Near-Shoring Essay

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Near-shoring  (also nearshoring)  means moving jobs to a nearby foreign country. It is part of the “X-shoring” constellation  of terms  that  include  off-shoring (sending work to an overseas location), multishoring (sending outsourced  work to several overseas locations based on the job to be done and the relevant skills available), and two-shoring  (using both an offshore location and a domestic one).

Near-shoring  should be part of a company’s global strategic   considerations   because   it  can   generate many direct material benefits, depending  on market conditions:

  • It allows a firm to upsize or downsize and to spread risk to other parts of the production chain.
  • Wage and costs differentials in near-shore countries make the company more competitive in the home market.
  • Nearby countries may have higher-quality workers with multilingual capability.
  • Rather than  extend  operations   to  a  country around   the  world,  a  company  that   employs near-shoring  can reduce costs and time to market because of the closer proximity to the home market.
  • Time-zone advantages mean easier synchronous communication.
  • Nearby markets open new consumer markets.

The question  facing owners and managers is how to select a near-shore  location. This selection usually is usually made through  a high-medium-low market selection matrix for making comparisons.  Considerations include size and composition of the near-shore market; economic  conditions  such  as growth  rate, tariffs, and trading blocs that the country  is part of; labor-market factors, such as skilled employees, wage costs, and employee protection regulation; infrastructure   issues  such  as transportation, electricity, and telecommunications; risk factors such as susceptibility to natural disasters; political stability and corruption; and intellectual property protection.

Especially important  for  near-shoring   decisions are wage costs in important labor sectors. Using the rankings  of the  top  near-shoring  destinations  from BusinessWeek  and  comparative  salaries from  Overseas Digest, an owner/manager of an IT company may want to consider the following near-shoring  options:

Near-Shoring Essay


  1. Atlantic Canada Opportunities Agency, Nearshoring Industry in Atlantic Canada (Atlantic Canada Opportunities Agency, 2007);
  2. Stefan  Bock, “Supporting Offshoring and Nearshoring  Decisions for Mass Customization Manufacturing Processes,” European Journal of Operational Research (v.184/2, 2008);
  3. “International Salary Report,” Overseas Digest, (cited March 2009);
  4. “Nearshoring: A Competitive Advantage in a Global Economy,” Trade & Industry Development, (cited March 2009);

“Top Countries for Outsourcing,”  BusinessWeek, (cited March 2009).

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