What practice involves subcontracting business processes to an external company in a nearby country?

The practice of subcontracting business processes to an external company in a nearby country is known as near-shoring. This approach allows businesses to take advantage of geographic proximity, which can lead to reduced shipping costs, easier communication, and fewer time zone differences compared to offshoring, where processes are outsourced to countries that are typically further away.

Near-shoring often features benefits such as a shared cultural understanding and potentially a more skilled workforce, which can make collaboration easier. While outsourcing refers to the broader concept of sourcing external vendors for various business functions, near-shoring specifically highlights the geographic aspect of choosing neighboring countries for these services.

Understanding this concept is critical for businesses considering how to optimize their operations and manage costs while maintaining quality and efficiency in their processes. Other options focus on different aspects of outsourcing that may not emphasize the geographical element as centrally, which is the defining factor of near-shoring.