The Trend Nearshoring

Nearshoring describes the process to offshore some business activities to geographically close destinations. It is of the utmost importance for firms to choose their offshoring destinations in a way that ensures cost efficiency but also maintains workflows across borders. Thus, it is not sufficient to consider simple cost factors but also a wider range of factors, such as institutional or social factors when choosing nearshoring locations.

The International Management Institute, the Center for Geopolitics and Competitiveness and the trade associations swissICT and Information Security Society Switzerland (ISSS) as implementation partners have investigated the nearshoring trend more closely. The focus is on the country selection process from the perspective of Swiss IT companies and the underlying attractiveness of various regions of Europe as the location for an IT service center.

As a result, a SML Center for Geopolitics and Competitiveness IT Service Nearshoring has been created. Based on various parameters it provides a deep insight into potential nearshoring destinations and their advantages as well as disadvantages. The IT Nearshoring Index helps firms in their nearshoring decision. It combines a wide range of factors to one overall nearshoring index. Firms can use this guideline to focus their due diligence on a narrow range of locations. Of course, the Center for Geopolitics and Competitiveness supports firms in their nearshoring process by offering a holistic approach. We consult firms to find out key factors for their offshoring decision and adjust the nearshoring index accordingly. This firm-specific and personalized nearshoring index is more able to pin down optimal nearshoring locations. Moreover, we support firms in the location due diligence by providing location risks assessments.

The ZHAW SML Nearshoring Index indicates the attractiveness of regions in Europe for Swiss IT service firms. The index can take values between 0 and 100, where a higher number represents more attractive region. Regions are colored in accordance to their Nearshoring Index, where light yellow colors indicate less attractive regions and darker red colors regions that are more attractive. 

The ZHAW SML Nearshoring Index is the aggregate of 5 weighted factors: Labor Factors, Economic Factors, Institutional Factors, Location Factors, and Social Factors. Each factor can be separately selected from the dropdown menu. 

Additionally, we included a Cost-Efficiency Index, which weights cost components much higher than the ZHAW SML Nearshoring Index. The Top 10 regions for the selected Index or Factor are shown in the Table below. 

Link to the interactive Nearshoring Index

The Center for Geopolitics and Competitiveness supports firms in their nearshoring process using a holistic approach. We consult firms by identifying key factors for their nearshoring decision and create a tailor-made Nearshoring Index. With this firm-specific index help firms to optimize their nearshoring location decision. Additionally, the Center for Geopolitics and Competitiveness can provide an in depth location analysis and risk assessment.