Business process outsourcing (BPO) is a business practice in which a company hires an outside service provider to perform a critical business function or task. Since 2012, global outsourcing revenue has been on an uncertain path. Revenue peaked at $104.6 billion in 2014 before falling to $88.9 billion the following year. According to outsourcing statistics, the trend of rising and falling revenues has continued, and as a result of COVID-19, these figures have yet to stabilize.

On the other hand, nearshore outsourcing is when a client organization outsources one or more of its operations, processes, or services to another country, usually on the same continent and in a similar time zone. For instance, nearshoring in the Dominican Republic has several advantages, including having similar time zones to North America and Europe, access to a multilingual workforce, and a strong cultural affinity with North America. Not to mention, it streamlines your supply chain and saves you money.

 

#1: Nearshoring and Offshoring Offers Different Time Zone Coverage

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Nearshoring operates in time zones that are similar to those of North America and Europe, whereas offshoring operates in time zones that are not covered by both countries’ domestic operations. 

The Dominican Republic has a similar time zone to North America and Europe, which is an initial benefit of nearshore outsourcing. Working across time zones can be challenging, particularly when trying out new ideas or working on large projects. Nearshoring solves this problem by putting your outsourced employees in the same time zone as your main office. This allows for in-person meetings and trips while also facilitating digital collaboration. As a result, working between agents and clients will be easier.

Firms can cover time zones not covered by their domestic operations by using external providers, such as hiring an offshore team in the Philippines. For starters, companies that place a high value on customer service can provide 24-hour service by having employees work on different schedules. Second, BPO employees working around the clock ensure that someone is available in the event of an issue or a crisis. Third, your local team can hand off unfinished tasks to your Philippine staff, allowing for continuous work on a project until it is completed.

 

#2: Nearshoring and Offshoring Are Both Cost-Effective

Both nearshoring and offshoring are cost-effective. The former is cost-efficient because it means your company’s supply chain is shorter. Meanwhile, due to the wage disparity between Western countries and offshore destinations such as the Philippines, offshoring services are less expensive than nearshoring solutions.

Although Latin America is not as cheap as other South-East Asian BPOs, it still outperforms the United States in terms of service costs. Closer proximity to the service provider means lower travel costs and a shorter time to market. More importantly, because nearshoring operations are in the same or similar time zones, employees do not need to work overtime or at night, which can save money compared to outsourcing.

Furthermore, nearshoring in the Dominican Republic reduces your company’s supply chain. Manufacturing costs will be lower, lead times will be shorter, transportation costs will be lower, and you’ll have more flexibility during volatile periods. You will also benefit from more consistent, faster, and less expensive delivery.

 

Apart from the pay, offshoring countries offer significantly less compensation and benefits than the United States. Employers can save money on Medicare taxes, Social Security benefits, health insurance, workers’ compensation, and other costs associated with US-based employees. Utilities, infrastructure, and materials are all cheaper in developing countries like the Philippines, making them more cost-effective for labor-intensive industries like manufacturing and call centers.

 

#3: Nearshoring and Offshoring Provides Knowledge & Expertise

 

Nearshoring and offshoring give businesses access to knowledge and expertise.

Nearshoring to the Dominican Republic gives you access to a multilingual, highly skilled workforce. The languages spoken by agents are Spanish, French, English, Portuguese, and Italian. The country is the only place on the planet with this combination of linguistic skills. This particular aspect benefits US markets due to the large Spanish population in the nation.

Offshoring allows companies to access knowledge pools they might not otherwise have access to. Business owners can focus on their core competencies and businesses by outsourcing. Because they can hire at a lower cost, they can afford to hire people with higher qualifications than onshore employees.

 

#4: Nearshoring and Offshoring Avoid Potential Cultural Barriers at Work

Despite availing services from other countries, nearshoring in the Dominican Republic and offshoring in the Philippines help you avoid potential cultural barriers in the workplace.

Dominicans have strong cultural and economic ties to the United States. Cultural compatibility is critical for effective collaboration and problem-solving. Latin America is also more familiar with the language and lifestyle of the nearshoring client due to its long history with North America, including a shared history of more than 300 years, This leads to a more productive work environment, and a more seamless corporate collaboration, and financial synergy. As a result, nearshoring in the Dominican Republic facilitates communication and interaction between agents and clients.

The natural ability of Filipinos to communicate in English is well-known. With a literacy rate of 94 percent, the nation is the world’s third-largest English-speaking country. American English is taught in all schools. Also, Filipinos speak with a neutral American accent that is easy to understand. Furthermore, Western society has had a significant impact on Philippine culture. Thus, locals are well-versed in both the English language and Western norms.

In summary, nearshoring provides similar time zones at work as offshoring helps you cover time zones that your domestic operations can not accommodate. Outsourcing in the Dominican Republic and the Philippines are cost-effective. Yet, the latter is cheaper due to wage differences and economies of scale. Not to mention, both countries bring you knowledge and expertise that you might not have inside your company. Lastly, availing services in both nations still help you avoid cultural barriers since they share cultures with the West. 

If you desire to nearshore in the Dominican Republic or offshore in the Philippines, Sourcefit got you covered! The company provides both types of BPO services. Custom Offshore Staffing Solutions is its specialty. The organization helps businesses large and small reduce costs and increase productivity by providing process consulting and highly skilled, highly motivated employees at a fraction of the market price. If you desire to learn more about nearshoring and offshoring, do not forget to follow @SourcefitPH on our social media and visit our website!