Start-ups are Leveraging Nearshore Employees; Should You?

A surge in inflation coupled with the tightest labor market in decades is prompting start-ups to look nearshore to satisfy their workforce needs. For years, large companies have been outsourcing to India and China, but the politics with China is unpredictable at best, and India has its limitations as well. Not to mention, they are both really far away – making it especially difficult for small businesses looking for cost savings. However, Mexico and Latin America are just on the other side of our southern border, in the same time zone as the U.S., and with a talented and plentiful population of eager workers. There are also a number of companies that make the process of hiring a nearshore team practically turn-key. 

Roughly one-third of NAHREP’s current staff of 45 is nearshore. We have nearshore accounting, marketing, graphic design, and chapter support employees. Over the next couple of years, we expect the ratio of domestic to nearshore employees to settle at around 50/50. 

The money we save by hiring a nearshore team allows us to do more with less. It also allows us to invest more in our U.S.-based team, helping with employee retention. Small businesses were forced to learn how to manage a distributed workforce during COVID, and that skill set has made managing a team south of our border much less intimidating. Security has been one of the concerns with nearshore employees, but working with reputable staffing service providers can dramatically reduce the risk of data/IP security breaches. 

On a related note, nearshore work strengthens the economies in Mexico and Latin America. Stronger economies south of our border reduce political unrest in those nations and will eventually result in fewer refugees coming from that region of the world.   

Outsourcing became a bad word to many for essentially emptying manufacturing plants across the U.S. There is no doubt the transition from a manufacturing to a service economy was painful for America’s middle class. Still, our workforce has adapted and will do so again. I fully expect that every competitive company in the U.S., both large and small, will utilize nearshoring to some capacity. The ones that do it best will have a huge competitive advantage in the coming years.