When it comes to outsourcing, businesses usually look at three main options: onshore, nearshore, or offshore outsourcing models.
While the common goal is often the same — saving money — the way each model works can be very different. In fact, 66% of U.S. companies outsource at least one department to cut costs
Here is a simple definition of each outsourcing model:
| Model | Definition | Example |
| Onshore Outsourcing | Hiring a third-party provider in the same country. | A U.S company partners with a U.S.-based outsourcing firm |
| Nearshore Outsourcing | Working with a vendor in a neighboring country. | A U.S. company outsources to a company in Latin America. |
| Offshore Outsourcing | Partnering with a provider in a distant country with a different time zone. | A U.S. company outsources to India or Pakistan. |
If these terms sound confusing, you’re not alone.
But don’t worry – in this blog, I’ll break down each outsourcing model and settle the onshore vs nearshore vs offshore outsourcing debate.
So, buckle up and let’s get started!
Onshore vs Nearshore vs Offshore Outsourcing: Explaining Each Approach
First things first: I will start by defining all three types of outsourcing – this will help you get a clear picture.
What is Onshore Outsourcing?
When a business owner chooses an outsourcing service provider in the same country where his business operates, this approach is called onshore outsourcing.
Even though it’s more expensive than offshore outsourcing, it has a number of advantages compared to hiring in-house teams.
Advantages of Onshore Outsourcing
- Both parties located in the same location make communication smooth
- You have more control over the BPO company’s operations.
- It is easier to find local candidates as compared to foreign ones.
What is Nearshore Outsourcing?
In this outsourcing approach, a company owner joins hands with a third-party vendor located in a nearby country.
As mentioned earlier, a simple example of nearshore outsourcing is a US-based company outsourcing one of its services to a team in Mexico.
Advantages of Nearshore Outsourcing
- It is more budget-friendly – you can save up to 40% more than onshore outsourcing
- Close proximity between the two parties means smooth communication
- There are no cultural differences or language barriers
What is Offshore Outsourcing?
Wait, there’s another outsourcing model you must know: Offshore outsourcing.
So, what is offshore outsourcing? It is a business strategy in which a company partners with a third-party service provider in a distant country (i.e., on a different continent).
Note: This is the most cost-effective outsourcing model – a US-based business can get access to cheap labor in the Philippines or India.
Advantages of Offshore Outsourcing
- You save up to 70% costs compared to onshore outsourcing.
- You can scale the team up or down very easily, depending on your requirements
- You get access to a global pool of talent – this option is not available with the other approaches
Onshore vs Nearshore vs Offshore Outsourcing: Key Differences You Should Know
At this point, you are well aware of each outsourcing model and the benefits each of them offers.
But that still doesn’t answer many questions, such as:
- How exactly does each outsourcing model differ from the others, and what makes them unique?
- Which outsourcing approach is right for my business goals?
- How will choosing one outsourcing model over others impact my business operations?
Lucky for you, you will have all the answers by the end of this blog.
Here I will provide a detailed comparison to provide you with a clearer picture – just stick with me, and you will know which model is the right one for you!
| Factor | Onshore Outsourcing | Neashore Outsourcing | Offshore Outsourcing | Winner |
| Cost | Costliest approach | Significantly less expensive | Most budget-friendly | Offshore Outsourcing |
| 24/7 Availability | Possible but very expensive | Difficult to provide 24/7 support | Best approach for 24/7 operations | Offshore Outsourcing |
| Scalability | Very difficult to scale up and down | Comparatively easier | Easy and cheap to scale teams up and down | Offshore Outsourcing |
| Proximity | Very close proximity | Proximity allows more control than offshore while keeping costs lower. | Very long distances between two parties | Onshore Outsourcing |
| Time Zone Alignment | Identical time zone | Almost the same time zone | Vastly different time zones | Onshore Outsourcing |
| Ease of Communication | Very easy to communicate and share feedback | Easy to share your thoughts | Very difficult to ensure smooth communication | Nearshore Outsourcing |
| Level of Oversight | You can keep track of every project | Easy because of close proximity | Not possible to keep track of every project | Nearshore Outsourcing |
| Global Talent Pool | Limited talent you can choose from | Access to more talented employees | Extensive pool of talent available | Offshore Outsourcing |
| Language Similarity | Similar language | No language barriers in most cases | Teams speak different languages | Onshore Outsourcing |
| Compliance with Law | Ensure legal compliance | Slightly more difficult | Cannot comply with your business ethics | Onshore Outsourcing |
So, to summarize this table:
- Choose onshore outsourcing if you want to avoid time zone and cultural differences. Also, slightly higher costs aren’t a concern.
- Go with nearshore outsourcing if you want compliance with local industry standards and minimum language barriers.
- Select offshore outsourcing if you want access to a global talent pool at the lowest costs. Plus, you have no issues with the language and time zone difference.
Final Thoughts
If you are looking for a reliable outsourcing partner, you won’t find a better option than HiredSupport. Our agents are available 24/7 to ensure any issue is timely resolved.
With a Clutch rating of 4.9 and a track record of improving Customer Satisfaction Score (CSAT) to 90+, we deliver efficient, reliable solutions.
And here’s the best part: offshore outsourcing with HiredSupport starts at just $7 per hour.
Just fill out this form, and our team will get back to you. You can also send an email to [email protected].
