by Sudeepa Nair

Created on: February 13, 2009   Last Updated: March 11, 2009

In recent times, near-shoring has risen as an alternative for outsourcing. Near-shoring refers to the sourcing of services from a contiguous or same continent as the country in which the outsourcer is situated. For example, in case of an organization situated somewhere in North America, a Latin American country like Argentina could be a viable near-shore option. As opposed to outsourcing, which refers to sourcing from low-cost countries from across the globe, near-shoring offers some advantages like similar time zones, cultural affinity, geographical proximity, ease of immigration and other legal issues. Let us dig deeper into some of these advantages of near-shoring.

1. Similar time zones: Working in similar time zones resolves several project management issues as will be vouched for by any organization that has had three different teams working on the same project but from three different time zones. At least one team has to sacrifice its night's sleep to finish off project activities or even to hold meaningful project discussions. Working late nights or early hours can take a toll on the physical wellbeing of employees in the long run, leading to decreased motivation and productivity. This can ultimately impact the attrition rate.

2.Cultural affinity:Belonging to neighbouring geographical regions can allow the client and the near-shore service provider to have similar cultural and historical roots. This goes a long way in building lasting client-provider relationship, arguably a good sign for the project on hand. When teams find it easy to communicate and share humor, an integral part of any workplace, employee morale receives a boost and so does the productivity. Cultural affinity serves the dual purpose of bringing the teams closer in an informal way and also forging a good working relationship.

3. Geographical proximity: If the service provider is just a short flight away, the client can easily have personal contact with the provider. This increases an understanding of client requirements and makes it easy to monitor, correct and even applaud the work of the provider. From the provider point of view, an occasional client visit raises the importance of the work being done. They can even pay a visit to the client's office to see in person how their methodologies and processes and being put to use by the client.

4. Ease of immigration and legal issues: Dealing with your neighbour, when it comes to immigration and legal issues, becomes much easier than dealing with a country which is half a globe away. This ultimately reduces project costs and has an impact on your bottom line.

Having had a look at the advantages, let us look at why anyone would not want to near-shore as opposed to outsource. The major reason could be cost - being closer to the client can take away the cost advantage; as countries in the same continent or region tend to have similar economic & social conditions, consequently, leading to similar wage patterns, living costs etc. The second reason could be that an openness to outsourcing gives an organization access to a wide variety, possibly a better quality, of talent. When an organization decides to near-shore, it restricts itself to a small sourcing market.

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