What is nearshoring

Nearshoring

1. Generally: Nearshoring is the relocation of operational activities to nearby or foreign countries. It can be seen as a special form of offshoring and the opposite of farshoring. For Germany, Austria and Switzerland, for example, Ukraine, Poland and Serbia are considered nearshoring destinations. When it comes to outsourcing, the focus is on organizational relocation, not geographical.

2. Features and goals: Nearshoring avoids disadvantages that can arise with farshoring, for example problems related to the way of working, the time difference and accessibility. At the same time, advantages such as high qualifications in technical and linguistic terms and flexibility are taken along. With nearshoring, as with offshoring, companies want to reduce personnel costs (wages and expenses for training and further education) in general.

3. Criticism and Outlook: Reduction of jobs in one's own country, increasing competitive pressure in the workforce and from partner companies, increased complexity in functions and processes, increased communication effort and data protection risks lead to nearshoring (like offshoring in general) being criticized. Business and information ethics can address these issues. A fundamental challenge is that the increased demand for personnel in a nearshoring country can lead to wage increases and thus a major incentive for relocation can be eliminated.