How to Choose Between Nearshore and Offshore Staffing

While each staffing strategy is intended to provide companies or projects with the best employee at the right time, each niche and need necessitates a unique framework for determining the best solution.

The concept of an offshore worker dates back to the early days of globalization when manufacturers sought to relocate factories outside of the United States in order to reduce overhead, provide more affordable wages, and increase profit. When it comes to making things like cars, worker location isn’t as important because the offshore workers don’t need to interact with the home team.

In the technology industry, for example, offshore workers frequently receive the same information technology and software development tasks as in-house U.S. teams. Companies that want to implement talent augmentation strategies, on the other hand, may face new challenges. While “going offshore” can provide access to a growing talent pool and significant cost savings, it frequently causes noticeable difficulties when the offshore team and the in-house team are required to integrate and work as one company.

Here comes nearshore staffing. When offshore first emerged, it sought to address a single central issue: how to run a business with less overhead. Companies were not driven offshore due to a lack of local talent—but that is now the driving issue. It is estimated that there will soon be a shortage of 1.4 million software developers in the United States alone, but only 400,000 local software developer graduates for those roles. The nearshore strategy focuses on filling positions that could be filled by local workers but are difficult to find.

Nearshore, like offshore, seeks to supplement a company’s workforce with foreign-born employees. However, unlike offshore, nearshore aims to accomplish this with teammates from neighboring countries in North and South America—hence the term “near” shores. Nearshore was born strategically as a result of the changing nature of the work that augmented staff members are asked to do. As company integration became the norm, teammates with similar work perspectives, home cultures, time zones, and linguistic familiarity became more appealing.

These straightforward metrics provide useful guidelines for businesses considering nearshore augmentation.

Time

Will your augmented teammates collaborate with your in-house team? If your company requires live collaboration, nearshore—where teammates share at least a 3-5 hour work overlap per day—may be the best option. Offshore may be preferable if no overlap is required and a “night shift/day shift” working structure is ideal. Time zones can make nearshore or offshore teammates feel like cohesive “members” of your company rather than a seemingly invisible contractor. When making your decision, consider the impact you want this teammate to have and how visible you want them to be on your team.

Communication

Assume that your remote and local teams must interact on a continuous, collaborative, or iterative basis. In that case, communication will be crucial in determining which strategy to employ. Language, working style, and collaboration technology tools such as Slack can all be used to communicate. Nearshore teams typically share educational models with US teams and have a linguistic connection to North American teams. Offshore teams, on the other hand, have varying home cultures and educational standards. When deciding on a strategy, it is worthwhile to investigate the specifics of your needs as well as the standards of the target talent.

Price

Last but not least, the cost of bolstering staff with one of these strategies. One significant advantage of nearshore teams over offshore teams is the lower cost per employee. However, depending on where you hire, this difference can be significant. Prices per hour for an offshore teammate, for example, can be quite low in less developed South Asian countries such as Pakistan or Bangladesh.

In India, for example, where the market is more competitive, this average rises. However, the average cost of workers for nearshore teams can rise depending on the skill level of the workers, as this region has a significant number of high-skill workers. Either option significantly reduces spending because many nearshore firms provide benefits and retirement plans so you don’t have to. Hiring offshore and nearshore can result in significant cost savings, but each has a cost-benefit balance.

Overall, great talent is distributed globally, and seeking out and hiring talent anywhere is a strategic advantage for any firm looking for the best and brightest. The question of ‘where’ to find talent becomes less important than the question of ‘how’ to integrate into your organization. It is a critical decision that businesses must approach with caution because it will have a significant impact on your company, its performance, and your bottom line. Because, at the end of the day, this talent represents your organization.