Difference between onshore, offshore, and nearshore outsourcing

March 4, 2022

Defining Terminology: Onshore, Offshore, and Nearshore Outsourced Customer Service

In general, these words have nothing to do with beaches or shores. Instead, they define the business approaches under which customer support is conducted.  The main variable in these models is where the team you hire for the project is located, and each has its pros and cons.

There is a fourth approach, by which a company hires full-time employees to provide their own in-house customer service, which of course has its own list of pros and cons (and costs).

Onshore Outsourcing

Onshore outsourcing refers to hiring an Outsourced Customer Service in the same country, and it is the simplest and most convenient approach – and known for providing the highest quality. For example, if you do business in the United States, hiring a team from your own or any other US state would be considered “onshore outsourcing.” The advantages of this approach are obvious: you can meet the team and discuss things face-to-face, we work in or close to the same time zone, and you can always keep in touch. Usually there are no language barriers or cultural differences between onshore teams and their clients.

The hinderance we most often encounter is cost.  While onshore support provides the highest level of service, the price is typically more expensive than off- or near-shore options. This is the most expensive of the approaches, but it provides the highest quality of service.

Offshore Outsourcing

An offshore team, on the other hand, is located in a foreign country, and most often one with a completely different cultural code and language. Offshore outsourcing usually offers the lowest prices due to lower cost of living.

With the lower price tag, however, come higher risks as, between the time differences and the language barriers, it’s often difficult to guarantee that work a client has paid for will be done on time or according to the specified plan. While there are certainly high-quality offshore resources you never know what you’re going to get. In the end, the project management responsibilities and efforts required to reduce risk may outweigh the cost savings.

And offshoring is generally known as delivering the lowest quality overall.

Nearshore Outsourcing

A trade-off or compromise between these two models is the nearshore outsourcing model. In fact, this model is just like offshore outsourcing, with the key difference being that the customer service team is located in a country that is close by and that upholds the same or similar cultural codes, traditions, and values.

The nearshore model provides for a lower cost model while delivering a level of quality most similar to the onshore model with the fewest differences.  For example, resources located in Mexico may have significant familiarity with the US and many may have spent time or grown up in the United States – and understand the language and cultural references.

Which Model Is Best for Your Organization?

In the long term, Outsourced Customer Service has proven to be very rewarding for many startups and businesses across the globe. In a connected, digital world, it is quite simple to reap the benefits of a dedicated team that works to their full potential — no matter where they’re located.

As far as which outsourcing model to choose, the most important takeaway is that you have the opportunity to balance cost and quality – and there is a direct correlation between the two.

If your organization is risk tolerant and looking for the cheapest option, the offshore approach may be a good option.  If you represent a premium product or service and wish to deliver the highest level of customer service, then onshoring will be your best choice.   If you need to balance cost and quality, but wish for your customer service team members to provide a high level of quality, then nearshoring may be a consideration to consider.