If you are planning on expanding your company internationally, outsourcing business operations, or expanding to a new market, nearshoring has significant benefits compared to other ways of doing so.
Nearshoring is a type of outsourcing. It happens when a company decides to transfer operations, usually IT-related, to a country that is geographically close. The main benefit tends to be cost reduction, however, what makes nearshoring more beneficial than other models is the closeness of the country where the hired company resides.
Setting operations in a nearby country allows for better communication and improved control of the supply chain. This guarantees better supervision of production, which will lead to higher quality products. It also offers access to a bigger talent pool and lower labor costs.
Here are some relevant nearshoring trends for 2022:
Specialization and Flexibility. US companies are outsourcing IT operations and software development more than ever. One of the biggest advantages of nearshoring is the diverse talent pool that opens for companies, where they can look for specialists and professionals for the service they need.
Latin America becoming a top destination. North American companies are encountering new centers of innovation in many Latin American countries. For example, cities like Guadalajara (Mexico), Medellín (Colombia), and Santiago de Chile have become talent and innovation go-to destinations for US companies.
Enhanced cybersecurity. As the number of remote workers increases, companies are aware of potential hackers. That is why ensuring that all external staff is well trained in cyber security and complies with the company's security software is becoming a top priority.
Increase in new technology. With remote work and the rise of outsourcing companies have doubled down in the adoption of cutting-edge technology to improve operations. From Artificial Intelligence to Robotic Process Automation, there is a huge demand for developers and engineers to help companies adapt to new tech.
Understanding between company cultures. Company and culture integration is a big part of the appeal of nearshoring. With both parties coming from nearby countries, it is expected to have shared knowledge of the market and a similar way to approach it.
Why is México an attractive option for nearshoring?
Mexico has time zones aligned with the United States, facilitating communications.
The country has many trade agreements like the USMCA, which eliminates tariffs on exports to the US.
Mexico has more affordable and faster transportation thanks to a really strong logistics infrastructure.
Read more: Why should companies invest in Mexico?
What is the difference between Nearshoring and Offshoring?
Offshoring is another very popular type of outsourcing, and while it may sound really similar to nearshoring, they are not the same.
The business process is carried out with companies in a nearby country.
The business process is carried out with companies in lower-cost countries, no matter the distance.
Greater control of production and less time in the decision-making process.
Cost reduction, whether in production, labor, logistics, offices, etc.
Similar cultural factors produce better communication and better knowledge of the shared market.
Different cultures may cause some difficulties in communication, but expose you to different markets.
Both parties are usually in the same time zone and share either the same language or cultural similarities.
It tends to be a time zone or language barrier that may complicate communications.