Apple assembles its devices in factories in China, IBM manages huge IT teams in India, and Eastern Europeans handle Amazon’s product development. These are all examples of “farshoring” — hiring contractors or full-time employees in countries far from your headquarters. It’s a practice we’ll be seeing more of in the coming years: Grand View Research expects the global outsourcing market, including farshoring, to grow 9.4% annually from 2024 to 2030.

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In this article, we’ll discuss what farshoring is, how it’s changing the market, and what opportunities it creates for businesses.

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What Is Farshoring?

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To understand what farshoring is, let’s compare it with two terms you probably already know: offshoring and nearshoring.

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Offshoring is when a company relocates certain business processes to another country—no matter how far away—or simply hires local professionals in that country. This strategy enables businesses to tap into global talent pools, reduce operational costs, and access specialized skills not readily available domestically.

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Nearshoring is when a company offshores a nearby country—for example, from the U.S. to Canada or Mexico. This strategy leverages geographical proximity, similar time zones, and often cultural and linguistic similarities to facilitate smoother communication and collaboration.

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Farshoring is relocating to or hiring in more distant countries, often in other continents—for example, from the U.S. to India, Poland, Europe to South Africa, or the Philippines. This approach allows companies to tap into global talent pools where specialized skills are available at a lower cost. 

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Nearshoring and farshoring are thus two types of offshoring, and workers hired in the destination country are called “overseas talent.”

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Six Reasons Why Farshoring Is A Magic Wand For U.S. Companies

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Wide access to talent. Farshoring gives companies access to a large and inexpensive talent pool. For example, Vietnam’s Ho Chi Minh City has become an important outsourcing center for software development because it offers high-quality services with labor costs 90% cheaper than in the United States. 

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Significant savings. For U.S. companies, farshoring is more economical than nearshoring. Yes, Mexico offers lower costs than the U.S., but India and China are even more attractive.

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The total remuneration of overseas talent recruited via Mellow is expected to increase by an impressive 138% compared with 2023. But even so, working with foreign professionals is profitable: their average monthly income is around €1,400 with a median of under €500, compared with a monthly average salary of $4,952 in the U.S.

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Time zone differences. Farshoring allows you to build a round-the-clock workflow. At 6 p.m., your team in Los Angeles is already at the beach (or at least in traffic), but work doesn't stop because in Manila, the Philippines, the day has just begun. This was one of the main reasons Amazon moved its call center services to South Africa in 2012: that made it easier to support U.S. customers at night.

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Risk diversification. Farshoring means diversifying operational risks by distributing work across regions with different economic and political conditions. Cisco Systems provides a good example. As of 2021, the company was manufacturing its products in more than 30 countries, and Its talent is similarly diversified: Cisco hires contractors for a wide range of positions, from software developers and UI designers to business analysts and project managers.

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Enhanced diversity. By farshoring, companies automatically build multicultural teams. For instance, Microsoft does business in more than 190 countries. This global presence allows the company to put together teams with varied cultural backgrounds, better understand the needs of different regions, and develop universal solutions.

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Access to new markets. Overseas talent helps companies enter new markets more smoothly. When Netflix decided to launch in Latin America (first in Brazil in 2011, followed by Argentina, Chile, Colombia, and Mexico), it hired freelancers and contractors from each country to adapt content to local preferences.

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Overseas Talent Trends in U.S. Hiring

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Mellow’s farshoring contractor management service is growing rapidly, with a 213% increase expected in 2024. In particular, American companies are increasingly turning to professionals from Eastern Europe for their high skills and comparatively low labor costs.

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Promising new markets

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There is growing interest in talent from Asia, Africa, and Eastern Europe: from 2022 to 2024, total remuneration for contractors in those regions increased by 39%, 60% and 106%, respectively. Average salaries for technical roles in South America have also increased due to the high demand for skilled professionals.

Google, for its part, is actively moving jobs to the Philippines, South Africa, and India. Its overseas talent performs a variety of tasks, from writing code to moderating content. According to Bloomberg, as of 2018, Google had more contractors than full-time employees.

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The most in-demand professions

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The table below shows the five most in-demand roles on Mellow for 2022–2024, with annual growth in parentheses.

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Though nearshoring can be advantageous thanks to geographical proximity and cultural similarities among employees, farshoring is often a more cost-effective solution for companies seeking global growth and increased operational flexibility. For U.S. companies, farshoring is an excellent and underappreciated way to expand resources, reduce costs, and bring fresh ideas to the table.