Nearshoring

Culture Clash in Offshoring – How Nearshoring avoids intercultural conflicts

Posted by InterVenture on June 7, 2018

Work colleagues look disappointedly at a monitor due to bad experiences with external offshoring company

If you work for a large company, or perhaps manage your own business, it’s a safe bet that you’ll be familiar with the concept of offshoring. Outsourcing business processes to international firms has been a much-used strategy for Western European and North American firmst, especially within the realms of software development, systems operation and customer contact services. Reduction in labour costs and associated operational overheads can be significant, but problems can and do arise when the cultural differences of partner countries are not considered.

 

Different cultural work ethics

neat matchbox next to matchbox with messy thrown in matches. Nearshoring prevents cultural differences.

For example, some American firms have experienced difficulties when offshoring IT and support services to partners in India and other Asian countries. Whilst the two countries do not have a major language barrier (with many Indians speaking excellent English), there is a distinctly different style of conversational communication between the two, which might not align perfectly with US expectations.

Also, the two nations have completely different working mentalities; American business culture is deadline-focused, with workers expected to show independent thinking and challenge business processes to increase efficiency. Conversely, Indian business culture is more focused on process and procedure, ensuring work is completed correctly, step-by-step, rather than being rushed to meet a given deadline.

 

Nearshoring benefits

colleagues are happy about successful cooperation with external nearshoring company

On the other hand, nearshoring offers an excellent alternative to companies looking to outsource processes to maximise business efficiency, without many of the operational pitfalls inherent to traditional offshoring.

If you haven’t encountered the term before, nearshoring involves outsourcing business services or functions to a country within close vicinity of the host nation. This could be two nations that share a common border, a common language or cultural history, for example. Companies investing in this solution can still access lower cost labour and resources, whilst also retaining a far greater level of control over the day-to-day operations in the partner country.

A nearby country is much easier to deal with, as working cultures are likely to be similar, or more easily managed through a local partnership. Whilst initial labour cost reductions may not seem as impressive, there are numerous ancillary benefits which make nearshoring a far more effective solution in the long term.

Language
A shared common language is of huge importance for efficient project management and clear understanding between partner countries, as breakdown in communication will lead to costly delays.

Locality
Operating a local partnership has clear benefits in terms of logistical cost savings. Managerial and visitor travel costs are drastically reduced, especially if the two countries share a border, which for large organisations can amount to huge annual savings.

Time
Nearshoring with a local partner within the same time zone, or +/- one hour, is obviously more efficient, as people are available during shared working hours and this also removes the requirement for ‘out of hours’ managerial supervision of the partner country.

Skills and cultural links
Nearshoring provides access to a greater pool of specialist skills, with common shared benefits (as above). For example, a UK-based firm could partner with a Serbian software firm or IT systems operator and benefit from the close cultural, geographic and logistical links between the two partner countries.

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