Knowra Nearshoring Nearshoring Nearshoring is the relocation of business activities to a nearby country, often to shorten supply routes, reduce time-zone differences, or improve access to a regional market.
Offshoring : The relocation of business activities to another country, often to reduce costs or reach new markets. Nearshoring is a geographic form of offshoring, distinguished by choosing a nearby country.
Business process outsourcing : The contracting of recurring business operations, such as payroll or customer support, to an external provider. Companies nearshore outsourced operations to coordinate more closely with domestic teams.
Reshoring : The return of business activities to the company’s home country after they were moved abroad. Reshoring brings work home, whereas nearshoring moves it to a nearby foreign country.
Foreign direct investment : A cross-border investment that gives an investor a lasting interest and significant influence in a foreign enterprise. Building or acquiring nearshore facilities can bring foreign direct investment to the host country.
Global value chain : The cross-border sequence of activities through which a product or service is designed, produced, delivered, and supported. Nearshoring changes where particular stages of a value chain take place.
Software development outsourcing : The use of external providers to design, build, test, or maintain software. Nearshore software teams can combine lower costs with overlapping work hours.
Farshoring : The relocation of business activities to a distant foreign country. Farshoring contrasts with nearshoring’s preference for geographic closeness.
Labor arbitrage : The use of wage or labor-cost differences between locations to reduce the cost of producing goods or services. Nearshoring can preserve labor-cost savings while avoiding some costs of distant operations.
Total cost of ownership : An estimate of all direct and indirect costs associated with acquiring and using an asset or service. Comparing full costs can reveal whether proximity offsets higher local wages.
Manufacturing : The transformation of materials or components into finished goods through labor, machinery, and production processes. Manufacturing plants are relocated near major consumer markets to shorten transport routes.
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