The Comprehensive Guide: What Are Offshoring and Nearshoring?

Updated December 2025 

The outsourcing of tasks and projects is surging, driving unprecedented demand for offshoring and nearshoring solutions. IT outsourcing (ITO) and business process outsourcing (BPO) lead the charge—global BPO alone is projected to grow by $222.61 billion from 2024 through 2030. 

Today’s business leaders are laser-focused on maximizing productivity and profitability. To stay competitive, they’re embracing bold strategies and tapping into global talent pools. 

Offshoring and nearshoring are two powerful approaches to extend your workforce beyond borders. Here’s what you need to know about these game-changing strategies. 

Offshoring vs. Nearshoring

Nearshoring and offshoring are both outsourcing strategies that involve delegating roles or entire departments to an international service provider.  

Previously, these practices were associated with more basic IT skills like customer service and admin services, but now, companies are looking internationally for skill sets like software development, AI engineering, and more. 

The key difference is location: 

• Nearshoring: Outsourcing to a nearby country, often in the same time zone, to reduce challenges while retaining outsourcing benefits. 
• Offshoring: Working with teams in distant locations, ideal for accessing a global talent pool over geographic proximity. 

As companies implement these solutions, the growing practice of rightshoring is also emerging. Rightshoring is the practice of balancing the mix of onshore, offshore, and nearshore operations. 

But when and why do companies look beyond their shores for talent? 

5 Reasons Companies Offshore and Nearshore

Businesses often choose to offshore or nearshore work for a variety of reasons, including the following.

1. Reducing Costs

Not surprisingly, many businesses embark on an offshoring or nearshoring project for a reduction of costs when building out new teams and projects.  

Skilled labor in other countries can sometimes come at a more affordable price than hiring in-house in the U.S., but companies will have to decide whether the cost savings match up with potential challenges faced when outsourcing tasks internationally. (We’ll get into those in the next section.) 

2. Accessing Specialized Talent

When you decide to outsource talent internationally, your potential talent pool expands greatly. And because you have a wider talent pool when you consider offshoring, you can often find an increase in quality candidates for your roles. 

Instead of being restricted to professionals in your direct geographical area, you can access experts across the globe. If you’re looking to fill a highly technical role on your team or want to outsource a specialized process, you can look in areas where those skill sets are abundant.  

3. Creating Scalable Systems

Covering all tasks—especially IT, creative, and customer relations—can be tough for growing companies focused on launching and reaching their audience. 

Outsourcing teams and projects allows you to scale easily. International partners typically offer the flexibility to start with short-term contracts and extend as needed. As your business grows, you can rely on your partner’s resources instead of building new internal teams from scratch. 

4. Building an International Team

When companies expand internationally, it can be helpful to already have employees or partners in their target area. Companies may start outsourcing their teams as a first step towards building a global presence in different countries. These international team members can then share valuable insights with the rest of the team as they undergo the expansion process. 

5. Expanded Availability

With various time zones available in different countries, you can provide 24/7 services to your customers without resorting to managing second- and third-shift employees. 

Now, let’s get into what each of these practices—nearshoring and offshoring—are. 

What Is Offshoring?

Offshoring is the transfer or outsourcing of specific tasks, activities, departments, or business processes to a foreign country. 

Companies may set up a Global Capability Center (GCC) but often choose third-party providers with established infrastructure and local expertise for efficiency and compliance. These providers may also partner with local firms for specialized services like IT or BPO to support the local economy and access niche skills. 

Businesses can operate offshore processes—such as call centers—while managing them from their home country, either through subsidiaries or external service providers. 

There are two types of offshore services to consider: 

• Services offshoring, which involves relocating the company’s technical and administrative services, such as software development, finance and accounting, and human resource management. 
• Production offshoring, which focuses on relocating physical processes like manufacturing, helps to deliver the same high-quality goods at a lower cost of production. 

The Pros of Offshoring

Offshoring offers several advantages, including the following: 

• Cost savings on labor, real estate, and government incentives 
• Sustainable, affordable scalability 
• Access to overseas markets 

The Cons of Offshoring

Despite its benefits, offshoring comes with its own set of drawbacks: 

• Time zone differences complicate communication 
• Cultural and language barriers hinder collaboration 
• Quality issues due to varying standards 
• Security and IP protection risks from differing cybersecurity practices 

What Is Nearshoring?

Nearshoring allows businesses to work with an outsourcing country “near” home, hence the name. However, it isn’t quite as simple as that. For instance, the United States might work with Canadian or Mexican nearshoring teams to save the costs of U.S. outsourcing while still sharing similar or the same time zones. 

With this strategy, businesses can have constant and real-time collaboration between their in-house and outsourced teams. 

The Pros of Nearshoring

Some advantages to nearshoring include: 

• Relatively small time zone differences 
• Fewer cultural and language barriers 
• Countries often share similar financial, legal, and security standards, such as data protection regulations 

The Cons of Nearshoring

The cons of nearshoring include: 

• Communication barriers: French-speaking regions in Canada and Spanish-speaking teams in Mexico may require multilingual staff 
• Higher costs compared to offshoring 

Nearshoring and Offshoring Challenges & How to Solve Them

While international outsourcing can scale operations, there are some challenges along the way.  

So, to proactively build successful nearshoring and offshoring teams, let’s talk about these challenges when outsourcing and how to address them ahead of time. 

1. Cultural Differences

Working with foreign vendors often involves cultural nuances—even with nearshoring. Misaligned expectations can lead to communication breakdowns and strained relationships. 

Solution: Research each business partner’s cultural norms, build cultural intelligence, and include staff familiar with both regions to foster respectful, productive collaboration. 

2. Language Barriers

Language differences can lead to communication breakdowns, even with modern translation tools. Although it’s easier than ever to work across language barriers, there is still a chance of misunderstandings. 

Solution: Ask clarifying questions to confirm understanding of your requests and requirements. Provide documentation in multiple languages so all parties have the necessary resources and consider hiring bilingual team members or an on-staff translator to facilitate accurate communication. 

3. Cross-Cultural Collaboration

Beyond cultural and language differences, companies must establish a clear structure for collaboration when building a global workforce. Not only do team members need mutual understanding; they need processes that enable effective cooperation. 

Solution: Build a management layer dedicated to bridging gaps and translating business needs between regions to ensure alignment and smooth communication across teams.  

4. Scheduling

Outsourcing may involve working with a company in a completely different time zone than your own. This requires you and your outsourcing partner to work asynchronously and find ways to touch base outside of business hours. 

Solution: Establish overlapping business hours where you can touch base on urgent projects and establish regular communication through email and messaging platforms. 

If you need continuous support, consider partners that offer 24/7 assistance or manage global capability centers to eliminate scheduling conflicts. 

5. Quality Control

Any time you outsource a process or service to another company, you give up a level of control over your operations. Because you’re not directly overseeing how the tasks are done, you may eventually encounter quality issues. 

Solution: Set clear expectations and measurable KPIs from the start, then conduct regular quality audits. Address concerns promptly and collaborate on solutions. Partnering with providers that operate through global capability centers can also help maintain higher standards. 

6. Setting Expectations

Setting clear expectations is essential when outsourcing processes to a third-party partner. Unlike internal management, you don’t have full control—different companies may have their own standard processes, and it can be challenging to effectively communicate your expectations. 

Solution: When meeting with a potential new outsourcing partner, thoroughly discuss the scope of work you’re seeking to ensure they can handle it. Thorough onboarding conversations and detailed documentation outlining core requirements help prevent misunderstandings.  

Ask partners about any concerns early, check in before key deadlines, and build flexibility into timelines. Consistent communication and regular progress reviews are key to successful international outsourcing. 

7. International Contracts

Working with an outsourcing partner involves coming to an agreement and drawing up a contract for your business relationship. When you outsource overseas, you’ll need to come up with a contract that complies with the business laws of both countries. 

Solution: Consult with lawyers with expertise in the area of international contracts. 

How to Start Nearshoring and Offshoring

If international outsourcing fits into your business plan, get started with these simple steps. 

Identify Your Needs

First, consider the scope of the support you need. Filling a single position will likely involve a different onboarding process than outsourcing your entire team. Create a basic outline of the processes you need to fulfill through offshoring. Although the scope of your needs may change, this is a good starting point for finding the right partner or candidate. 

Establish a Budget

Identify your general budget for the role or roles you want to fill. Your budget may help you determine which countries to focus on in your candidate search. Comparing your budget to competitive market rates in different areas can also help you establish reasonable expectations for the level of talent you can afford to hire. 

Explore Outsourcing Locations

Research areas that have a strong talent pool for the skills you need and market pay rates that align with your budget. If you want to outsource large-scale operations, you can also research service providers in different countries that meet your requirements. During your research, you may decide to focus on a specific geographic area or maintain a wide search radius to access the best possible services. 

Contact an International Staffing Partner

International staffing and professional service companies go beyond simply filling roles—they act as strategic partners in helping businesses achieve operational excellence. These firms bring deep expertise in managing complex international engagements, from compliance and legal requirements to process optimization and technology integration.  

By clearly defining your objectives and scope, you enable your partner to design tailored solutions that align with your business goals. Instead of just sourcing talent, they deliver end-to-end support, ensuring seamless collaboration, cultural alignment, and measurable outcomes that drive growth. 

Outsource Your Business Needs with Insight Global

With proper preparation, nearshoring and offshoring can be cost-effective, convenient ways to scale and streamline your business. 

At Insight Global, we can address all the potential drawbacks of outsourcing on your behalf, allowing you to focus on your company’s core operations. By choosing a reliable staffing partner and professional services provider, you can enjoy the benefits of outsourcing that can help you navigate these challenges.