Nearshoring

Nearshoring is "the transfer of business or IT processes to companies in a nearby country, often sharing a border with your own country", where both parties expect to benefit from one or more of the following dimensions of proximity: geographic, temporal (time zone), cultural, social, linguistic, economic, political, or historical linkages. The service work that is being sourced may be a business process or software development.

Overview

Nearshoring is a derivative of the business term offshoring.

Offshoring involves shifting work to a foreign, distant organization in order to reduce production costs. Offshoring is subject to several different constraints, however, such as time lag between the parties, differences in local employment laws and practices, and oversight. A Western European IT company, say, might outsource software writing to a company in India, which specialises in such work, to take advantage of low cost, and skilled labour with a common language, but the distance between the two means reduced face contact, therefore less control of the project, and greater vulnerability to threats such as intellectual property theft and fraud.