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2.5. Offshore versus Nearshore

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As the phenomenon of offshoring has matured in IT field, we are witnessing segmentation in the marketplace. A range of ”shoring” and ”sourcing” terms have sprung up: “farmshoring”, “multishoring”, “rightshoring”, to list a few. At least one has even been trademarked: “AnyShore” (Carmel and Abott, 2006). Of particular prominence among these terms is “nearshoring”: Nearshoring is typically a centre or a series of centres that perform codified, routine activities for a number of corporate customers (Evisan et al, 2004). Countries and companies that view themselves as nearshore position themselves as offering some of the benefits of offshoring (namely cost reduction), while mitigating other difficulties, especially those imposed by distance. Nearshoring typically has a higher cost profile than offshoring, but it has several important benefits: lower risk, easier communication with the client, and usually a greater cultural affinity to the core customer groups, which can be particularly valuable in customer-facing entities (Evisan et al, 2004).

The term “nearshore” made its earliest appearance in a software development venture called PRT that was set up in the Caribbean island of Barbados in the years 1995-1998 (Hopkins, 1998). Given that India, the software superpower, is geographically distant from its major clients in the US, the innovative business model adopted by PRT consisted in recruiting Indian software developers to produce code of a standard similar to India but in a location nearer to the United states. The PRT founder was a vibrant marketer; he emphasized the term “nearshore” in promoting his company. Since then, the offshoring community began to regularly reframe India as a “farshore” territory, while most other destinations that are geographically closer to their major clients are characterized as “nearshore”.

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