Onshore, Offshore, or Nearshore? Choosing the Right Outsourcing Model for Your Customer Service

Let’s face it — the days of everyone working from the office are largely behind us. The remote work culture is not just a trend anymore, and it’s definitely growing. For some, this may sound surprising, but that’s not bad news at all.

In fact, this shift is especially valuable when it comes to outsourcing customer service. Our open talent economy provides companies with access to a global talent pool, meaning they can build responsive, multilingual, and cost-effective support teams like never before. With such a trend, it’s unsurprising that over 66% of small to midsize and 68% of enterprise-grade US companies outsource at least one of their business departments.

However, there’s a catch here: not every outsourcing model is suitable for every business. The location of your outsourced team does play a major role in how well your customer service actually performs. Should you keep it close to home, move it abroad, or find a middle ground?

In this article, we’ll explore the three main approaches — onshoring, offshoring, and nearshoring — and break down which model might be the best fit for your business goals, customer expectations, and operational needs.

The Three Customer Service Outsourcing Models

Opting for customer service outsourcing can prove to be a great idea for many businesses across various industries. But, as we have mentioned before, the trick is to find the best-fitting model. Below, we will break down the three major approaches to outsourcing customer support talent.

Onshore Outsourcing

Onshoring is probably the simplest strategy. In this model, a company outsources its customer support functions to a provider within the same country. Instead of managing support in-house, businesses partner with local vendors. This means that the agents handling customer interactions are also based domestically.

Why is this approach considered the easiest? Mostly because onshore representatives already understand the local market. They share the same language nuances, cultural context, and even the everyday frustrations of the customers they serve. This often leads to smoother communication and higher customer satisfaction. Onshoring also typically simplifies data protection, privacy management, and compliance with national regulations.

The trade-off, however, is cost. Onshore outsourcing is typically more expensive and limits your access to a broader global talent pool, which can make recruitment slower and quite competitive.

Offshore Outsourcing

In offshoring, companies turn to outsourcing providers to find talent in overseas countries. This option is mainly chosen by businesses looking to optimize customer support-related costs. It’s also a great solution for those who are trying to expand their brand reach to foreign markets.

Compared to onshore customer service, offshoring allows for reaching a broader talent pool, oftentimes opening the doors to more skilled professionals. However, this model brings on more complications with work organization, especially considering the time differences. Cultural differences might also become an obstacle, unless your support outsourcing partner provides the new team with culture-sensitivity courses.

Generally speaking, offshore outsourcing has become quite a common practice, with the most popular destinations being Eastern Europe, the Philippines, India, and Latin America. It is also widely used by such famous companies as Target, Amazon, Google, and even the Wall Street Journal.

Despite some drawbacks, this customer service outsourcing method works well, requiring just a few adjustments. For instance, aside from culture-sensitivity courses, you might want to think about introducing language skills testing, assigning special management staff, and establishing a business continuity plan.

Nearshore Outsourcing

Finally, we’ve got to the nearshore outsourcing model. Following this strategy, businesses find those customer service outsourcing companies that hire agents from neighboring countries. This model basically offers a middle ground: while your company still gets talent from the relatively similar cultural, linguistic, and legal backgrounds, you can still access a broader pool of candidates and find opportunities to save costs.

This option also offers a much better work-environment compatibility, as the time zones usually don’t have such drastic differences. In comparison to complete offshoring, nearshoring also allows for a much more effective organization of work. After all, if your agents are in a nearby country, you can, in theory, organize meetings, team buildings, and even conferences, to maintain in-person communication as well.

Comparing Onshore vs Offshore vs Nearshore

So you don’t get lost in all the possibilities and specificities of the different customer service outsourcing models, we’ve created a helpful comparison table with key aspects to remember.

Key Factors to Consider When Choosing The Best Model for Your Business

We have broken down the differences between the different models, which gives you enough details to make a well-informed decision. However, before you jump straight to picking, we would suggest considering a few points more closely.

1. Costs

Budgets tend to have their limits. And as many businesses look at outsourcing as a way of lowering operational costs, it’s important to pick a customer service outsourcing model that will support this goal. And even though it’s true that offshoring is the cheapest option, it might not be so for every company.

For example: A mid-sized e-commerce company based in Germany decides to offshore its customer service to the Philippines to cut costs.

At first glance, it looks perfect — labor is much cheaper, and the vendor promises round-the-clock support. However, once operations begin, unexpected challenges arise:

• Time zone differences cause coordination delays between the European management team and the offshore agents.
• Language knowledge gaps lead to misunderstandings with German-speaking customers, hurting satisfaction scores.
• The company has to hire extra quality assurance managers and invest in training programs to align the offshore team with their brand tone.
• Shipping returns and payment issues (which require knowledge of EU consumer law) take longer to resolve, increasing customer churn.

By the end of the first year, the costs for additional oversight, training, and lost customers outweighedf the initial savings.

 Even though offshoring looks cheapest on paper, the total cost of ownership can turn out higher than if a company uses a nearshore or hybrid outsourcing model (we will discuss that option later.) Thus, always consider the pros and cons of different models specifically for your business, as sometimes even onshore outsourcing might be the cheapest.

2. Quality

The next key factor to consider is the quality of service. After all, no company wants to choose an outsourcing option that ends up frustrating customers or damaging loyalty. The reality is that some regions have a stronger talent pool of skilled support agents than others. Upcity’s poll from 2022 has found that the most widely spread issues companies face when outsourcing were communication difficulties, fulfillment of deadlines, and execution of the provided instructions. That’s why it’s worth doing some research before deciding on a model.

If you’re considering nearshoring or offshoring, look into which countries have a reputation for experienced, well-trained customer service professionals. It’s also a good call to define your expectations early on — prepare a clear list of service level agreements (SLAs) so potential providers understand your standards from the very beginning.

3. Work Complexity: Customer Expectations & Needs

To know what exactly to look for, consider the following:

• The scope of work → Which support channels need to be covered? How many agents are generally needed? What type of ticketing system they need to be familiar with?
• The complexity of work → which cases you need the agents to handle? Are those refunds and returns? Or do you need a team familiar with handling chargebacks?
• Customer expectations → How fast the responses should be? Which languages does your audience use, primarily? Is there a specific tone of voice these new agents will have to follow?

The last is probably the most important. For example, if your audience values instant responses and values talking to “their people”, an onshore or nearshore team might bring about better alignment. If cost efficiency and around-the-clock coverage are the priority, an offshore team could make more sense.

Understanding these aspects will help you identify the outsourcing model that best fits your customers’ needs, while ensuring consistency in tone, quality, and overall experience.

4. Scalability & Flexibility

It’s easier to think about outsourcing customer support as just a here-and-now solution. In reality, it’s much more effective to consider all the possibilities it opens in the long run. Right now your business might have just 3000 tickets per month, but who knows, maybe they will turn into 15K next year.

As such, try to think a few steps ahead: are you expecting any seasonal peaks in request volumes in the near future? Are you planning on expanding your business to other regions and markets? Are you planning on engaging a bigger audience with your product? If the answer to any of these questions is yes, then you need to consider which model will offer the most opportunities for scaling and flexibility.

5. Data Security & Compliance

Last but not the least important question is the question of data protection and regulatory compliance. The issue is, the greater the physical and operational distance between your business and the service provider, the more complex these risks can become. Offshore partnerships, in particular, may face heightened challenges related to cybersecurity, intellectual property protection, and adherence to regulations such as GDPR, CCPA, or industry-specific standards like HIPAA or PCI DSS.

While reputable customer service outsourcing providers often have strong contractual and technical safeguards in place, proximity still matters. Onshore and nearshore models typically offer easier oversight, clearer accountability, and faster response times for audits or compliance checks. Contract enforceability is also more straightforward when working within familiar legal frameworks.

Ultimately, businesses operating in highly regulated industries (or handling sensitive customer data) should carefully weigh these factors. Choosing a provider with transparent data-handling practices and high governance standards can make all the difference in maintaining customer trust and protecting brand integrity.

Possibilities for Hybrid Approaches

We’ve hinted earlier that there’s kind of a “fourth” option when it comes to customer service outsourcing – the hybrid model. It’s a solution that combines the best of both worlds, but how? There are a couple of ways:

1. Combining onshore management with off- or nearshore support agents.

In this setup, your company keeps key managerial roles, such as team leads, trainers, and quality assurance specialists, in-house or within the same country. The customer support agents themselves, however, are sourced through an outsourcing provider abroad. This model helps maintain high service standards and cultural alignment while still benefiting from the cost savings of offshore labor. The catch is that it demands ongoing oversight of both management and external teams, which can add a layer of operational complexity.

2. Keeping core business processes onshore and only outsourcing customer support to near- or offshore agents.

Another hybrid approach involves keeping essential business functions (e.g. product development, marketing, or account management) onshore, while outsourcing customer support to a nearshore or offshore team. This allows companies to protect their intellectual property and maintain close control over sensitive operations, while delegating customer-facing support to regions offering time-zone flexibility and multilingual capabilities. It’s a practical way to scale service coverage globally without compromising your core business integrity.

3. Blending AI customer service with near- and offshore outsourcing.

This third option has just started to gain popularity, but with the rapid expansion of AI tools, it is expected to become more widespread. The idea is simple: use AI-powered chatbots or virtual assistants to handle routine, high-volume inquiries, such as order tracking, password resets, or FAQ responses. The human agents, on the other hand, will be focusing on more complex, emotionally sensitive, or high-value interactions. Such an approach allows companies to reduce response times, ensure 24/7 availability, and cut operational costs without compromising customer satisfaction. When paired with skilled nearshore or offshore teams, it also helps maintain the human touch where it matters most – in conversations that require problem-solving skills and empathy

Best Customer Outsourcing Companies

Drawing The Line: How Should Businesses Outsource Customer Service

Choosing the right customer service outsourcing model ultimately comes down to the consideration of your business priorities, customer expectations, and operational realities. No professional can really tell which is the best option, as the optimal solution varies greatly from business to business.

The key is to assess your specific needs: consider the complexity of your support, the expectations of your customers, your growth plans, and how much oversight you can realistically maintain. By carefully weighing these factors and maybe exploring a few innovative options (or considering a hybrid model), you can build a customer service operation that is efficient, budget-sensitive, but, most importantly, helps your business to build long-term loyalty with your customers.

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