• Tweet
• Sharebar

• Tweet

For businesses looking at cutting their costs and focusing on their core business through outsourcing work, it is wise to consider nearshoring as a potential alternative.

Savings from nearshoring are not as significant as offshoring, however it is still less expensive compared to operating in places such as Australian mainland capital cities. According to Access Economics’ industry report, the cost difference between near shoring in Tasmania and off shoring to India or the Philippines in certain circumstances may be comparable.

Although the global perception is that outsourcing work to Asia is economically advantageous because of lower labour costs, there may be operating expenses and risk factors to be considered in the total cost and these may impact the price difference between nearshoring and offshoring.

At first glance, offshoring is inexpensive, but it may have hidden costs.

According to Access Economics’ findings, there are indirect costs in the advertised price of Indian and Philippine offshore contact centres. These indirect costs comprise higher staff training requirements, management fees, charges for overseas calls, increased rates for call escalation, spending for international travel, and risks caused by changes in the socio-political environment of the offshore location. There are also added costs because of lower quality where, from a customer’s viewpoint, service from an offshore contact centre is less satisfying compared to service from a local or nearshore contact centre. Considering all these costs and risks may make offshoring more expensive than it initially seems, and this lessens its cost advantage substantially.