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What is nearshoring and how does it affect the technology industry?

Nearshoring is a term that refers to relocating the production chains of companies to places with a strategic geographical position. This term is the result of the unsuccessful strategy of offshoring operations in the United States in the 1980s. Performing nearshoring operations aims to optimize and thus have greater profits. For American companies, in a country like Mexico, it is easier to pay for factories, workers' salaries, electricity, fuel, inputs for products and taxes.

According to a note from El Economista, currently around 80% of Mexico's industrial production is destined for the United States. Furthermore, both the proximity and extension of the border, as well as being in the same time zone, make this economic exchange a great option for companies in the United States. In Mexico there is also greater cultural affinity with the region and the English language is better mastered. Also, there are high quality standards at low cost, due to exchange differences.


Nearshoring would increase global exports from Latin America and the Caribbean by 78 billion dollars each year, according to projections from the Inter-American Development Bank (IDB), of which 35.3 billion correspond to Mexico (45%).


According to a publication from IMCO, currently the northern states are better prepared to attract this phenomenon, because in addition to their geographical proximity to the United States, they have better working conditions, greater commercial openness, more innovation and diversification of economic sectors. States such as Querétaro and Jalisco also stand out.


Now, in the field of technology it is important to know the two perspectives of this phenomenon, the first is;


  • What technologies are required by the industries or companies that come to Mexico? and,

  • What technologies and services are going to be exported from Mexico to provide services in the United States?

Mexican companies must be prepared to provide services to companies looking for a nearshoring ally. Making changes to IT infrastructure can take between 6 months and 1 year. It is essential to plan it to have a better transition, consolidate alliances with investors and also be able to afford this change:


  • Cybersecurity: Mexico ranks first in cyberattacks in Latin America, with 85 billion attempts in the first half of 2022, according to the IDC platform.

  • Cloud services: infrastructures, platforms or software systems that host and make available to customers, suppliers and third parties, as well as production chain data in real time.

  • AI and specialized software: programs that identify losses, errors, processes, display data and interconnect different areas will be necessary to streamline the chain.

  • Internal apps or platforms: suppliers' own microsites or applications help operational and administrative areas to certify information and keep all collaborators informed in real time.


Now, what technologies and services can be exported from Mexico to provide services in the United States?


U.S. companies that require IT processes that can be managed remotely can outsource, from website and application development and maintenance to systems testing and cybersecurity management. The workers most required by companies in the United States are developers, followed by those specialized in full stack. As for the most in-demand technologies, Java and Python stand out.


In addition, it has the following strategic advantages:


  • Access to a larger talent base.

  • Saving time and effort in searching and hiring talent.

  • Low employee turnover due to commitment to the project.

  • Reduction of costs, both fixed and variable due to competitiveness.

  • Reduction in project risk due to the guarantees offered by contracted companies.

  • Detection of new opportunities by the contracted companies.


With both sides of the nearshoring alliance, it is possible to reach a balance that is beneficial for both those who hire and those who provide their services. This is a great opportunity for Mexican companies to improve their processes, services and standards. At CyberLat, we are ready to provide you with the best solutions in cybersecurity, AI and training so that your company is on par with what is needed for this economic and knowledge exchange. Write to us at info@cyber.lat to schedule a call and detect your company's requirements.






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