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Thread: Offshore or Nearshore Outsourcing?

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    Default Offshore or Nearshore Outsourcing?

    Hello everyone!

    I noticed that many big companies these days from the US or UK are choosing to outsource offshore, usually in Asian countries because the prices for manpower is relatively cheaper. There are also companies which choose to outsource nearshore to neighboring countries because of the easier communication and similar cultures which make it easier for a company to dictate what they want from the products they outsource.

    In your opinion, which among offshore and nearshore is better for a company? They both have their individual advantages but which do you think is better for businesses in your area?

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    Diamond Member Corzhens's Avatar
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    Default Re: Offshore or Nearshore Outsourcing?

    @gracer, I agree that the main reason for US or UK outsourcing from offshore markets is the cheaper cost. Especially from the so called 3rd world countries like Bangladesh or Cambodia, their labor is cheap and most foreign companies there are satisfied with the prevailing labor conditions - no labor strikes and no arrogant union like what you will find in the Philippines. With the comparison of offshore or nearshore, I don't think there is much difference because it would largely depend on the labor climate. Foreign companies are apt to choose a country with a friendly labor climate, one that is showing foreign companies their hospitality in the labor industry.

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    Default Re: Offshore or Nearshore Outsourcing?

    Quote Originally Posted by Corzhens View Post
    @gracer, I agree that the main reason for US or UK outsourcing from offshore markets is the cheaper cost. Especially from the so called 3rd world countries like Bangladesh or Cambodia, their labor is cheap and most foreign companies there are satisfied with the prevailing labor conditions - no labor strikes and no arrogant union like what you will find in the Philippines.
    I never knew this. This somehow serves as a negative blow for our Philippine manpower but of course, companies will always look for circumstances that will favor them more. Sometimes this is one thing that I really don't approve of much when it comes to our other fellowmen, there's just too much freedom for unions and strikes that these groups sometimes abuse that freedom. When this happens, more outsourcing options for foreign companies come out in the scene.

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    Default Re: Offshore or Nearshore Outsourcing?

    I think it depends on the business and the situation. Some may find it favorable to have an outsourced department that is a little bit more familiar with their own culture but when that is less important than the savings then the money becomes the priority and when that is the case usually the best option will be in Asia. I think these days when most transactions and communications are done online the location is not as much of a problem anymore.

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    Default Re: Offshore or Nearshore Outsourcing?

    I would say near-sourcing is best. Using offshore manufactures can be a hassle because of the language barrier and different cultures. Something normal here may be out of the ordinary over there. Using nearshore sourcing allows for an easier understanding between the two companies which is important. This reminds me of the first Simpsons episode to ever be broadcasted. Mr. Smithers was black, this was due to the translation of man servant to slave and the belief of the Koreans who were animating that episode that he should be black. I know it is a TV show and we are talking warehouse and logistics but it is a good example of issues that can occur due to outsourcing certain aspects of your business.

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    Default Re: Offshore or Nearshore Outsourcing?

    I don't believe that its dependentl on whether it's offshore or nearshore. The main cosideration in this process is for obtaining the lowest possible wage costs and most favourable operating conditions in other to maximixe profit. Therefore, wherever the the condition are most favourable profit wise, thats where the business will seek to locate their operations. This is the main reason why so many large businesses are frequently relocating from one to another region of the world.

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    Diamond Member Corzhens's Avatar
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    Default Re: Offshore or Nearshore Outsourcing?

    Quote Originally Posted by explorerx7 View Post
    I don't believe that its dependentl on whether it's offshore or nearshore. The main cosideration in this process is for obtaining the lowest possible wage costs and most favourable operating conditions in other to maximixe profit. Therefore, wherever the the condition are most favourable profit wise, thats where the business will seek to locate their operations. This is the main reason why so many large businesses are frequently relocating from one to another region of the world.
    Some companies, depending on the industry that they belong, the quality of workers is the primary element that outsourcing companies look for. Take for instance the call center where the Philippines and India are fighting for the top slot in terms of outsourced employment. Both countries have English for their second language so it is expected that their quality of English is above par compared to other Asian countries. And with the relocation of their work place, particularly factories, yeah, the primary consideration there is the cost of labor wages. And not to forget that the prevailing cost of wages depends on the stability of the country's political landscape.

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    Default Re: Offshore or Nearshore Outsourcing?

    Quote Originally Posted by explorerx7 View Post
    I don't believe that its dependentl on whether it's offshore or nearshore. The main cosideration in this process is for obtaining the lowest possible wage costs and most favourable operating conditions in other to maximixe profit. Therefore, wherever the the condition are most favourable profit wise, thats where the business will seek to locate their operations. This is the main reason why so many large businesses are frequently relocating from one to another region of the world.
    Yeah these days where communication and security can be solved with just doing everything digitally the location matters a lot less and the dependency on where you put your outsourced department is a little less constrained so businesses tend to focus more on the other factors like maximizing profits. The only time I think location would be considered a lot is when there is physical exchange necessary for operations that happen regularly enough but even then transportation these days has gotten much better as well.

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    Default Re: Offshore or Nearshore Outsourcing?

    I agree with Corzhens that the labor climate makes or breaks a company's outsourcing interests in particular countries. The quality of workers also matter because that means shorter training time, lesser training costs and overall savings. Many firms have pulled out of technologically competent countries simply because they do not have the English skills necessary to handle foreign backoffice tasks.

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    Default Re: Offshore or Nearshore Outsourcing?


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