The dynamic business landscape of Mexico is witnessing a significant trend: the rise of nearshoring. This article looks at how transformative change has brought in new businesses and revolutionized vital industries in the country.

What is Nearshoring?

Nearshore outsourcing involves a business engaging employees from a neighboring country to support its team and deliver services. Some advantages of nearshore outsourcing may include cost savings, cultural alignment, geographical proximity, and a similar time zone. Outsourcing, the practice of contracting certain business functions to external parties, has become increasingly popular in today's globalized economy.

One of the main reasons behind this trend is the rising costs of maintaining operations in one's home country. As businesses strive to remain competitive and maximize profits, they often find that the expenses associated with running their operations domestically are simply too high.

These locations are typically geographically close to the home country, making them easily accessible and facilitating smoother communication and collaboration. Additionally, they often boast lower labor costs, more flexible regulations, and improved infrastructure, making them attractive options for businesses seeking cost-effective alternatives.

By outsourcing to nearby locations, companies can take advantage of the cost savings associated with lower labor expenses. Skilled professionals in these locations are often willing to work for lower wages compared to their counterparts in developed countries. This allows businesses to allocate their resources more efficiently and invest in other areas of their operations.

Moreover, nearby locations can provide businesses with access to a larger talent pool. These destinations may have a surplus of skilled workers who are eager to contribute to the growth of foreign companies. By tapping into this talent pool, businesses can benefit from a diverse range of skills and expertise, ultimately enhancing their competitiveness in the global market.

In addition to cost savings and access to talent, outsourcing to nearby locations can also offer other advantages. For instance, businesses can take advantage of favorable tax incentives and government support that may be available in these locations. This can further reduce operational costs and provide a conducive environment for business growth.

Mexican Economy

The economic growth of Mexico is the result of nearshoring strategies. These strategies have transformed its industrial landscape, turning Mexico into a significant player in the global economy.

Until September 2023, there has been remarkable dynamism in the industrial markets of various cities in Mexico. This shift demonstrates the involvement of these regions in the national industry, both economically and strategically.

Monterrey, Querétaro, Tijuana, and La Laguna are important in this change, with foreign investment here to stay. Many factories from China, the United States, Taiwan, Korea, Germany, and Italy have come to Mexico to manufacture goods. Various areas of Mexico host these factories.

Mexico City, as the country's capital, has experienced diversification in its industrial activities. The free trade agreements in place make it one of the prime options for business operations. Besides being an administrative center, the city hosts sectors such as biotechnology, fashion, and the food industry.

Tijuana in Mexico is close to the huge US market, making it a valuable location. This city is important for making different things, especially electronics, medical devices, and consumer goods. Over 586 companies worldwide have been attracted to nearshoring services, which help them reduce costs and save money for future investments.

Impact on Employment

Beyond buzzwords, we explore how this phenomenon not only drives business growth but also contributes to local employment. These companies are creating job opportunities, and strengthening the economy in each region.

In addition, studying important nearshoring companies in different areas helps to uncover compelling success stories. Prominent companies like Walmart have been instrumental in expanding their businesses and supply chains by employing nearshoring strategies.

Pisa-Farmacéutica is using nearshoring to improve its production and distribution chain in the pharmaceutical industry. The company improved its processes.

It also helped people get better medicines. This benefited both locals and foreigners. Additionally, it created more jobs in the area.

Aptiv is a major player in mobility technology. They have centers in various locations. These centers allow them to quickly deliver advanced solutions and stay ahead in the industry.

Benefits of Nearshoring in Mexico: Tijuana and Nuevo León as Strategic Drivers

Nearshoring in Mexico goes beyond being just a buzzword; it is changing the country's industrial landscape. This strategic shift not only attracts new investments but also fosters a more diverse and dynamic business environment. Focusing on specific data, Tijuana and Nuevo León emerge as two key points in this phenomenon.

In Tijuana, the demand for industrial space has seen a significant increase because of the growth of nearshoring. The city is in a convenient location near the U.S. market. This makes it attractive for companies that want to establish operations near the border. Many companies choose Tijuana for manufacturing because of lower labor costs and being closer to the target market.

Nuevo León, on the other hand, has also experienced a boom in nearshoring. Monterrey, the industrial capital of Mexico, has become a pivotal point for the relocation of foreign companies. The region has attracted significant investments in sectors such as manufacturing, technology, and services, boosting the local economy and generating employment. Developed infrastructure and a skilled workforce have contributed to positioning Nuevo León as a strategic hub for nearshoring.

Nearshoring is significantly impacting Mexico's industrial growth. Tijuana and Nuevo León play crucial roles in this transformation.

Unlock Your Business Potential in Mexico with CPI's Expert Guide

For companies interested in exploring nearshoring service opportunities in Mexico, we extend an open invitation to contact Co-Production International for comprehensive support. CPI helps you with manufacturing investments in Mexico, including evaluation, site selection, cost analysis, and management of your operations.

Discover the potential and advantages that this country has to offer. Contact CPI today to start your journey towards successful investment and growth in Mexico.