What is nearshoring? A glossary for hiring teams

How to use this glossary for Latin American hiring

Start with the terms that change what you are buying. Nearshoring describes where work happens. Recruiting, staff augmentation, and managed services describe different ways to arrange that work. A proposal needs to explain both.

For example, you might need an engineer who takes work from your engineering manager and joins your code reviews. You might instead need a provider to complete a database migration against written acceptance criteria. Those purchases need different contracts, even if the people work in the same city.

Before comparing proposals, write a short description of the job. Include the work the person will own, the manager they will report to, and the hours they must share with colleagues. State whether you need a person to join your team or a provider to deliver a result.

Then use the glossary to check the proposal against that description. If it says "dedicated team," ask who assigns the work. If it says "full service," ask which employment tasks are included. Put the answers into the agreement so your hiring manager and finance team are buying the same thing.

Read cost and timeline terms separately. A salary is different from a provider invoice. An accepted offer is different from a person starting work. Mixing these up can leave your budget short or your project without the staff you expected.

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What terms should you check before choosing a provider?

Use the definitions with the questions below when reviewing a proposal. Ask the provider to explain how each term applies to your role. A label can help you sort options, but the agreement needs to assign specific duties.

Nearshoring, offshoring, and onshoring

Nearshoring means placing work in a nearby country. Offshoring is the broader term for placing work abroad. Onshoring means placing it within the buyer's country.

For a US employer, a software team in Latin America can be a nearshore team. The employer might run its own local operation or use an outside provider. Neither geography nor the word "nearshore" tells you who signs the employment contract.

When asking what does nearshoring mean for your team, start with a working week. Which meetings require the hire? Who reviews their work? Do they need access to physical equipment? These questions turn a location choice into a job someone can actually perform.

Reshoring and friendshoring

Reshoring means bringing work back to the home country. Moving work from a distant overseas location to Mexico is nearshoring for a US business. Bringing that work back to the United States is reshoring.

Friendshoring concerns the political or trade relationships behind a location choice. A country can meet both nearshoring and friendshoring goals, but the words describe different reasons for choosing it.

For a hiring buyer, these labels leave several decisions open. You still need to choose an employment model and check whether the candidate can do the job. Ask anyone proposing a location to connect the recommendation to your team's work.

Nearshoring in supply chain management

In supply chain management, nearshoring concerns where production or supply activity happens relative to the market being served. A buyer may examine factory locations, transport routes, and access to inputs.

Software hiring raises a different set of operating questions. The buyer needs to know who manages the engineers, how they access systems, and when colleagues can work together.

Keep the scope clear when a proposal uses examples from manufacturing to support a staffing decision. A shorter shipping route says little about whether an engineer can maintain your application. Ask for evidence tied to the service you plan to buy.

Staffing companies and recruiting agencies

A staffing company helps a business fill roles. Depending on the agreement, its duties may extend to employing assigned workers or supporting the placement after the hire starts.

A recruiting agency finds and assesses candidates. Check when its fee becomes due and what support continues after acceptance. Do not assume that finding a candidate includes arranging employment or running payroll.

If you are asking what is a staffing company because you need a specific hire, request a written division of duties. Name who conducts interviews, sends the offer, and handles employment questions. Also identify who steps in if the candidate withdraws before starting.

Direct hire and employer of record

With a direct hire, the person joins your own organization rather than being assigned as a provider's employee. For cross-border work, establish which entity will sign the employment agreement before sending an offer.

An employer of record is the legal employer under an arrangement in which the person works for a client business. Candidate search is a separate service to confirm. Ask whether you must bring a selected candidate.

Have the provider explain the relationship among your company, the worker, and the employing entity. Request a clear contact for payroll questions. Your engineering manager should also know where to send employment concerns instead of trying to resolve them through project instructions.

Staff augmentation and managed services

Staff augmentation adds people to a team whose daily work you direct. Your manager needs time to assign work, review progress, and provide feedback. Include that management capacity in your hiring plan.

A managed service gives a provider responsibility for an agreed service or result. The scope should state what the provider must deliver and how you will judge completion.

Consider a migration project. If your lead assigns individual tasks to added engineers, the arrangement looks like staff augmentation. If the provider owns a defined migration and you approve the result, the contract should describe that delivery responsibility.

Ask who bears the work of correcting defects and how changes to scope are approved.

Dedicated teams and statements of work

A dedicated team is a group assigned to your account or project. Ask whether the members work exclusively for you and whether you can approve substitutions. The word "dedicated" does not answer either question by itself.

A statement of work records what the provider has agreed to do. For a project, include the deliverables and the conditions for acceptance. For added staff, describe the roles, schedules, and reporting lines.

Record how changes will be priced before they happen. If a project expands, both sides need to know who can approve more work. Keep that approval separate from a developer's routine estimate during a planning meeting.

Time zone overlap and daylight saving time

Time zone overlap is the period when colleagues can work together. Mexico City stays on UTC-6 without seasonal clock changes. Tijuana follows US daylight saving dates. Check the specific city when setting meeting times. IANA North America time zone records.

Bogotá stays on UTC-5. Buenos Aires and São Paulo stay on UTC-3 without seasonal clock changes. Their time difference from US colleagues can change when US clocks move. IANA South America time zone records.

A clock offset does not establish a person's availability. Ask for the candidate's proposed working hours, including breaks. Check that schedule against recurring meetings and any support duties.

Write the agreed window in named time zones. If your team uses Pacific time, test an afternoon code review against the candidate's local end of day. Recheck the calendar around clock changes.

Asynchronous work and response times

Asynchronous work lets colleagues make progress without responding at the same moment. It depends on written context that another person can use without waiting for a meeting.

For engineering teams, agree where to record decisions and who reviews blocked work. State how to raise an urgent issue separately from a routine question. A message in a chat channel should not be the only record of a changed requirement.

Ask candidates to explain a technical decision in writing as part of a role-relevant assessment. Use the exercise to discuss the level of detail your team expects. Shared hours still need clear handoffs when someone is away.

Gross salary and total employment cost

Gross salary is pay before applicable employee deductions. It differs from take-home pay and from the employer's full cost of employing the person.

Total employment cost includes pay and applicable employer obligations. A provider invoice may also include service fees. Ask for the categories included in each figure before comparing proposals.

Use the same role and seniority across quotes. Confirm the expected schedule and whether equipment is included. If one quote covers ongoing employment support and another covers recruiting alone, list those differences beside the price.

For an annual budget, ask how required payments and leave are treated. Have the provider explain when charges reach your invoice.

Flat monthly rates and statutory bonuses

A flat monthly rate is a recurring price for the services named in the contract. Check the billing currency, payment date, and treatment of partial months.

Ask what can change the price. A role change, a pay review, or a change in the agreed service may need a new quote. The contract should explain the process.

A statutory bonus is a payment required by applicable employment rules. Ask the provider to identify the obligations for the actual hire and explain whether the monthly price includes them.

Keep the employee's pay currency separate from your invoice currency. Request written terms for any exchange-rate adjustment so finance can understand how the bill is calculated.

Time to fill and the first working day

A hiring timeline needs a defined start and end. Ask whether the clock starts when a role is approved, when the search begins, or when the provider receives complete requirements.

Check the endpoint too. Presenting candidates, accepting an offer, and starting work are separate milestones. A plan built around acceptance may still leave a gap before the person joins.

Give the provider the date you need someone working. Ask which steps depend on your team's availability, then reserve interview time.

Before confirming the start date, assign someone to prepare equipment and access. The manager should have an initial task ready and know who will answer the hire's questions.

Vetting, retention, and replacement guarantees

Vetting means checking a candidate's fit before presentation or hire. Ask which checks relate to your role and what evidence you will receive. A process label does not tell you whether someone can review your code or explain a production incident.

Retention measures how many hires remain after a defined period. When reviewing a claim, ask which hires count and whether each person has reached the stated milestone.

A replacement guarantee describes a remedy if a placement does not work out. Read the triggers, exclusions, and fees that remain payable. Ask who runs the new search and what happens while the role is empty.

Keep your handover plan separate from the guarantee. Document work as it happens, assign a backup owner, and define how access will be removed when someone leaves.

Bring the role's duties, required working hours, and planned start date to the conversation. Talk to Opus about a role.

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