“Nearshore” is a term that can puzzle even experienced executives because its meaning changes depending on context. In everyday language it literally means “near the shore,” but in business it refers to moving work to another country that is geographically nearby. The catch is that which work is being moved, and why, varies between industries. Below, we’ll clarify what nearshore means in different contexts (from IT services to manufacturing), why the term can be confusing, and how it compares to related models like offshore, onshore, rightshore, and hybrid sourcing.
The meaning of “nearshore” depends on context, leading to confusion if you don’t specify the industry. In supply chain and manufacturing, nearshoring means relocating production or operations to a nearby country (as opposed to far-off offshoring). For example, moving a factory from Asia to Mexico would be considered nearshoring. However, in IT and services, nearshore typically describes outsourcing work to teams in neighboring countries (often within similar time zones) instead of a distant overseas location.
In both cases the core idea is proximity (leveraging a closer country for business operations) but the application differs. A CIO talking about nearshore might mean partnering with a software team one country over, whereas a COO might mean shifting a manufacturing supplier closer to home. No wonder the term causes confusion.
o make matters trickier, nearshore is also used as both a verb and noun, and sometimes interchangeably with nearshoring. Essentially, nearshoring is the practice (noun/gerund) of moving work to a nearby country, and to nearshore (verb) means to do so. The key takeaway: whenever you hear “nearshore,” ask “nearshore what?” – an IT team, a call center, a factory? Context is everything.
In the tech and services sector, nearshore outsourcing refers to hiring a provider or team in a neighboring country (usually one that shares similar time zones and cultural affinities) to perform work for your company. In other words, it’s outsourcing “close to home.” A nearshore partner is outside your home country but within the same region, for example, a U.S. company working with developers in Mexico or Canada instead of India or China. The essential difference from traditional offshore outsourcing is geographical proximity.
Why go nearshore for IT services? It offers a “best of both worlds” balance between onshore and offshore. You can reduce costs compared to onshore domestic hiring, while avoiding many downsides of far-away offshoring. Because nearshore teams operate in similar time zones, you get real-time collaboration during your working hours.
Meetings don’t require someone to be up at 3 AM, and coordination is smoother. Cultural and linguistic barriers also tend to be lower; neighboring countries often have some shared language skills or business culture overlap, meaning fewer miscommunications.
In practice, nearshore IT services encompass things like software development, call centers, technical support, QA testing, and other professional services performed by a vendor in a nearby country. For example, a fintech company in Western Europe might nearshore its software development to a team in Eastern Europe, or a U.S. SaaS firm might use a customer support center in Costa Rica. The collaboration between client and nearshore team is often quite close-knit: daily video calls, agile sprints aligned in time, and continuous communication, making the nearshore team feel like a natural extension of the home team.
In a manufacturing or supply chain context, nearshoring has a similar spirit of “closer to home” but applies to physical goods production and logistics. It means moving production, sourcing, or suppliers to a country that is near your primary market or base of operations. This is often discussed as an alternative to offshoring production to distant low-cost countries. For instance, a European company that originally offshored its assembly plants to Asia might nearshore some production to Eastern Europe. Or a U.S. retailer might nearshore apparel manufacturing from overseas in Asia to factories in Mexico or Central America. Geography is the distinguishing factor: near offshoring instead of far offshoring.
Why are companies doing this? Nearshoring manufacturing is largely about speed, control, and risk reduction. By bringing factories or suppliers closer, companies can shorten their supply lines and respond faster to demand changes. Shorter transit times mean quicker shipping and restocking, which improves inventory management and customer responsiveness. Proximity also makes oversight easier – you can visit a nearby plant more often to monitor quality or troubleshoot issues. Furthermore, recent global events (trade wars, pandemics, geopolitical tensions) exposed the vulnerabilities of having extremely far-flung supply chains. Nearshoring is seen as a way to improve supply chain resilience by reducing dependence on distant regions.
It’s important to note that in supply chain usage, nearshoring might involve your own company’s facilities or those of a supplier/partner. For example, you might build a new manufacturing plant in a neighboring country, or you might contract a nearby third-party manufacturer. Either way, the goal is the same: relocate production nearer to the home market. Nearshoring is often discussed alongside reshoring (bringing production back to the home country entirely) and contrasted with classic offshoring. One logistics firm succinctly defines it: “Nearshoring involves relocating manufacturing to nearby countries, while reshoring means bringing production back to the company’s home country.” Both strategies aim to improve delivery times and control by reducing distance.
It’s clear that nearshore means slightly different things to different teams – yet the concepts overlap. What’s common across all uses of “nearshore” is the idea of leveraging geographical proximity as an advantage. In any industry, nearshoring is essentially a variant of offshoring that keeps things regional. As one source puts it, nearshoring is “a form of outsourcing where a company moves certain business operations (like manufacturing, software development, or customer service) to a nearby country.
The key difference from offshoring is geographic proximity.”In a manufacturing or supply chain context, nearshoring has a similar spirit of “closer to home” but applies to physical goods production and logistics. It means moving production, sourcing, or suppliers to a country that is near your primary market or base of operations. This is often discussed as an alternative to offshoring production to distant low-cost countries. For instance, a European company that originally offshored its assembly plants to Asia might nearshore some production to Eastern Europe. Or a U.S. retailer might nearshore apparel manufacturing from overseas in Asia to factories in Mexico or Central America. Geography is the distinguishing factor: near offshoring instead of far offshoring.
In both IT/services and manufacturing, the motivation is to get benefits of cost or specialization by going outside your home country, without the downsides of extreme distance. Time zones, travel, language, culture – being “near” helps mitigate those issues whether you’re dealing with a factory or a development team.
However, there are notable differences in how nearshoring is implemented between, say, a tech company and a manufacturing firm:
In tech and services, nearshore usually refers to outsourcing tasks to a vendor or third-party team abroad. You’re hiring an external provider (developers, support agents, etc.) located nearby. In manufacturing, nearshoring often involves physical relocation of facilities or suppliers. The company might invest in its own plant in the nearshore location or source from a manufacturer there. In short, tech nearshoring = hiring a team; supply chain nearshoring = moving production location (which could be in-house or via a supplier).
Nearshore service teams often integrate tightly with the client’s organization (daily collaboration as part of one virtual team). In manufacturing, while supply chain partners are crucial, they operate more independently than an integrated dev team would. You’re coordinating production and logistics, but not necessarily having a plant in Mexico join your daily staff meetings (barring your own captive facility).
Both forms of nearshoring try to balance cost savings with convenience. But the balance can differ. In IT, labor cost differences drive decisions heavily – for example, a developer in a nearby country might save money over local hires, though not as much as an offshore developer in the lowest-cost country. In manufacturing, labor and production cost differences matter too, but factors like tariffs, shipping costs, and lead times play a bigger role. Nearshoring production might be pursued not just for labor savings but for quicker delivery.
Let us help you define the nearshore roles you actually need, match them to U.S. time zones, and align on budget before you commit.
SCHEDULE A CALLOne area where the term nearshore is heavily used is in IT staffing and team augmentation services. If you’ve come across phrases like “nearshore development team” or “nearshore staff augmentation,” this is all about services companies providing talent in nearby countries to extend your team.
Nearshore staff augmentation means you are adding remote team members (developers, engineers, designers, etc.) from a nearby country to work in tandem with your in-house team. Unlike a fully outsourced project where you hand off deliverables to an external agency, augmented nearshore staff are integrated into your daily operations and workflows. They join your stand-ups, use your collaboration tools, and essentially become an extension of your team – just based in a different country. One definition explains it well: nearshore staff augmentation is “a workforce strategy where companies extend their in-house teams by hiring tech professionals from neighboring countries or those in similar time zones,” enabling “better communication due to cultural and time zone alignment.”
This model has become very popular for IT and software development needs because it tackles two big challenges: the tech talent shortage and the downsides of traditional outsourcing. With nearshore augmentation, you tap into talent pools in nearby countries (for a US company, think Latin America; for Western Europe, think Eastern Europe, etc.) where there are many skilled engineers. You also save on costs since salaries may be lower than at home, but you don’t sacrifice much on collaboration. Because of the proximity, nearshore team members generally work overlapping hours with your team and often speak the same language fluently (for instance, many Latin American engineers speak excellent English, and European nearshore teams often have multilingual capabilities). As a result, you avoid the “black box” effect of outsourcing – instead of throwing specs over the wall to a distant team, your nearshore teammates are in the loop day-to-day.
Finally, to avoid any lingering confusion, let’s define some of the common terms related to “nearshore” and outsourcing models. Understanding these will help you translate the jargon when evaluating strategies:
In outsourcing, onshore means the work is being done in your home country. An onshore vendor or team is located domestically, within the same country as your business. For example, a company in the US hiring a software development company also in the US is using onshore outsourcing. Onshore offers maximum proximity (literally local), eliminating language/time-zone issues, but usually at the highest cost.
Offshore refers to outsourcing operations to a distant country, typically overseas and in a faraway time zone. Often this implies going to regions known for low-cost labor. For instance, a U.S. company might offshore customer service to the Philippines or software development to India. Offshore locations tend to be much farther away than nearshore, which can introduce challenges in communication and coordination, but they often provide the greatest cost savings.
Nearshore means outsourcing to a neighboring or nearby country – one that is geographically close and usually shares similar time zones or regional culture. The idea is to gain some cost advantage or specialization by going outside your country, but maintain easier collaboration thanks to proximity. By formal definition, it’s “the outsourcing of business processes to companies outside one’s home country, but usually within the same region of the world”
Have a question? Click "Get Started" above to schedule a free consult and discuss your specific engineering needs.
In business, nearshore refers to outsourcing or moving part of your operations to a nearby country rather than a faraway one. It’s essentially a form of offshoring that stays within your general region or time zone.
These terms all relate to where companies place their operations or sourcing: Offshoring means moving work to a distant country (often overseas) to capitalize on cost advantages – for instance, a German firm offshoring production to Asia. Nearshoring means shifting work to a nearby country – the country is foreign but geographically close.
Nearshoring can offer a balance of cost savings and operational convenience. Key benefits include: closer time zone alignment (allowing real-time collaboration and easier communication with the remote team), fewer cultural or language barriers compared to a very distant outsourcing location, shorter supply lines or travel distance (which means faster shipping or easier oversight trips), and often lower costs than purely domestic operations (though not always as low as far-off offshoring). Essentially, nearshoring “bridges the gap” between offshoring and onshoring by minimizing headaches like major time differences, while still providing cost and talent advantages.
Nearshore teams that onboard fast, collaborate deeply, and build better products.
