Mexico Number One Choice for 'Nearshoring'

While outsourcing IT tasks offshore – usually to the other side of the planet – may be so last decade, the trend of “nearshoring,” or locating IT development facilities out of U.S. borders but nearby is certainly still on the rise.

A new ranking of Latin American nearshore outsourcing locations by IT outsourcing consultancy ThinkSolutions has found Mexico at the top of the list of preferred nearshore locations, Network World (News - Alert) is reporting this week. The other locations, in order of ranking, were Chile, Costa Rica, Argentina, Brazil, Colombia, Panama, Peru, Puerto Rico and Guatemala.

“It was no surprise to see Mexico at the top of the list,” said ThinkSolutions' Tony Mataya. “NAFTA makes trade with Mexico very financially viable, and the cultural influence that comes from sharing a border with a country simplifies business relations.”

ThinkSolutions said it was surprised to see Brazil ranking fifth, since the company has a thriving IT industry. Despite this, and the fact that Brazil has a large labor pool, its lower-than-expected ranking may be due to language constraints. Portuguese-speaking Brazil offers less proficiency in both English and Spanish than the top-ranked Latin American countries.

ThinkSolutions used several criteria for ranking the nearshore location, including financial incentives, availability of labor and skill sets, the country's business environment, ease of doing business, accessibility to the U.S. (travel times) and the country's unemployment rate.

Limitations on travel times may continue to keep Mexico ranked above Chile, said ThinkSolutions, since the South American nation is at least a 10-hour flight from the U.S., though its appeal as a nearshore destination is strong in every other category.