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When you outsource your contact center, one of the decisions you need to make is where you want your operations to be located. In addition to domestic options, you may also be given the options to offshore or nearshore. Both have potential benefits, which are discussed below.

Offshoring

When an American company offshores its call center, it puts it in a facility that is geographically far away from the US. For example, many companies outsource to facilities located in the Philippines.

The primary benefit of offshoring is labor cost savings. According to an article in the LA Times, Filipino call center workers make about one fourth of what their American counterparts are paid, resulting in lower costs for the client company. Offshore outsourcers advertise potential cost savings of up to 60 and even 70%. These are likely on the optimistic side, but even if actual savings came in at 30 or 40%, that is very meaningful to the bottom line.

Another benefit of offshoring is the access US companies gain to a new and often highly educated labor pool. Also, according to the LA Times, a call center agent in Manila makes around $700 a month, roughly the same as a lawyer in Manila pulls in. These are considered to be very high paying jobs and therefore attract a lot of college educated, English speaking workers. This is a bonus for companies that are able to tap into this qualified labor pool through outsourcing arrangements.

Nearshoring

In a nearshoring scenario, operations are still outsourced to facilities located in a foreign country, but one that’s much closer to the US, such as Mexico.

Nearshoring offers the same potential benefits as offshoring (cost savings and labor pool access). But relative to offshoring, there are some possible advantages to nearshoring.

For one thing, the nearshore facility is likely to be in or close to the client company’s time zone. This makes it more convenient to manage by, for example, eliminating the need to hold conference calls in the middle of the night. More importantly, it also mitigates one of the agent scheduling drawbacks of offshoring. In offshoring, a majority of the agents may have to work the night shift so that they can support US daytime demand. This contributes to agent turnover. Nearshoring facilities, and therefore their clients, don’t have to contend with that factor.

Also worth noting is that closer means easier and cheaper to visit. That may translate to better communications, relationships and results if client companies are able to visit more often. Or it could mean lower travel costs. Not to mention the psychological benefits of having a vendor that’s just a short plane ride away.

So, there are some possible advantages to offshoring and nearshoring. As usual, they have to be weighed against potential drawbacks and assessed within the context of a company’s business objectives. These outsourcing models will work for some but not for all.

The Results Companies offers offshoring and nearshoring services. We can help you understand what’s right for your organization. Contact us now at communications@resultstel.com.