Mexico: a favorite destination
In Mexico, the importance of industrial parks is vital, as they provide significant competitive advantages for attracting foreign investment. These foreign investments offer multiple business opportunities for companies in the country, since, for foreign companies, having a strategic ally in Mexico favors their development. Nearshoring is precisely the link between a foreign company and a company that is subcontracted to provide particular services with unbeatable geographic proximity.
According to the Ministry of Economy, foreign direct investment in Mexico increased by 12% in 2022 compared to 2021.
This only tells us one thing: the current conditions in the country are attracting the attention of foreign investors, generating new business opportunities for local companies.
These conditions create new areas of growth for the industry. According to information from the Mexican Association of Industrial Parks (AMPIP), during 2022, 47 new industrial parks began to be developed in Mexico. These industrial parks are a fundamental part of the country’s strategic infrastructure and logistics system, providing significant competitive advantages for attracting foreign investment. Precisely, foreign companies that are setting up in Mexico can use the services of local IT providers for their facilities and operations in the country.
Estimates indicate that nearshoring will generate approximately $300 million for the country, but what is nearshoring, and why has it become so important in recent years?
What is Nearshoring?
Nearshoring is a reality. The Mexican Ministry of Economy points out that, of the increase in foreign direct investment compared to the previous year, 48% is new. This is driven by the fact that the manufacturing sector with the manufacture of cars and trucks, electronic components and auto parts has found its epicenter in our country.
Geopolitical conditions, quality of labor, proximity and costs are, generally speaking, the main characteristics that have led American companies to manufacture and export products from Mexico instead of Asia.
Nearshoring is nothing more than the outsourcing of services to a provider in a geographically close country.
If for decades the trend was offshoring, migrating labor to Asian countries – particularly China – to reduce costs, the trend today is to return to geographic areas closer to the United States, making Mexico the preferred destination.
Nearshoring is the element that closes the gap between offshore and onshore. Nearshore allows companies to take advantage of the cost benefits of outsourcing and retain greater control by having the provider in the same time zone, a similar culture and the ease offered by Mexico as a country where numerous of its professionals are fluent in English.
Nearshore services for the United States
When we talk about nearshoring, we are talking about outsourcing to a provider located in a geographically close country. This feature provides multiple advantages, such as facilitating communication and coordination between both parties.
Mexico is an excellent example of this. If a company in the United States is looking to outsource some services to a nearby supplier, its proximity to Mexico allows it to find a strategic partner located in a similar time zone and with a close cultural and linguistic relationship compared to a supplier in Asia.
Nearshoring is also understood as companies moving jobs to lower-cost countries to take advantage of savings, but it is important to realize that nearshoring is not just about establishing a contact center outside the United States to provide customer service.
Some of the main areas that companies choose to outsource are:
- Business services such as sales, accounting, marketing, and administrative and customer service tasks
- Manufacturing services to reduce costs in the creation of a facility that can be extremely expensive
- IT and technology services such as software development and engineering, project management and other technology-related services