Near Offshoring Essay
Near Shoring-A smart alternative to offshoring
By Deepak Jaiswal
Offshoring has remained an eminent part of operational strategy for business houses for a few decades now. Lately, business experts and economists have come up with a new framework of outsourcing jobs to territories in the close proximity of the profit centers. And this they have named Near Shoring. Near Shoring is taking the outsourced work to a nearby country (such as Canada, in the case of the United States). It is a popular model for companies that don’t want to deal with the cultural, language or time zone differences involved in offshoring.
Birth of Near Shoring
For decades companies expanded their conglomerates by buying other companies. Initially these companies were
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With changing times, there is change in circumstances and in the way business houses operate. Near Shoring is an operational model that retains the benefits of outsourcing and negates the issues rising due to offshoring. Companies have started to realize that offshoring is not good for all circumstances and this practice is not for everyone. Near Shoring counters the practice of Captive Centers that are offshore companies set up by business houses to provide internal services and in some cases to sell those same services to clients. Evaluating the cons of offshoring on a few parameters, here is how it stands today.
- Learning Curve: With initial movement of the labor work, offshoring gradually led to movement of supervisory roles to the offshoring destinations which led to the onshore people who earlier filled these roles to take up other functional jobs. This has caused loss of utilization and efficiencies of almost all forms of human resource. Near shoring aims at bringing back the functional units of businesses to places in close proximity to home so that the supervisory jobs can be performed locally thereby increasing the credibility of people at
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The Bring Jobs Home Act aims to encourage reshoring and near shoring by giving tax credit associated with near shoring jobs and denying tax deduction for outsourced businesses. Near shoring and Reshoring will enable companies to extract benefits out of all such government policies.
- Wage Gap Decline: Globalization and inter relation between developing and developed economies have led to decline in the salary gap between onshore and offshore work forces. This overshadows the cost economy benefits that offshoring initially provided to businesses. Since the wage rate gap now does not provides adequate cost benefits to firms, and with so many other concerns with offshoring, Near shoring has opened up new dimensions to manage costs in better
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