Why U.S. Companies are Tapping Talent in Latin America: The Rise of Nearshoring

Contrary to what you may have heard, global hiring isn’t going anywhere — it’s just staying a bit closer to home. They call this process nearshoring.

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In this article, we’ll explore what nearshoring is, why U.S. companies are increasingly hiring in Latin America, and how businesses can apply this strategy well.

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What is nearshoring?

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Nearshoring is when companies move operational processes to neighboring or nearby countries. It’s more relevant now than ever: from 2020 to 2023, CEOs’ mentions of this and similar strategies in speeches increased by nearly 3,000%.

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The idea of nearshoring is balancing cost reduction with ease of communication, coordination, and cultural alignment. That's why fast-paced sectors like customer support, marketing, and IT are increasingly shifting toward this model.

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Traditionally, nearshoring has been associated with manufacturing (think NAFTA), and that’s still true today: 80% of COOs in this area plan to expand their onshoring or nearshoring in the next three years. 

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Today, nearshoring’s relevance is expanding beyond factories: companies are interested in keeping their programmers, marketers, designers, and analysts closer to each other. This strengthens knowledge supply chains and minimizes the difficulties of long-distance communication. So in the digital age, nearshoring’s appeal is based on time zones, collaboration, and business agility.

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Comparison with other strategies

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Nearshoring isn’t the only way to move processes overseas. In fact, there’s a whole family of “-shoring” models.

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To learn more about farshoring, check out our article on it.

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Benefits of nearshoring for U.S. companies

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One of the main reasons American companies are increasingly choosing nearshoring is a shortage of workers. In March 2025, the unemployment rate in the U.S. was 4.2% — that’s about 7.1 million people. Meanwhile, there were 7.2 million vacancies. That means even if all the unemployed found work immediately, some roles would still go unfilled.

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The second reason is rising costs. Between March 2024 and March 2025, average hourly wages rose 3.8% (1.4% faster than inflation). This means it's getting more expensive for businesses to hire in the U.S., and companies are looking for more affordble alternatives overseas.

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Why Latin America?

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• There's a large talent pool: the region includes more than 30 countries and has a labor force of about 370 million people.
• There are skilled professionals in various industries, not just IT, marketing, and analytics. For example, Trinidad specializes in oil and gas and telecommunications, Peru in logistics and transportation, Puerto Rico in IT and healthcare. Mexico is actively developing business service outsourcing, and according to Deloitte, it became the U.S.’s largest trading partner in 2023, surpassing China.
• Cost savings. The median annual salary for Latin American professionals, including engineers and designers, is about $74,400. By comparison, in the U.S., the median developer makes $127,000, and computer systems analysts make about $102,000.
• Developed recruitment infrastructure. In 2023, the market for staffing services in the region was about $11.5 billion. Eleven of the world's largest staffing companies operate there. The main hiring centers are Brazil, Argentina, Colombia, Chile, Mexico and Peru.
• In addition, there’s high cultural compatibility with the U.S.: many Latin American professionals have studied or worked there and are familiar with American business culture.
• Finally, English proficiency is high, especially in places like Mexico City, San Jose del Cabo, and Guatemala City.

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Limitations and risks of nearshoring

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Nearshoring isn’t for every company. Here are some potential downsides to be aware of.

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• Varying infrastructure quality. Internet, communications, and even electricity are unstable in some Latin American countries, especially outside of major cities.
• Difficulties with currency and payments. You can’t always pay with dollars; some countries have currency restrictions. Bank transfers can be subject to approvals and delays.
  
• Worker misclassification. The legal definition of “freelancer” or “contractor” varies from place to place. Contractors might technically qualify as employees, which can have tax and legal consequences for the company.
  
• Language and cultural differences. Although there are cultural ties and plenty of English speakers in major cities, there can still be difficulties in day-to-day communication. This is a bigger risk if you hire directly rather than through a qualified agency.
  
• Administrative complexity. It’s not so bad if you’re hiring one person. But as your team grows, tasks like drawing up contracts, making payments, and monitoring compliance can become a real administrative burden.
  
• High competition for talent. As international companies move into the region, talent availability can be a bottleneck in high-demand industries.

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Nearshoring FAQs

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