Process Outsourcing in Uncertain Times

Many companies in Mexico underwent an intensive crash course in management during the COVID-19 pandemic, adapting to volatile, uncertain, complex, and ambiguous conditions. Today, in the face of ongoing economic and geopolitical challenges, it is clear that these conditions are here to stay. One of the next major challenges for Mexican businesses will be the potential imposition of tariffs on Mexican imports by the United States. Preliminary estimates suggest that the manufacturing industry would be among the hardest hit, primarily due to the close integration of intermediate goods processing and assembly between the United States and Mexico, particularly in the automotive and technology sectors.

According to projections from Mexico’s Ministry of Economy, foreign direct investment (FDI) in 2024 may have reached a record US$38 billion, with the manufacturing sector being the primary recipient. However, during this same period, the North American market faced significant cost pressures, impacting the profitability of manufacturing companies in Mexico.

In 2025, Mexican companies must adopt a strategic approach to operational efficiency to remain competitive and navigate rising cost pressures in North America. The global manufacturing industry is inherently driven by competition, requiring companies to consistently deliver high-quality products, meet tight deadlines, and manage fluctuating costs. In this context, process outsourcing emerges as a powerful and proven tool for streamlining operations, enhancing efficiency, and fostering the agility and flexibility needed to adapt to market fluctuations across various industries.

Process outsourcing allows a company to hire an external provider for specific functions, enabling the company to focus on its core production activities while potentially reducing costs by leveraging the specialized expertise of outsourcing providers. Estimates suggest that the global market for manufacturing process outsourcing could reach US$512.74 billion by 2030.

Traditionally, manufacturing companies in Mexico have managed all aspects of production internally. However, by partnering with the right outsourcing provider, these companies can free up valuable internal resources to focus on their core competencies, improve production capabilities, and drive technological advancements.

Key functions that can be outsourced within the manufacturing industry include supply chain management (procurement, supplier relations, and logistics), assembly and subassembly of components that do not require in-house expertise, packaging and labeling, quality control and inspection, external auditing services, precision engineering and CNC machining, equipment maintenance and overhaul, facility management, administrative processes (such as data entry, documentation, and record-keeping), among others.

Ultimately, beyond reducing expenses and improving operational efficiency, outsourcing can:

• Ensure safety and quality standards

• Lower equipment costs

• Streamline processes

• Attract specialized expertise and knowledge

• Accelerate business growth and revenue generation

• Enhance operational scalability

In an industry as dynamic as manufacturing, where demand can be volatile, flexibility in managing different production levels during economic downturns becomes imperative. The ability to adapt — achieved through process outsourcing as part of a broader business strategy — can prove particularly beneficial and invaluable.

Volatility, uncertainty, complexity, and ambiguity are the defining forces of today’s business landscape. While companies in Mexico face significant challenges, they also have unique opportunities to innovate, transform, and abandon outdated work models that hinder growth and competitiveness.