What is Nearshoring?
Okay, I’ll admit it. I thought I knew what “nearshoring” meant for the longest time until my friend tried to explain it to me. After our conversation, I broke down and actually did some research to find out where I was wrong about nearshoring.
So what is nearshoring? According to Dictionary.com, nearshoring is “the practice of moving one’s employees or business activities from a distant country back to a country that is nearby.” Nearshoring began in the 1990s when companies needed to outsource IT but wanted to maintain geographical closeness.
While nearshoring is typically a strategy to cut costs and simplify logistics, companies trying to strengthen relationships across borders also use nearshoring because it increases proximity and cultural similarities.
What’s the difference between nearshoring and offshoring? Offshoring typically refers to a company transferring work to a country that is not nearby while nearshoring is sending work to a country close in proximity.