What Is Offshoring? Overview, Benefits, and Challenges

Key Takeaways

Offshoring is the practice of having business processes, services, or tasks performed in a different country, typically to benefit from lower costs, access to specialized talent, or time zone differences.
Roles that can be effectively offshored include IT and software development, customer support, finance and accounting, sales and marketing, and creative services—essentially any position that can be performed remotely and doesn't require face-to-face interaction.
Nearshoring is a specific type of offshoring where businesses work with talent in geographically close countries, such as Latin American countries for US companies. It offers similar cost benefits to traditional offshoring but with additional advantages like shared working hours for real-time collaboration.

Is it crazy to think you could hand over parts of your operations to a team halfway across the world? Not at all. Successful businesses do it every day, whether it’s a startup hiring developers in Colombia or an e-commerce business offshoring customer support to the Philippines.

Offshoring gives you access to specialized skills and lower costs compared to hiring in the US. The question isn’t whether you should hire offshore—that’s a no-brainer for most growing businesses—it’s which roles you should fill with overseas talent. We’ll break it all down in this article.

What Is Offshoring?

Offshoring is having business processes, services, or tasks performed in a different country, typically to benefit from lower costs, access to specialized talent, or time zone differences.

Let’s clear something up: offshoring isn’t necessarily the same as outsourcing. With outsourcing, you hand tasks over to a third-party company. With offshoring, you’re building your own team—they just happen to be based in another country (or several countries).

Here’s what it looks like in practice: A US company needs IT support but doesn’t have the budget for US-level salaries. Instead of contracting with an outside firm, they hire their own support team in Colombia.

These employees work directly for the company, handle all customer queries and troubleshooting, and follow the company’s processes. The business maintains complete control while significantly reducing costs.

Many US businesses are also exploring nearshoring, a specific type of offshoring where you hire in geographically closer countries like those in Latin America.

The big advantage? Similar time zones mean your team is working while you’re working. We’ll dive deeper into nearshoring vs. offshoring later, but it’s worth keeping in mind as an option that gives you many of the benefits with fewer communication headaches.

What Problems Does Offshoring Solve For Businesses

Businesses of all sizes can benefit from offshoring, helping them deal with common issues that hold them back. Here are a few key problems it can solve.

Talent shortages

By 2030, over 85 million jobs could go unfilled, potentially leading to $8.5 trillion in lost revenue globally. The issue isn’t a lack of people—it’s that businesses can’t find qualified candidates with the skills they need.

Offshoring opens access to a larger talent pool. Instead of competing for scarce local talent, companies can hire skilled professionals with the expertise they need in countries with strong educational backgrounds in these industries.

A great example is what we’ve seen with accounting roles. Some companies we work with were looking for 6+ months for senior accountants in the US before realizing they could find professionals with the same qualifications in Argentina within weeks.

Rising wages

Wages in the US have risen by 42.4% over a 14-year period. While higher wages boost consumer spending and improve employee retention, they also increase labor costs and squeeze profit margins.

Offshoring to countries with lower living costs lets you hire qualified professionals at more affordable rates without sacrificing quality. You don’t have to lower your expectations just because you don’t have the budget for A-players in the US. Top talent exists globally, and offshoring lets you access top talent that will fuel growth at rates that work for your business.

You’ll also save on expenses like office space and other costs of having workers on-site. It’s a win-win: companies reduce costs by 30–70%, and offshore employees receive competitive salaries for their local economies.

Need for round-the-clock operations

Some industries require continuous operations, like customer support, IT services, and financial trading. Offshoring makes this easier as it takes advantage of time zone differences.

When it comes to customer support, not all tasks can be handled by a bot. A US company can offshore a customer service team to provide clients with real human assistance even outside regular business hours. This setup improves response times, enhances customer satisfaction, and keeps operations running smoothly day and night.

Rapid growth demands

Scaling a business in the US is expensive and involves long recruitment cycles. Offshoring allows businesses to expand their teams more efficiently and with cost efficiency in mind.

For example, startups can hire offshore developers during a product launch and scale down when demand stabilizes. This flexibility makes it easier to grow without making long-term financial commitments.

A person showing benefits of offshoring in an online meeting

Roles That Can Easily Be Done Remotely from an Offshore Location

Let’s be practical here. If you’re already allowing remote work, does it really matter if your team member is working from their house 10 miles away, from the other coast of the US, or from another country entirely? For roles that don’t require face-to-face interactions with clients or in-office collaboration, geography becomes irrelevant.

The key is identifying which positions in your organization can thrive in a remote environment. Once you’ve done that, offshoring becomes a natural extension of your remote work strategy—just with the added benefit of significant cost savings.

Here are the most common roles you can offshore.

IT and software development

Roles include:

Software developers and engineers (web, mobile, back-end, front-end, full stack)
QA testers and automation engineers
Cloud and DevOps engineers
AI and machine learning specialists
Cybersecurity analysts

Offshore software development is a smart choice for companies looking for specialized engineers from around the globe. Countries like India, Argentina, and Mexico have large pools of developers with expertise in programming languages like Python, Java, and JavaScript.

Customer and technical support

Roles include:

Customer support representatives (email, chat, phone support)
Technical support specialists
Help desk analysts
Client success managers
Community managers

Customer service and support is one of the most popular functions to offshore. Offshore teams can handle inquiries effectively because of the round-the-clock support they can provide. A great example here is the Philippines, which has over 1.5 million freelancers who excel in this area because of their strong English proficiency and cultural familiarity with US customers.

However, if you need support representatives who work during US business hours, Latin America is often the better choice due to the time zone alignment. Plus LatAm bilingual LatAm reps allow you to serve both English and Spanish-speaking customers without hiring separate teams.

Finance and accounting

Roles include:

Bookkeepers and accountants
Payroll specialists
Financial analysts
Tax preparers and auditors
Fraud prevention and risk analysts

Accounting and finance roles are among the top 10 hardest to fill. By offshoring, you can find finance professionals faster while staying compliant with financial standards.

For example, we helped an e-commerce health and beauty brand hire an offshore bookkeeper five times faster while reducing costs by 60%. The new hire, who is from the LatAm region, has excellent English skills and integrated smoothly into the team without a hitch. This isn’t unusual—we routinely see companies slash their hiring timelines while significantly reducing costs when they expand their search for accounting and finance talent to Latin America.

Sales and marketing

Roles include:

Sales development representatives (SDRs)
Lead generation specialists
Telemarketers and cold callers
Digital marketing specialists (SEO, PPC, social media)
Email marketing and automation experts

Something notable about hiring offshore sales and marketing experts is that they can bring diverse market insights, helping businesses expand into new regions smoothly.

Many offshore sales reps specialize in cold calling, appointment setting, and follow-ups, while offshore marketers can manage paid ads, SEO, and content creation.

Design and content creation

Roles include:

Graphic designers (branding, UI/UX, print and digital design)
Content writers and copywriters
Video editors and motion graphics artists
Social media managers
Illustrators and animators

Creative production services are increasingly being done offshore because, aside from cost efficiency, offshore creatives are well-versed in global branding trends and can produce content tailored for international markets.

Offshoring vs. Nearshoring: Which Strategy is Better?

Earlier we touched on the difference between offshoring and nearshoring, but let’s dive deeper into how these approaches compare in practice.

The terminology can get confusing because “offshoring” technically refers to any hiring outside the US.

But let’s be clear about how these terms are commonly used:

When people contrast “offshoring” with “nearshoring,” they’re typically using “offshoring” to mean hiring talent in distant countries like India, the Philippines, or Eastern Europe—places with significantly different time zones from the US.

“Nearshoring” is a specific type of offshoring where you work with talent in nearby countries—primarily Latin American countries for US companies. The key advantages are similar time zones, cultural alignment, and easier collaboration.

Both approaches offer cost savings and access to specialized talent, but they have distinct practical advantages depending on your company’s needs.

Why choose to offshore

There are several benefits of choosing to offshore:

Cost efficiency: Competitive rates from offshore destinations with lower costs of living help businesses save significantly.
Tap into global talent: Unlike hiring in-house, which limits recruitment to a specific area, offshoring lets you connect with experts worldwide.
Extended business hours: Time zone differences enable 24/7 operations, improving customer service and productivity.

While offshoring brings many advantages, time zone differences and cultural barriers will require careful management.

Why choose to nearshore

Building nearshore teams gives you the cost benefits of going offshore while eliminating most of the headaches. By working with talent in Latin America, you get a solution that feels much more like having a remote US-based team than a traditional offshore arrangement.

Here’s why nearshoring to Latin America works so well for US companies:

‍Real-time collaboration: Your team works during your hours, so you can have actual conversations instead of waiting 24 hours for email replies. This means projects move faster and issues get resolved immediately. ‍
Cultural compatibility: Latin American professionals understand US business culture, sports references, and holidays. Many have worked with US companies before, eliminating the awkward adjustment period often experienced with teams in Asia or Eastern Europe. ‍
English proficiency: You’ll find professionals with excellent English skills who can communicate complex ideas clearly, both in writing and on video calls. ‍
Geographic proximity: Most Latin American tech hubs are just a direct flight away from major US cities—much more convenient than the long-haul flights and multiple connections required to reach Asia or Eastern Europe. ‍
Familiar education systems: Many Latin American countries have education systems modeled after those in the US, with similar degree programs and professional certifications.

Nearshoring solves one of the biggest offshoring challenges—potential communication gaps—by providing better time zone overlap and a stronger cultural fit.

The result? Working with a nearshore team feels much more like an extension of your local team than a separate offshore operation.

A woman working actively in her laptop for offshoring

Best Practices for Successful Offshoring or Nearshoring

Ready to build a productive external team? Here are some best practices to get you started.

Choose the right location: Not all offshore locations offer the same benefits. Consider factors like talent availability, time zone differences, language proficiency, and infrastructure before selecting one.
Look for an ideal offshore/nearshore partner: Work with a reputable staffing or recruitment agency that understands your industry and has proven expertise. A reliable partner will provide top talent that fits into your existing team with ease.
Build strong communication practices: Effective communication is a must, especially when working with remote teams. Use collaboration tools like Slack, Zoom, and project management platforms to keep workflows efficient.
Assure quality and security: Establish strong quality assurance (QA) processes and data security measures. Regular performance reviews and compliance with data protection regulations mitigate risks and maintain high work standards.
Provide proper training and onboarding: Skilled external teams need training to understand company processes and expectations. A structured onboarding plan avoids misunderstandings and reduces ramp-up time.
Creating a long-term growth plan: Think beyond short-term cost savings. Build relationships with your offshore teams and invest in their development for long-term business success.

When implemented properly, offshoring and nearshoring can become powerful strategies for scaling operations.

Final Thoughts

The domestic talent shortage isn’t going away. And traditional hiring approaches are leaving companies understaffed, losing their competitive edge, and wasting resources on lengthy recruitment cycles.

Offshoring opens up new opportunities for businesses seeking access to global talent while achieving cost efficiency. And if you want real-time collaboration and cultural fit, nearshoring to regions like Latin America is the way to go.

Whether you’re looking at nearshore or offshore development, customer support, accounting, or creative services, the key is choosing the right offshore partner, setting up proper processes, and working with teams who understand the US market.

After seeing hundreds of companies transform their growth trajectory through strategic nearshoring to Latin America, we’ve found it’s often the perfect solution for US businesses facing hiring challenges. The time zone alignment, cultural compatibility, and cost efficiency create a powerful combination that’s hard to match with any other hiring approach.

Ready to learn more about why nearshoring is a game-changer for so many businesses? Read our article on the 10 most frequently asked questions about nearshoring to LatAm.