Nearshoring Vs. Offshoring: How To Hire Affordable, Quality Labor Overseas

Romania is one of the lowest-priced countries for hiring workers in Europe. While the average Swiss worker earns close to $11,450 per month, Romanians earn just $1,490, one-tenth as much.

Here’s the interesting part: Some countries in Southwest and Eastern Europe, like Romania and Georgia, are perhaps some of the most attractive places for hiring talent for everything from technical and website work to data entry.

When evaluating business jurisdictions for European entrepreneurs for our clients, these spots rank relatively highly.

At Nomad Capitalist, we help high-net-worth entrepreneurs and investors get more out of their money, going the extra mile to help reduce taxes legally and develop a Plan B for you and your business. 

In fact, more and more entrepreneurs are no longer hiring in the Philippines, Southeast Asia, or India. An increasing number of high-end entrepreneurs are favoring Eastern European countries for outsourcing.

This concept of “nearshoring” is gaining steam as businesses realize that productivity is even more important than cost savings.

Nearshoring is somewhere in between “onshoring” and “offshoring.” Offshoring is hiring call center agents in the Philippines or data entry people in Bangladesh, while onshoring is the practice of repatriating jobs to the Western world.

For example, in Malta, it’s a lot cheaper to manufacture than in Germany and involves less government nonsense than setting up a factory in Spain or France. And the fact that Malta offers some intriguing tax benefits right in the heart of Europe is also a benefit.

Similarly, a lot of German companies, as well as Amazon, are shipping lower-rent tasks right over to Poland.

For entrepreneurs who need virtual assistants or other non-technical labor, Eastern Europe is one of our top picks for several reasons:

English Fluency 

Not everyone speaks English there, especially not the older generation, with some jurisdictions still living off the fumes of the past communist regime.

However, there are a number of American companies in there and plenty of ]workers who have been very well-trained in American English and even American culture. It’s easy to have a conversation with smart young people here and never have to repeat or explain yourself.

Low Costs 

At Nomad Capitalist, we believe that the herd mentality removes value and drives up prices. Ever since Tim Ferriss wrote The Four-Hour Workweek, people have been hiring Filipino assistants to help them handle tedious tasks.

We frequently talk about the benefits of investing and doing business in Asia, but the fact that Asia is emerging rapidly also leads to higher prices, including labor. There are some people in Vietnam who speak decent English, and you can find them for less than $500 a month. You could find talent for less if you’re willing to set up a physical business there. But it may be a challenge.

You can hire a Romanian whose equivalent English skills are better on average and whose culture is more closely aligned with yours. Romanians are also highly tech-savvy, considering the region’s mathematics and technical education success.

By contrast, Romania isn’t really any more expensive than non-EU states like Albania or Serbia. This can be a real benefit if you want to hire staff in a physical work environment; starting a company in the EU can be used to get you European Union residency and future citizenship.

Internet Speeds

The likes of Romania and Hungary have some of the fastest internet speeds in the world, rivaling those in Tokyo or Hong Kong, with an average download speed as high as 260.97 Mbps.

Even if your staff works remotely, they need fast and reliable internet to get their job done. Internet service in part of Europe is very cheap by US standards, especially considering speeds are far better. That’s quite something. Considering hiring those workers in the States would cost you a lot more. 

Of course, Eastern Europe isn’t the only place to benefit from higher-quality, affordable staff using nearshoring. Countries like Malaysia and Singapore in Southeast Asia offer lower-cost labor than you may be used to in the US or Europe, all with less governmental red tape.

Those countries compare somewhat favorably to the Philippines when you consider that almost all young Malaysians, for instance, are well-educated and speak pretty good English.

In the Americas, smaller pockets in countries like Mexico and Panama offer more affordable labor for manufacturing and technical and financial work.

While we believe in offshoring your business, investments, and capital, we have seen a trend away from offshoring labor. However, there will always be a need for cheap tasks being done in the likes of Bangladesh or Nepal.

Entrepreneurs have moved away from hiring people for $1 to “hiring people who can get the job done with no-nonsense in order to stay in business and grow. It’s the abundance mentality: invest a little bit more, a little more smartly, and potentially get a lot more in return.

As with anything, you need to understand where the trends are moving and align your business interests accordingly.

Location is no longer an issue when it comes to finding talent and hiring staff. 

At Nomad Capitalist, we have ten years of experience helping high-net-worth individuals incorporate offshore, obtain second citizenship and residencies, and invest in real estate opportunities. 

Become a client today, and we will work as the architects and general contractors of your holistic offshore strategy, helping you go where you are treated best.