In an increasingly interconnected world, companies are looking for more efficient ways to operate, cut costs, and maintain quality. That’s where nearshoring comes in—a key strategy that improves collaboration, logistics, and boosts local economies.
No wonder Nearshoring in Mexico has gained momentum as one of the most attractive options for international businesses. This trend responds to current global challenges, redefining supply chains as we know them.
Today, we’ll explain what nearshoring is, along with its pros, cons, and benefits.
Nearshoring is a business strategy involving the relocation of operations, services, or other business processes to neighboring countries. Its aim is to leverage geographic and cultural proximity—plus time-zone advantages—so companies can optimize costs, achieve operational efficiency, and lower supply-chain risks.
A simple example is that U.S. firms once outsourced to distant countries in Asia—like China or India—but now seek alternatives in countries like Mexico, thanks to its closeness, competitive costs, and trade agreements such as the USMCA (T-MEC).
Having defined nearshoring, let’s examine its potential advantages for businesses, as well as the challenges it can entail.
Pros | Cons |
Enables a broader network of nearby suppliers. Better market insight and higher product quality. Local providers know the regulations and market environment, cutting down legal and operational risks. Less distance reduces shipping costs and delivery times. More effective, direct communication with subcontractors. Similar time zones help streamline scheduling, calls, and joint processes. Some countries offer stronger IP protections than more distant offshoring locations. | Setting up in a new country can require significant investment in infrastructure and resources. It may lead to reduced job growth in the company’s primary location. Host country regulations can be complex to navigate. |
Indeed, the heavy reliance on other nations may be seen as a disadvantage. It can expose businesses to devaluation in local currencies, affecting market stability, pricing, and investment possibilities.
The main difference lies in the location of the operations and the benefits each strategy aims to achieve.
Offshoring entails relocating to distant countries, prioritizing very low costs but at higher risk.
Nearshoring involves outsourcing services or processes to countries nearby, balancing cost reduction with other advantages.
Let’s outline it more clearly:
Nearshoring | Offshoring | |
Location | Operations are relocated to nearby countries (e.g., U.S. to Mexico, Europe to Poland). | Distant countries with cheap labour (e.g. India, China, Philippines). |
Cost | Moderate, often with local tax benefits. | Low, but with possible hidden costs. |
Communication | Easier, with fewer time-zone and cultural gaps. | Limited by time and cultural differences. |
Culture & Language | Generally more aligned culturally and linguistically. | Cultural and language barriers that can cause delays or errors in projects. |
Operational Risks | Lower: more political and legal stability in nearby countries, plus closer supply chain oversight. | Major: Political conflicts, economic fluctuations and differing regulations can pose significant risks. |
Both strategies have their pluses and minuses, but nearshoring typically offers a safer route for companies wanting optimization without compromising communication or efficiency.
Nearshoring in Mexico is common, as the country is a top go-to for multinational companies. Not just due to its geographic location, but also thanks to multiple trade deals.
The first ones to shift production to Mexico were U.S. companies, yet it’s not limited to them—China and Germany have also set up here to benefit from strategic advantages. They’ve done so in major industries like manufacturing, tech, and automotive. This generates thousands of specialized jobs and strengthens supply chains by cutting lead times and shipping costs.
Mexico has a broad network of trade agreements spanning 50 countries. This alone makes it a magnet for nearshoring, attracting investors from many sectors. Here are a few examples:
Tesla: A clear demonstration of nearshoring in Mexico was Tesla’s expansion to Nuevo León in March 2023, with an estimated $5 billion investment and over 35,000 jobs promised.
American Express: In 2013, American Express set up a call centre in Mexico City. It was designed to serve US customers in both English and Spanish. The project generated more than 2,500 jobs.
Mattel: The world’s largest toy producer has a plant in Escobedo, Nuevo León, since 1984. An expansion in 2022 not only boosted its North American presence but also enabled it to ship to markets in the Americas, Europe, and Asia from Mexico.
Also, nearshoring could lift the country’s labor productivity by 15-30% by 2030, per the Consejo de Empresas Globales (CEEG).
Nearshoring provides ample strategic opportunities for businesses looking to expand operations to another country. Some main benefits:
Geographic proximity lowers costs related to transport and logistics, and in turn optimises delivery times.
Mexico as a nearshoring destination, for example, often offers lower labour and operating costs than other countries. This can also help counteract the effects of inflation by keeping final prices more stable.
Operating near your main market streamlines communication, quality control, and the capacity to react fast when demand changes.
Lets you keep closer oversight and control of your entire chain, mitigating global risks and boosting resilience to disruptions.
This model gives companies the opportunity to explore markets in and around the host country.
In the case of Mexico, it has become an entry point to expand into Latin America. It is key for domestic consumption and regional projection thanks to its more than 130 million inhabitants.
Nearshoring doesn’t just benefit those outsourcing operations—it’s also interesting for people who want to diversify their portfolios.
Can you maximize investment potential?
Yes, with tools like Wise or DolarApp, which can handle international transactions conveniently.
However, keep in mind some features of Wise aren’t yet fully accessible to Mexican users—whereas DolarApp provides more comprehensive solutions adapted to the Mexican market. That doesn’t just matter for large investors or businesses operating in multiple markets, but also for anyone looking to hold dollars in a more modern way.
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