center needs are very seasonal, but you need to maintain quality even as you scale up and down throughout the year.

If so, nearshoring might be a good option for your team. Don’t see yourself in the above examples, but still considering nearshoring? We’ll break down the benefits, risks and biggest use cases of nearshoring in this article so you can easily determine if it’s the right fit for your organization.

Benefits of Nearshore Outsourcing

Nearshore outsourcing is a growing trend in CX, and for good reason—nearshoring comes with a host of benefits, and it avoids many of the drawbacks of other shoring options, such as offshoring or onshoring.

Here are four major benefits of nearshoring (especially compared to other outsourcing solutions):

1. Cost Savings. Nearshoring is much more affordable than hiring in-house, or even outsourcing domestically. Outsourcing saves a significant amount not only on acquisition and maintenance of your team—for example, costs related to recruiting, hiring, training and managing—but also on overhead costs, such as software, supplies, office space, benefits, and more.In addition, since the cost of living is much lower in many nearshoring locations, per-agent rates are more affordable than domestic solutions.
2. Proximity and Time Zone Compatibility. Consider the benefits of being located closer to your outsourcing partner:
   • easier travel for on-site visits
   • increased real-time collaboration time due to time zone overlap
   • more control over day-to-day operations
   • more closely aligned work schedules

   With offshoring solutions, your provider is likely to be located in India or the Philippines. With nearshoring, though, your provider is likely to be located in Mexico or Puerto Rico, offering much greater proximity.

3. Cultural and Linguistic Similarity. Due to the proximity of nearshoring call centers, the majority of nearshore agents have spent time living, studying or working in the US. As such, they have a higher level of both linguistic and cultural proficiency compared to offshore agents. This proficiency leads to higher quality communications, improved service levels and customer satisfaction, and a stronger connection between your brand and your customers.
   
   In addition, nearshore call centers are more likely to have multilingual agents who speak languages that are important to your US audience—for instance, Spanish or French. Onshore agents are less likely to be multilingual—or cost premium prices if they are—while offshore agents are likely to be multilingual, but in languages that are less common for a US audience.
4. Skilled Labor Force. Finally, unless you have legal restrictions, there’s no reason to limit yourself to a US-based workforce. Nearshoring provides access to a high-quality labor market that’s not subject to the ebbs and flows of the US labor market, allowing you to hire quickly and scale up and down as needed.

Risks of Nearshore Outsourcing

Of course, no outsourcing solution is without its unique risks and drawbacks. When considering a nearshoring partner, there’s four primary risk factors to look out for.

1. 1. Quality control and monitoring. While nearshoring offers a greater ability to monitor quality and be involved with day-to-day operations than offshoring, it can’t provide the same levels of quality control and day-to-day monitoring that you would find with an in-house team. For many organizations, this is welcome—they’re happy to pass off customer service and experience to a team of trusted experts to free up internal resources.
      
      

However, this does mean that you’ll need to partner with trusted support to ensure that quality is maintained. Look for nearshoring providers that offer standardized quality assurance practices, have proven results in hitting, maintaining or improving service levels, and have testimonials that back up their results.

1. Data security and privacy. Anytime you outsource something rather than keeping it in-house, data security and privacy are a risk. Given the increased risks of cybersecurity attacks, any partner to your business should have the highest level of security to manage and protect consumer information and data. As such, nearshoring—or any outsourcing—providers should have, at minimum, PCI compliance. Additional certifications provide enhanced security, as does a great track record.
   
   
2. Legal and regulatory compliance. For industries that require it, ensuring that any outsourcing partner is compliant with US laws and regulations (i.e. offering HIPAA compliance, etc.) is a must. However, ensuring that your providers are maintaining compliance can be a risk. In many cases, nearshore providers are more likely to offer secure compliance, as they’re closer to the US and more familiar with the US legal system.
   
   
3. Infrastructure and technology limitations. Some nearshore (or offshore) locations may not use the most up-to-date technology, or may lack crucial infrastructure necessary to provide you with world-class customer experience and support. This isn’t true of every nearshoring provider, but it is a risk when it comes to outsourcing. As such, ensure you understand what your potential partner has and doesn’t have in their tech stack, and how their technological solutions will impact your potential growth in the future.Keep in mind as well that a lack of modern software or technological solutions can be a red flag pointing to a lack of innovation, or a sign that this provider might not be able to grow with you and adapt to market changes.