Society For Human Resource Management (SHRM) Certified Professional Practice Exam

What does the term 'near-shoring' generally refer to?

1. Outsourcing to distant countries

2. Moving business processes closer to home

3. Local recruitment practices

4. Reducing the workforce

The correct answer is: Moving business processes closer to home

The term 'near-shoring' generally refers to the practice of relocating business processes or services to a nearby country, rather than to a distant one. This approach allows companies to benefit from lower operational costs while still maintaining proximity to their home country. By moving operations to a location that is geographically closer, organizations can take advantage of reduced shipping times, lower travel costs, and often cultural and temporal similarities that facilitate smoother communication and collaboration. In contrast, outsourcing to distant countries involves transferring business functions to far-off locations, which can introduce complexities such as time zone differences and logistical challenges. Local recruitment practices focus on hiring talent within the immediate geographic area rather than shifting business processes. Reducing the workforce does not inherently relate to the concept of near-shoring, as it concerns workforce size rather than the location of business processes. Thus, moving business processes closer to home accurately captures the essence of near-shoring.