Nearshoring is rapidly becoming the go-to strategy for companies looking to streamline operations while accessing specialized skills just a stone’s throw away. But why is nearshoring gaining such traction? Let’s dive into the reasons.
Current landscape of nearshoring in Latin America
Latin America has emerged as a prominent destination for nearshoring, countries like Mexico, Colombia, and Brazil are at the forefront of this trend, attracting businesses seeking to optimize their operations and gain a competitive edge.
The 2023 market report analyzes the potential of software development nearshoring to Latin American countries.
| Mexico | Colombia | Brazil |
Tech talent pool | 150,000+ | 700,000+ | 750,000+ |
ICT graduates, annually | ~13,000
| ~250,000
| ~46,000
|
ICT market revenue in billion USD | $10.2 | $26.76 | $49.5 |
Number of IT vendors listed on Clutch | 360+ | 440+ | 263+ |
Ease of Doing Business ranking | 67 | 60 | 124 |
Global Innovation Index | 63 | 58 | 54 |
Kearney Global Services Location Index | 13 | 11 | 5 |
Source: N-iX – Software development in Latin America: 2023 market report
Key insights
- Mexico has the smallest tech talent pool of the three countries, but it also has the lowest ICT market revenue. This suggests that Mexico’s tech sector is less mature than those of Brazil and Colombia.
- Colombia has a large tech talent pool and a growing ICT market revenue. This suggests that Colombia’s tech sector is on the rise.
- Brazil has the largest tech talent pool and the highest ICT market revenue of the three countries. This suggests that Brazil has the most mature tech sector of the three countries.
Tendencies of nearshoring: The future of efficient and sustainable business
The landscape of nearshoring is evolving, and as we march towards 2025, several key trends are emerging. Let’s dive into these nearshoring trends and see why they’re shaping the future of global collaboration.
A strategic shift to Latin America
The increased focus on Latin America for nearshore outsourcing is a strategic move that offers numerous benefits. The region provides a skilled workforce, cultural affinity with the US, and convenient time zones, all of which contribute to more efficient and effective business operations.
As companies continue to seek ways to optimize their global workforce and improve their competitive edge, Latin America stands out as a promising destination.
By leveraging the advantages offered by countries like Mexico, Colombia, and Brazil, businesses can build strong, collaborative partnerships that drive success in the rapidly evolving global market.
#DidYouKnow
The fastest growth in the Staffing Industry was seen in the clinical/scientific and healthcare sectors in 2024.
The "Reshoring" effect
Remember when offshoring was all the rage? Well, some companies are now pulling back, but not completely.
They’re opting for nearshoring instead. This “reshoring” effect is about finding a happy medium – bringing operations closer but not all the way home. It’s about balancing cost, quality, and efficiency. Nearshoring offers the benefits of proximity without the high costs associated with domestic operations. It’s a win-win scenario that combines the best of both worlds.
Nearshoring 2.0
We’re on the brink of what could be called “Nearshoring 2.0.”
This next phase focuses on deeper collaboration and knowledge sharing between companies and their nearshore partners. It’s not just about outsourcing tasks but building integrated teams that work closely together to achieve common goals. This collaborative approach can lead to innovation, improved problem-solving, and a stronger overall partnership.
Specialization and automation play a bigger role
Nearshoring is moving beyond generic outsourcing to more specialized services. Companies are zeroing in on countries that excel in specific industries.
For example, Mexico’s manufacturing strength attracts companies in that sector, while Colombia’s robust IT talent pool draws tech firms.
Automation is also playing a significant role. AI and machine learning are streamlining operations, enhancing productivity, and ensuring that projects run smoothly despite the geographical distance.
This technology improves efficiency and reduces the potential for human error, making nearshoring an even more attractive option for businesses looking to optimize their operations.
#DidYouKnow
According to the 2024 State of Staffing Report, almost two-thirds (64%) of respondents anticipate growth of 1-20%
Continued rise of regional powerhouses
Countries like Mexico, Costa Rica, and other Latin American nations are poised to become the go-to nearshoring destinations for US companies, particularly in manufacturing and IT.
These countries are not just nearby but also offer competitive advantages in terms of cost, skilled labor, and logistical ease. Mexico, for instance, is already a powerhouse in manufacturing due to its established infrastructure and proximity to the US market.
Similarly, Colombia is becoming a hub for IT services, thanks to its strong educational system and growing tech talent pool.
Sustainability as a key driver
Eco-conscious companies are always on the lookout for ways to reduce their carbon footprint. Nearshoring offers a sustainable solution.
By keeping operations closer to home, businesses can significantly cut down on travel and logistics, reducing their environmental impact.
Less travel means fewer emissions. Plus, many nearshoring locations are investing in green technologies and practices, making it easier for companies to align with their sustainability goals. Nearshoring is not just smart for business; it’s smart for the planet.
Let's focus on sustainability
Also, companies are increasingly prioritizing nearshore partners with strong environmental and social responsibility practices. This trend aligns with growing consumer demand for sustainable products and ethical sourcing.
By choosing nearshore partners committed to sustainability, businesses can enhance their corporate social responsibility profiles while also reducing their carbon footprint. Less travel and closer proximity mean fewer emissions, aligning nearshoring with eco-friendly business practices.
#DidYouKnow
Key strategies include automation to drive efficiency and going above and beyond what candidates expect.
Risk mitigation strategies
Companies are developing robust risk mitigation strategies to address potential challenges such as political instability, regulatory changes, and intellectual property concerns.
These strategies include diversifying nearshore locations, investing in local legal expertise, and implementing strict data security measures. By proactively managing these risks, businesses can safeguard their operations and ensure long-term success in their nearshoring ventures.
Evolving talent landscape
As nearshoring grows, so does the demand for skilled talent in these regions.
Educational institutions and training programs in nearshore destinations are evolving to meet this demand. They are developing curricula and training programs tailored to the needs of the global market, ensuring that graduates are equipped with the skills necessary to thrive in a nearshore environment. This focus on education and training helps create a steady pipeline of qualified professionals ready to support nearshoring operations.
Government support
Governments in nearshore destinations are recognizing the economic benefits of attracting foreign investment and are offering incentives to make their countries more appealing to international businesses.
These incentives might include tax breaks, grants, improved infrastructure, and supportive regulatory environments. Such government support can significantly lower the cost and risk for companies considering nearshoring, making it a more attractive option.
Colombia, for example, is a good example of how government initiatives can drive nearshoring growth. Here’s how the country is doing:
- Since 2019, the Colombian government has actively marketed the country as a prime nearshore destination.
- The government offers tax breaks, funding opportunities, and streamlined business registration processes to make Colombia an attractive location for nearshore operations.
- Initiatives like Ruta N, a renowned innovation hub in Medellin, promote science, technology, and innovation. This fosters a skilled workforce that caters to the needs of nearshore businesses.
Nearshoring is revolutionizing the way businesses operate, offering a blend of proximity, efficiency, and sustainability.
#DidYouKnow
Referrals and LinkedIn were again the highest-rated sources for new candidates.
Final thoughts
As we look ahead to nearshoring outsourcing trends in 2025, it’s clear that nearshoring will continue to play a pivotal role in global business strategies. Whether you’re aiming to reduce costs, enhance collaboration, or align with sustainability goals, nearshoring provides a robust solution.
So, what do you think? Ready to embrace the future of smart staffing with nearshoring?
To ensure the accuracy and reliability of our insights, the data presented in this article is sourced from the comprehensive “2024 State of Staffing” report. This report reflects the dynamic nature of the staffing industry over the past few years, capturing key trends and strategic shifts. *
Keep reading:
- Differences between nearshoring and offshoring,
- Successful nearshoring examples,
- and learn a complete guide to nearshore development teams.
