Economic Uncertainty: How Nearshore Outsourcing Can Help
By now, you’ve likely heard the news of an economic recession on the horizon. Troubling economic times are known to lead to decreased demand for goods and services, reduced revenue, and increased competition. But did you know that nearshore outsourcing can be an effective business strategy for navigating these tough times?
Let’s get into it.
“I have enjoyed increasing my potential customers, and I hope to reach more of them.”
Should You Outsource?
Outsourcing is a growing trend among businesses of all sizes, as the world economy faces an unprecedented recession following the COVID-19 pandemic. The decision to outsource has become viable for many businesses, as it allows them to access specialized skills and services which they may not be able to find within their own country. Furthermore, inflation has many businesses seeking their most affordable options when it comes to attaining tech resources.
Selling or outsourcing certain tasks allows businesses to focus on the core aspects of their operations. This can allow them to become more efficient and successful. This way, businesses remain agile in the face of an economic downturn.
In addition, outsourcing also allows businesses to access the latest technology and solutions from around the world, which can help them stay ahead of the competition and ensure that their products and services remain competitive. This is especially important in times of economic hardship, as it can help businesses stay afloat.
But is outsourcing really on the rise? In a recent report by Making Science, roughly 86% of polled company executives claimed that they are likely to outsource tech capabilities over the next 6 months. More specifically, these executives expressed their interest in outsourcing in the following areas:
Ultimately, outsourcing has become more attractive to businesses in the digital age, as cloud-based services can be accessed quickly and affordably. Despite the risks, the advantages of outsourcing and the advantages of the cloud make it an attractive option for businesses in a recession.
Why Choose Nearshore?
Nearshore outsourcing refers to the delegating of business functions to companies in nearby countries. This approach provides businesses with a number of benefits — from cost savings to improved flexibility, from access to specialized skills to conveniently overlapping time zones. But the benefits don’t stop there! Not only can choosing nearshore talent benefit the outsourcing company, but it can have an equally positive impact on the company being outsourced.
During difficult economic times, businesses often seek ways to reduce costs and maintain profitability. By choosing nearshore outsourcing, businesses can inch closer to their goals by accessing lower labor costs in neighboring countries. Additionally, outsourcing to a nearby location allows businesses to more easily adjust their workforce as market conditions change, which can be particularly beneficial in an unpredictable economy.
Another advantage of this type of outsourcing amidst a recession is the access the specialized skills. Outsourcing to a nearby country can open businesses up to a wider pool of talent, including skills that are in high demand. This can help improve competitiveness and maintain an edge during trying times.
Benefits for the Outsourcing Country
Nearshore outsourcing allows companies to take advantage of lower labor costs in nearby countries while still being able to easily communicate and collaborate with their outsourced team. In an article for Future of Sourcing, it was found that companies can expect to save around 50% by choosing nearshore talent as opposed to major IT hubs like San Francisco or New York.
This can result in significant cost savings, especially during a recession when budgets are tight.
Access to Skilled Labor:
Many nearshore destinations have well-educated and highly skilled workers who can provide valuable expertise and support to companies in a variety of industries. Furthermore, nearshore countries are more likely to offer language proficiency and cultural overlap making for better communication between the two parties. For instance, according to Statista, Argentina and Uruguay are at the top when comparing English proficiency among Latin American nations.
This can be particularly beneficial during a recession, when companies may need to make strategic investments in order to stay competitive.
Companies tap into a nearby talent pool, which can result in shorter lead times and faster time-to-market for new products and services. This can be especially important during a recession, when companies need to be nimble and responsive to changing market conditions in order to survive.
Benefits for the Outsourced Country
Job Creation and Economic Growth:
Nearshore outsourcing can create jobs and stimulate economic growth in the outsourced country. It can provide opportunities for local workers to gain valuable skills and experience, and can also attract foreign investment, which can further boost the local economy.
Access to New Markets and Customers:
It allows companies in the outsourced country to tap into new markets and customer bases in the outsourcing country. This can be particularly beneficial during a recession, when domestic demand may be weak.
Improved Efficiency and Productivity:
It can help companies in the outsourced country to improve their efficiency and productivity by accessing specialized expertise and technologies from the outsourcing country. This can help them to remain competitive and survive during a recession.
All Things Considered…
Overall, nearshore outsourcing can be a valuable strategy for businesses looking to navigate an economic recession. By outsourcing certain business functions to a nearby country, you can take advantage of cost savings, improved flexibility, specialized skills, reduced cultural barriers, and time zone overlap. Additionally, it can benefit the global economy by creating jobs, leading to economic growth, increasing competitiveness, improving trade relations, and improving the standard of living.
Businesses should consider nearshore outsourcing as a strategy for navigating an economic recession and potentially benefiting the world economy.
Wondering if nearshore talent is the right solution for your company? Contact Modelit today and we'll discuss exactly how our Salesforce experts can fulfill your business needs.