México: Nearshoring Hotspot of 2024

Imagine a location in which robust domestic demand and ongoing economic growth are complemented by government investment in social programs and infrastructure. Mexico is this location in 2024 because of a number of factors coming together to drive the country's economy forward. Mexico is positioned to become an interesting opportunity for investors and progressive businesses, thanks to the country's nearshoring trend and steady growth. But what is causing this momentum, and how can you take advantage of Mexico's business opportunities? Let's take a deeper look at why businesses should strongly consider Mexico for their business growth and expansion.

What is Nearshoring

Nearshoring is a business strategy where companies outsource certain business processes or tasks to a nearby country rather than a distant one. This approach offers several advantages such as reduced costs compared to onshoring, while still maintaining geographical proximity which can facilitate communication, cultural alignment, and potentially quicker turnaround times. Nearshoring is often chosen to mitigate some of the challenges associated with offshoring, such as time zone differences, language barriers, and cultural disparities, while still benefiting from lower labor costs in nearby regions.

Increase of Nearshoring to the Americas

As opposed to the old trend of offshoring certain operations to Asia, the nearshoring of manufacturing and other operations from Asia to the Americas is one of the major trends propelling Mexico's economic growth. The following are some of the factors driving this trend:

• Artificial Intelligence: The rise of automation and artificial intelligence, which is making it more cost-effective to bring back manufacturing to the Americas.
• Supply Chain Blues: The pandemic revealed weak points in international supply chains, causing businesses to look for alternatives that are more durable and streamlined. Faster shipping times, fewer interruptions, and a stable environment are benefits of nearshoring to Mexico.
• Cost Advantage: Despite recent increases, labor costs in Mexico are still much lower than in the United States or Canada. For businesses looking to maximize their profits, this translates into alluring business opportunities.

Mexico's Economic Outlook 2024

The Mexican Advantage

• Strategic Location: Mexico is a geographical goldmine for nearshoring companies due to its 2,000-mile border with the US, which facilitates effective cross-border trade and collaboration.
• Skilled Workforce: Mexico has 60 million skilled workers who have experience in a wide range of industries, including manufacturing, aerospace, and automotive. This talent pool is constantly expanding. This easily accessible human capital stimulates productivity and innovation.
• Stable Economy: In 2024, the Mexican economy is expected to expand by 2.6%, which will foster favorable investment conditions. This stability gives businesses looking to establish themselves in the area much-needed predictability and confidence.
  
  
  source: bbvaresearch.com
• Government Support: By providing incentives, cutting red tape, and fostering an atmosphere that is business-friendly, the Mexican government is aggressively encouraging nearshoring. With this proactive stance, Mexico is positioned as a friendly location for nearshoring businesses.
• A favorable external environment: The global economy is expected to grow by 2.9% in 2024, which will benefit Mexico's export-oriented economy.
  
  source: imf.org
• Favorable Business Climate: Mexico offers competitive tax rates, attractive incentives, and a streamlined regulatory environment, making it easier for businesses to thrive. This pro-business approach makes Mexico an increasingly attractive investment destination.
  
  More about Tax Benefits in Mexico

2024 presents a window of opportunities for Mexico to capitalize on the nearshoring wave. By addressing the existing challenges and leveraging its advantages, Mexico can solidify its position as the 2024 Nearshoring Hotspot. Companies considering nearshoring should carefully assess their needs, conduct thorough due diligence, and partner with reliable local experts to navigate the landscape. Ongresso can help you with your nearshoring journey. By working together, we can ensure a smooth and successful path to shared prosperity.

Get in touch with one of our nearshoring experts to start your journey.