A more recent trend in the field of business process outsourcing (BPO) is the concept of near shoring, setting up an outsource destination closer to home. For the US, these destinations would be Canada, Mexico and select Central and South American countries rather than more traditional offshore locales such as India and the Philippines.
One of the primary factors that led to an increase in near shoring is the year-to-year wage increases occurring within India, especially among IT outsourcing. Other key factors included:
Working with outsource staff in a similar time zone. (No more 2am staff meetings).
Due to similar time zone – Staff was more accessible for critical issues and decisions.
Near shore offered advantages for multi-lingual support as well as disaster recovery.
The trend toward near shoring should continue for the foreseeable future. However, certain countries are still not as proficient as India and other more established offshore providers due to lack of experience. Also, the infrastructure in a number of countries is still suspect but improving. In recent years, sourcing management executives have reported an ‘offshore fatigue.’ At the same time, a fascination with near shore alternatives has developed further fueling the trend.
Ultimately, the increased competition will create a wider breadth of service options for outsourcing and services should improve.As near shore destinations gain in maturity, the near shore market should continue to grow. Near shoring will not replace offshoring any time soon. However, it has become and will continue to be an integral part of the sourcing mix.