Outsourcing, Offshoring, Nearshoring: Are They The Same?
In the business world, outsourcing has been the buzzword since its emergence in the late 1980s up to this date. It became widely used by many marketers, especially start-up entrepreneurs, because of its many benefits. Cost-effectiveness is the top reason why many business people were enticed to apply outsourcing for their e-commerce. Through outsourcing, they can start a business at a limited budget.
Outsourcing is a business strategy where companies send out some of their non-core but essential tasks to the more capable outsourcing firm, have resources, and have people who are experts to do the tasks. Outsourcing customer service is one of the business aspects that is usually outsourced by many companies. Since online customer service is not the central aspect of the business but is essential to keep and attract more customers, they should keep customer support through outsourcing.
Outsourcing customer service became more significant during the pandemic. Due to the fear of the virus, restrictions, and lockdowns, online customer support became more relevant. And due to the pandemic, the world economy was paralyzed because 90% of the businesses were critically affected. Some decided to downsize employees. Some have chosen to close either temporarily and permanently. But with the help of outsourcing, many are still able to survive and continue.
Two similar business strategies are interrelated to outsourcing: offshoring and nearshoring. Some people misinterpreted that these three words are similar. Although their main functions are the same (sending out business processes to external providers), each of them has its objectives.
Outsourcing is defined as a business process where companies transfer some business tasks to external providers rather than doing them in-house. This strategy became in demand when they discovered how big they could save in outsourcing customer service. All company sizes can take advantage of outsourcing to achieve the cost-effectiveness and flexibility it offers. They can also get the service of excellent workers from different countries. And through 24/7 outsourcing customer support, companies can serve their customers all over the world even if they are already close in their regions. Excellent customer service is essential to boost sales and keep customers’ loyalty.
Outsourcing in the Philippines is a perfect example. There is an increasing number of companies across the globe that choose to outsource their customer service in this country.
Offshoring, like outsourcing, is the process of transferring business processes to foreign countries. Similar to outsourcing, its main goal is to cut labor and operational expenses. International clients get the service of offshore companies because their country environments allow them to manufacture products economically or provide the required service at a lower cost. Offshoring allows your business to operate 24/7. Outsourcing customer service in the Philippines is an example of offshoring. US-based companies can still provide assistance to their customers from different time zones.
Nearshoring is a process where companies transfer their services to their neighboring countries. Both companies could benefit from one or more of the following dimensions of proximity, such as geographic locations, time zones, culture, language, and economy. Nearshoring is the opposite of offshoring.
Australian companies transferring some business processes in the Philippines is an example of nearshoring. Both countries have only three hours of the time difference, and they both speak English fluently.
Outsourcing, offshoring, and nearshoring have the sole purpose. That is, to help companies run their businesses smoothly and achieve flexibility and success.
