Making the Most of Nearshoring: How the US Can Take Advantage

Mexico has always been one of the top commercial allies of the US, whether for production or workforce purposes, helping countless US businesses grow and expand. It started with low-cost labor and production, but today the trend is evolving to include top-quality talent for core positions.

How the Mexico-US Commercial Relationship Started

It all began in the 1940s as the US needed a workforce to work in agricultural food production because many Americans were joining the military and going to war in Europe. In response, the US government launched the Bracero program, allowing Mexican men with farming experience to work in America (Tijuana EDC). In the 1960s, the Maquiladoras were developed, usually operating near the US-Mexican border. Later, American companies capitalized on the cheaper labor force in Mexico and took advantage of the generous tax breaks provided under the North American Free Trade Agreement, the United States-Mexico-Canada Agreement, and the Program for the Manufacturing, Maquiladora and Export Services Industry (IMMEX).

In the late 1990s and early 2000s, large US corporations found a new way to reduce costs. This time, instead of cutting their production costs, they made cuts in service and employees, saving money at the expense of quality. Mexico was passed over in favor of countries like the Philippines and India, to where American corporations outsourced their call centers, customer services, and many back-end functions. Between 2020 and 2021, however, two significant shifts marked the start of a trend toward nearshore staffing for all kinds of positions. The first was COVID-19, during which employees had to work from home, thus catapulting the remote work model and the technologies to enable this. The second was the “great resignation” of massive numbers of employees who voluntarily resigned from their jobs, forcing businesses and companies to look for talent abroad.

Tapping Into Mexico 

This led businesses to explore nearshore staffing. Mexico is well positioned to be the best source of talent for American companies as the n neighbors share the same time zones and culture, and it is within easy traveling distance for in-person meetings. Mexico has a vast pool of quality talent; there are almost 130 million people there with an average age of 29 and a higher education from universities with global reputations. In the second half of 2021, nearshoring by tech companies in Latin America increased by 286%. When American companies started looking to Latin America for talent, it was mainly tech positions. This has been evolving to include all kinds of positions, from data entry, executive assistance and customer service, to finance, digital designers, developers and many more.

How US Businesses Can Make the Most of It

Every American business should explore nearshore staffing and see how they could benefit from it. It is a strategy that is no longer reserved for big corporations; companies of all sizes and industries can take advantage. In today’s global market, businesses compete for the best talent and to be the most cost-efficient, so the use of nearshore staffing is a strategy that must be considered.

For nearshore staffing to work correctly, it is essential to:

• Have the correct tools in place, including communications, project management, and time-tracking tools when required.

• Have clearly defined policies, processes, and goals in place to ensure that each member knows exactly what to do, how to do it, and what the company’s expectations are.

• Welcome the remote team as part of the company; they are not virtual employees, they are full staff members who should be treated as an extension of the team, with constant communication.

• Select the right nearshore staffing firm, with the care one would take in choosing a business partner. This is not just another supplier; this is a company that will help grow your team in another country. Always check references and ensure they treat the staff the way you would like them to be treated. In particular, look at their turnover rate.

• Never delegate employee selection; make sure you can interview the candidates and have the final word. This will ensure that only candidates are hired who share the company's values and culture.

• Ensure that remote staff have clear lines of reporting to a leader who is in place from the start.

Conversely, here are some counter-indicators to nearshoring:

• If you don’t have time to train your team, this is not the time to use nearshore staffing. Do not assume that your remote staff will know what to do and how to do it. Like all employees, they must be trained.

• Do not sacrifice quality to keep costs down; retain the level of quality that your business needs.

• Do not nearshore without a growth plan, mapping out how to hire and grow the remote team.

Conclusion

Since the 1940s, US businesses have been taking advantage of what Mexico has to offer as a business ally or partner, whether it is labor, low-cost production, or quality talent. In the past, this was a strategy reserved for big corporations that could partner with a Maquila or build production facilities in Mexico. The new trend of nearshore staffing is for everyone, from a startup to a Fortune 500 corporation, and everyone in between. With recent technological advances, many more businesses can now reap the benefits of nearshore staffing. 

I have seen how our clients have grown using this strategy to tap into Mexico’s quality talent while generating savings. In a study by Remote Team Solutions, a nearshore staffing firm, 45% of our clients doubled the number of remote team members in just one year; they were able to scale faster due to the savings generated.

I highly recommend the use of nearshore staffing as a strategy to compete globally. I recommend analyzing which positions can work remotely and planning to transition them gradually to a nearshore staffing firm. You can start with one remote staff member to get the feel of the process, make improvements along the way, and keep adding more positions to your remote team. Just remember, having your nearshore remote team is like everything else; you must do it right and put in the time (at least in the beginning) for it to work.