5 things retailers should consider when it comes to nearshoring

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Retailers face numerous pressures and challenges: just one bad experience can turn a customer off a brand and companies are expected to deliver 24/7, personalized, omnichannel experiences faster than ever before – all while keeping overhead and labor costs in check.

How can retail businesses cut costs without sacrificing the seamless experiences customers expect? Nearshoring could be the answer, especially in today’s tight labor market.

Nearshoring can bring many benefits to companies when done well, but there are also some pitfalls retailers should recognize as they consider this option. Here are five things to think about as you assess whether nearshoring is right for your business:

1. Location proximity

Nearshoring, by definition, means you’re outsourcing work to a neighboring country. This brings various logistical benefits. For businesses based in the United States, most nearshore options will keep outsourced workers in the same time zone as the business, which makes it easier to sync operations and communication.

Having nearshore workers in the same time zone as the business’ headquarters also means those nearshore workers will be in the same time zone as the company’s target demographic and consumer base. And traveling to nearshore partners is much easier than visiting off-shore locations.

2. Culture and language

Working with a nearshore partner often means there are certain cultural similarities and a common language spoken among in-house and outsourced workers. This can help the company provide a more uniform level of customer support, which leads to better customer experiences and higher customer satisfaction. As an added bonus, high-quality English language support typically is easily scalable, allowing companies to quickly ramp up during times of peak demand.

But for some companies, this may not be enough. Some customers are sensitive to even the slightest cultural misalignments, and no brand wants to alienate its consumers. If you’re target audience falls into this category, nearshoring may not be the right fit.

3. Infrastructure capabilities

There are pros and cons to nearshoring when it comes to infrastructure.

Among the benefits, many nearshore locations are centralized in metropolitan areas that tend to have strong infrastructure in place – and outsourcing partners are equipped to maximize on that high-quality infrastructure, enabling them to meet business needs quickly and easily.

On the downside, nearshoring can expose businesses to new potential security risks. However, as outlined above, outsourcing partners take painstaking efforts to identify the best locations, ensure extensive firewall and security measures, and conduct transparent security risk assessments. Companies considering nearshoring should expect to have these discussions.

Overall, keeping all operations onshore usually means they are more secure, so companies may need to invest additional resources into identifying and preventing new security risks – or they may not want to take on the additional risk nearshoring can bring.

4. Cost considerations

Many assume nearshoring will bring cost reductions to a business, and that’s true – to an extent.

Nearshore solutions are less expensive than U.S.- and Canada-based ones, especially given the wage pressures in today’s labor market. The money saved through nearshoring can be reinvested in other facets of the business, and nearshoring can be a great way to drive ROI at a total lower cost.

But it’s important to note that nearshore options are typically more costly than many offshore options. If cutting costs is a primary motivator, offshoring will often yield better results – so consider whether the pros of nearshoring are enough to outweigh the budgetary cost to your business.

5. Specialized support needs

Keeping things relatively close to home makes it easier for companies to bring in specialized support as needed.

Companies that want to integrate Spanish or Portuguese support with their English-speaking support, for instance, will find they’re able to do so – and scale it – efficiently. This makes it easier for brands to deliver frictionless, more personalized and customized experiences that will lead to great CSAT and brand loyalty.

Working with an experienced outsourcing partner can help you gauge how nearshoring can benefit your brand and whether it’s the right move for your business.