What is nearshore Outsourcing?
Outsourcing in general is hiring a third party vendor to take over a certain section of your business. This can be an entire department, or just a task, and the vendor will provide as much resources and support as necessary to run that department or task more efficiently than you were able to do in-house.
This efficiency can be measured in various ways, but the most common are cost and quality. It can be expensive to run all departments in-house, especially for a team like customer service that requires it’s own tools, training, and quality assurance. Partnering with a call center that already has this infrastructure built into their business can keep those costs down. On the quality side, outsourcing a piece of your business to a vendor who is an expert in that sector can relieve the in-house pressure of staying on top of industry trends and training.
Now, what is nearshore outsourcing? This is one of the three options you have to engage a third party call center. It simply refers to the location of the call center, which if nearshore, would be outside of the United States but within close proximity.
What are different types of Outsourcing? What is the difference between offshore and nearshore?
The three different options for outsourcing are onshore, nearshore, and offshore. The main difference between the three is their proximity to the United States, and then there are other unique qualities that stem from that. We cover these differences in detail in our Complete Guide to Call Center Outsourcing, but let’s dig into the basics here.
Starting with location as the main difference, all of your onshore call centers are located in your home country, which in this case we’re referring to the United States. These are still third party business process outsourcers (BPOs), and separate from your in-house operations. Offshore call centers are located far from the United States, or in other words, overseas. As mentioned above, nearshore call centers are located outside of the United States, but just a short plane ride away.
To give some examples of these locations, there is an onshore call center located in Utah, a nearshore center located in Mexico, and an offshore center in India.
A fellow nearshore provider defines the other differences as:
- Cost Savings
- Time Savings
- Convenience & Collaboration
- Efficient Communication
- Different Time Zones
Onshore call centers are generally the most expensive (sometimes even more expensive than your in-house center). While cost savings is not the reason to engage an onshore center, they do have the other categories covered. They’ll be located just a short drive or plane ride away which is convenient for training and collaboration, and the communication style will be similar to what you’ll find with your in-house center, but with higher quality output as you’re partnering with industry experts.
However, most businesses are looking to save on costs when outsourcing a portion of their business, so nearshore and offshore options tend to be the most popular. Offshore call centers will be your cheapest option with the highest cost savings, but there is some sacrifice on convenience and quality (by United States standards). Flight times are high, around 15-20 hours, often with multiple layovers, so travel time is definitely something to consider when engaging an offshore BPO. The time zones are also considerably different which will have an affect both in your travel experience and the every day operation. For the most part, offshore call centers operate 24/7, but you may not have access to all resources during the normal US workday. Due to the distant location, these areas have their own languages and culture completely separate from the United States. This is to be expected, but can be an obstacle in quality when offshore BPOs are serving US customers.
Nearshore call centers tend to give you the best of both worlds, as you’ll find notable cost savings along with high quality service and convenience. Cost savings will vary depending on the nearshore location you choose, but you can weigh that against the quality you’re looking to achieve. Because of the proximity to the United States, most nearshore locations have similar cultural trends, and inhabitants are often consumers of US products and culture.
The languages you’ll find in nearshore locations match that of your US customers, often offering at least English and Spanish, and some providing French and Portuguese. The convenience of proximity is also a big draw for people who have experienced the long travel times and time zone changes of an offshore call center. Depending on where you are in the United States, your nearshore center could be the same flight time as some of the onshore options. Bogotá, as an example, is a three-hour plane ride from Miami, which is about the same if you were to travel from Miami to Detroit.
There are more nuances in the nearshore sector, as quality, price, and location will balance each other differently with each site. You’ll want to engage multiple vendors in a detailed request for proposal (RFP) before making the decision on the right nearshore partner for your business.
Why do companies outsource?
There are various reasons why a company may look to outsource a piece of their business, but it’s usually related to cutting costs and elevating the quality of service. It can also be a huge time saver for the business when outsourcing their customer service or sales departments, since those require a lot of time and attention. Outsourcing these sectors gives a business more time and energy to spend on developing their product, marketing, and other high level dealings that lead to growing in your industry.
- When factoring in the cost savings and increased quality you receive from outsourcing to a nearshore, it’s really a no-brainer. Although you may pay more upfront to get the outsource partner up and running, you’ll see cost savings overall with agent salaries, tools and resources, and management.
- The cost of living in the US is almost always higher than in nearshore and offshore locations, which is why the salary is lower. It’s a cost advantage to be able to run the majority of your business from the US, but have your agents working out of a country like Colombia or India where the US dollar goes farther.
- Depending on what your call center offers, you can save on tools and resources such as the telephony system and customer relationship management program (CRM) that your agents use to communicate with customers and document interactions. Whereas your in-house contact center would need to pay full price for these licenses, call centers often have deals with providers to utilize these systems across multiple programs, which results in cost savings for both the outsourcer and the client.
- The management of your program comes with significant cost savings for both reasons mentioned above. The salaries of these positions are lower depending on the area, and it’s often included in the full price of your outsourcing contract since it may include shared resources. For example, even if your program manager at the call center is dedicated to your program, there will be a hierarchy and organizational structure around them that are shared across all programs, but still contribute significantly to your program running smoothly. You would need to have an infrastructure and resources for your in-house team to monitor customer interactions, analyze them, coach the agents, and just general operations management. With an outsourced call center, that infrastructure is built into the business and you’re not responsible for the human resource responsibilities that come with it.
- It’s possible to build a quality customer service or sales department with your in-house team, but that takes a lot of time, energy, and money. Working with a nearshore outsource partner, you can have confidence that the service provided will be quality because they are the experts in this industry. They have experience with other programs to work off of, and also a focus on developing industry trends.
- Of course there are concerns with relinquishing some control to your business. It’s comfortable to keep your assets close to home because it’s a familiar space that you know and trust, but that shouldn’t hold you back from taking your business to the next level. Many nearshore locations cater to the contact center industry, so the infrastructure, safety, and data security are less of a concern than you may think. Bogotá, Colombia, for example, has a high quality infrastructure for both telecommunications and transportation. There is nearly 100% electric utility coverage with redundancy, and a public transportation system that covers 80% of urban transport needs.
- You’ll also find highly skilled employees in a city like Bogotá, as its investment in education is a draw to young professionals. 2/10 of the best Latin American universities are based in Bogotá, and 42% of 25-64 year olds in the country have at least a secondary education.
What are the benefits of nearshore Outsourcing?
With nearshore outsourcing, you’ll find the general benefits mentioned above with cost savings and quality. Cost and quality work on a scale when it comes to outsourcing, which we’ve detailed in this blog post about lowering costs closer to home. Generally, the farther you go from the US the lower your costs will be, but quality will be higher the closer you are to home. Nearshore outsourcing is the perfect inbetween where you’ll find costs lower than onshore centers and quality higher than offshore centers.
Another factor, which also contributes to quality, is the call center culture you’ll find in your nearshore locations. In the US, we tend to think of call center work as an entry-level industry. One may start out in the call center as a way to get their foot in the door with a company they’re hoping to grow with, but in a different department like Marketing or Operations. The call center is just a starting point in that scenario, and not their passion or the end goal of their career. Others use the opportunity as a way to make money while going to school, or to get on their feet while they plan their career in other fields. It’s not just due to the job itself, but also the pay. A US agent’s hourly rate is often between $10-$14/hour, which provides a yearly earning of $21k-$40k. The cost of living in many cities in the US does not allow for this to be a long-term opportunity, or at least not full time. This isn’t to say it’s a bad thing, but this American culture in the call centers leads to a high turn over rate and a struggle to keep agents motivated in onshore and in-house call centers.
On the contrary, the call center culture in nearshore locations like Latin America, Mexico, and the Caribbean is much different. The industry itself is a respected career path, and the demand often allows for multiple call centers to exist in the same city. While we still have a lot of students working in our call centers while studying for their degree, we also have plenty of employees who continue on with us post graduation. It’s common for our HR department to match students with a client’s program that fits with the industry they are studying. This gives them valued experience in their field, and they also have an opportunity to use their degree to build a career within the call center.
You can see from the results of our latest employee survey, not just how they feel about our company but also how they appreciate the call center industry in general. Our agents are excited to have the opportunity to work with big US brands, and proud to represent such an important role as customer service or sales. They also feel valued with an average salary that covers their cost of living in the area, and motivated from the extra incentives we’re able to provide.
75% of our employees actually indicated that they’d like to create a career path in the call center, so we developed a tool for this in our E-Learning platform. In addition to the mandatory training and refreshers for each agent’s program, they have the opportunity to indicate a goal for their future with the company. Our tool will then suggest trainings that align with that career path, and agents can take them in their own time. When an opportunity arises, they are already prepped and ready to be promoted.
How to choose a nearshore call center location?
Prioritize Your Wants and Needs
As mentioned in a previous section, nearshore locations are on a sort of sliding scale. In order to choose the best nearshore call center for you, you’ll need to have a good grasp of your needs. Get together with your team to list out your needs and preferences, and then prioritize them. Here are some example factors to consider:
- Cost savings
- Location/Geographic Proximity to your HQ
- Specific languages, or multi-lingual capabilities
- City infrastructure
- Surrounding culture
- Market size and workforce availability
This site has a good breakdown of market size and languages offered in each of the nearshore locations. If language is a top priority for you, you can narrow down your search based on the options available in each country. For example, if your customer base speaks English and Portuguese, you can narrow your search down to Mexico, Colombia, Costa Rica, and Suriname. In terms of market size, it’s good to consider if you have a large program that requires a lot of seats, or if you have a specific niche requiring special skills. You’ll want plenty of talent to choose from!
Whether cost savings is a high priority for you or not, we don’t recommend chasing the lowest price you can find for your nearshore center. If price is truly the top priority for you, then offshore may be your best bet. This same site mentioned above points out that:
“In general, nearshore labor and other operating costs are higher than offshore call centers. Superior English aptitude and bilingual agents couple with other skill sets in high demand along with geographic proximity to the USA all call for a premium above offshore pricing.”
You get what you pay for, and that’s especially true for call center outsourcing. However, that doesn’t mean you can’t shop around with cost savings in mind. Just be aware that higher cost savings could mean sacrificing quality, proximity, or some other needs on your list. This is where prioritization is especially important.
The surrounding culture is something fun to consider on your list. While it won’t necessarily affect your daily operation, you’ll want to choose your partner under the assumption that you or members of your team will be visiting the location. Maybe these visits will be rare, or as frequent as once quarter, which will factor into your prioritization. Each nearshore location is unique, and has different things to offer in their cities. Some are more Americanized, so you’ll find plenty of comforts of home (like chain restaurants and hotels) when traveling to visit your center. Others offer more of the unique culture of that country, including cuisine, entertainment, and transportation. What are you looking for out of the experience, comfort or new experiences?
Send Out a Detailed RFP
Now that you have your priorities in order, you’re ready to search for the nearshore center that checks all of your boxes. Create a detailed Request for Proposal (RFP) that will get you answers to the questions regarding your priorities, and also the services you need. Nearshore centers are not one size fits all, so you should be able to narrow down your options quite a bit from the responses you receive. You should be able to find nearshore centers to engage in your RFP just from a simple search on the Internet, or you can reach out to a service like CXEffect who partners with multiple service providers, and can point you in the right direction.
Visit Your Top Choices
An in person visit to your top sites of choice is ideal, but many sites also offer virtual tours. You’ll not only get a feel for the space where your agents will be working, but you’ll get a chance to meet with the management team and supporting players who will be responsible for handling your account. At the end of the day, you want a partner that checks all of your boxes, but also a team that mixes well with your own company culture.