What Is onshore outsourcing? Is it right for your business?

Onshore outsourcing can be a cost-effective solution for businesses that want to use a BPO (business process outsourcing) company to hire a third-party team, but don’t want to deal with the complexities of offshore team members.

Outsourcing functions like customer service or software quality assurance can be an effective way to increase efficiency, scale quickly, and save money. Keeping your outsourcing onshore can make it easier to manage and communicate with your team (by keeping everyone in the same or closer timezones) and offer other benefits (like improved cultural understanding and potential legal protections for businesses that operate with highly sensitive intellectual property). These issues can be solved with offshore teams, as well, but for some companies, onshore will be a better fit.

To make sure you have a successful outsourcing experience, it’s important to understand your goals and find the right type of outsourcing for your business.

In this article, we’ll look at the benefits of onshore outsourcing and how it compares to other types of outsourcing, such as nearshore and offshore outsourcing.

What Is Onshore Outsourcing?

For many people, the term outsourcing means hiring workers from outside your country, but it is actually when a company contracts a third party without hiring them directly, no matter where they are located. For example, hiring an independent contractor for a short-term project can be considered a type of outsourcing. That’s true whether they’re located on the other side of the world, or they have an office in the same building.

Let’s break down the three types of outsourcing based on where your contractors are located:

  • Onshore outsourcing (also called domestic outsourcing) is when the service provider is located in the same country as the business they’re completing work for.
  • Offshore outsourcing is when the service provider is located in a different country than the hiring company.
  • Nearshore outsourcing is when the service provider is located in a different country, but one that’s in close proximity to the original business.

When Should You Choose Domestic Outsourcing?

In some ways, domestic outsourcing can be more straightforward than other types of outsourcing. After all, you won’t have to navigate the regulatory landscape of multiple countries, and you can conduct business in the currency you usually use.

However, if we consider the larger picture, it’s important to outsource when it makes the most sense for your team’s bandwidth and skill specializations.

Here are three signs that outsourcing is the right move for your business:

1. New tasks are taking time away from core business tasks

As your company grows, tasks that used to be a small part of your business can start taking more and more time. This can get in the way of developing new products and services. For example, companies that need support for software quality assurance often outsource this help, because it can be more efficient and cost-effective than recruiting full-time employees.

2. You’re running out of room for new employees.

Renting or purchasing office space can be a big expense, and it may not be practical or cost-effective to find additional office space in your city. With onshore outsourcing, you can increase the size of your team without relocating to a larger building or crowding everyone into your existing workspace.

3. You need additional tools and expertise.

If the tasks that you need done are outside your core business areas, then you may need external experts to advise you on workflows and equipment. Outside consultants may be an option, but with outsourcing, you can benefit from that expertise on an ongoing basis and treat your new associates as part of your team. For example, a hospital may need an additional occupational therapist to help patients in rehabilitation, so the hospital may post a travel OT job to hire a professional who can come and go as needed. Access to extra talents is one of the key benefits of an outsourcing model.

Pros and Cons of Onshore Outsourcing

Business people deciding to go for onshore outsourcing

Once you’ve decided that outsourcing is the way to go, you’ll need to decide whether you want to use a team that is nearshore, offshore, or onshore. How do these three types of outsourcing compare?

Onshore Outsourcing vs. Offshore Outsourcing

Let’s review the difference between onshore outsourcing and offshore outsourcing. With onshore, you’re obtaining services from people in the same country, and using offshore means you’ll get services provided by people who may be on the other side of the world. The pros and cons of each option depend on your needs.

Offshore outsourcing has a reputation for being cheaper because you can hire in countries with lower labor costs. While this isn’t always the case — nearshore teams can often be very cost effective and factors like the level of skill required to do the work have an impact on cost — in general, offshore outsourcing is the lower cost option.

Time zones can also be a pro or con depending on your business model. If you’re hiring a web developer or a fractional marketer, then it may make sense to choose onshore outsourcing so you can communicate during your regular working hours.

On the other hand, if you’re hiring a customer support team, then you may benefit from having coverage in other time zones and using a follow-the-sun strategy. This way, customers can reach your support team around the clock and your agents can work reasonable hours.

Onshore Outsourcing vs. Nearshore Outsourcing

Nearshore outsourcing shares some similarities with offshore outsourcing, except that the services are performed from a nearby country instead of a distant one. A U.S-based business might choose to work with a BPO based in Honduras rather than one based in Asia, for example.

Nearshore outsourcing delivers some of the same benefits as onshore outsourcing, such as having a similar time zone and being physically closer. With this type of outsourcing, it’s usually easier for someone at a nearshore location to travel for a business meeting or company offsite than for a BPO in an offshore location.

However, there may still be language and cultural differences, so keep this in mind as you decide between nearshore and onshore outsourcing. Roles that require advanced English-language skills, such as customer support or help desk positions, may be performed better by an onshore team. That said, some outsourcing services test for language proficiency before hiring. (At PartnerHero, for example, all our associates, regardless of location, test at the highest C2 English level in the EF SET test.)

Finally, it’s also worth looking into the intellectual property laws of any countries you’re considering, especially if workers will be handling proprietary data. Not all countries have the same privacy and confidentiality laws, so you’ll need to clearly outline your expectations in these areas. This is also something you should discuss with your outsourcing firm.

Is Onshore Outsourcing Right for You?

The right type of outsourcing depends on your business’s specific needs, so you’ll need to dig into the pros and cons of each one. 

Consider how important these three areas are for the work you’re considering:

1. Time zone and proximity

Onshore outsourcing nearly guarantees that the outsourcing services will be performed during local working hours and will overlap with those of your in-house staff. This may be especially important if you have tight project management needs or continuous improvement (CI) cycles.

However, outsourcing often isn’t a good fit for positions that require a physical presence. For example, certain IT service positions require someone on-site to service equipment. Or, you may need someone in the office who can help guests understand where to go for meetings. 

2. Expanded talent pool

Onshore outsourcing gives companies access to a larger talent pool that’s less limited by location than in-person work.

This is a considerable benefit in and of itself, but it’s even more important when you consider the flight from big cities during the pandemic. San Francisco had the biggest drop of all U.S. cities, losing 6.7% of its population. That means companies that are used to hiring locally may benefit from contracting with BPOs outside of their city or state.

3. Expertise

Finally, onshore outsourcing allows you to contract certain aspects of your business out to other workers so your team can focus on what they do best. 

Outsourcing your customer support is a cost-effective way to deliver a great customer experience, freeing up your team to focus on things like product development and sales. 

A BPO service can work alongside your in-house team members, allowing you to scale your company quickly, preserve (or enhance) your customer experience, and avoid lengthy hiring processes.

Choose PartnerHero for Your Outsourcing Needs

Onshore outsourcing agents providing customer service

Onshore outsourcing may be a good fit for businesses who need to scale non-core services and want to hire workers in their country. However, in some cases, offshore and nearshore outsourcing may be a better option.

At PartnerHero, we can help you decide which type of outsourcing is right for your business and help satisfy your customer support needs. Whether you need flexible services or a dedicated team, we offer excellent customer support, quality assurance testing, trust & safety services, and more.

Get in touch today to learn more about our services and find out how PartnerHero can help you scale your business.