In the context of today's globalized economy, two specific concepts have been more relevant than ever: nearshoring and offshoring. Business leaders are now embracing these strategies as essential mechanisms for strategically expanding their company’s operations into new markets, capitalizing on untapped opportunities.
Before we delve deeper into the topic, let's first establish clear definitions for both nearshoring and offshoring:
Nearshoring involves the practice of outsourcing business processes or services to a neighboring country or region, typically characterized by geographical proximity, shared time zones, and cultural similarities. This approach allows companies to benefit from cost efficiencies while maintaining close collaboration and reducing logistical complexities.
Offshoring refers to the relocation of business operations or services to a distant country, often driven by the pursuit of lower labor costs. While offshoring offers access to larger talent pools and potentially significant cost savings, it may entail challenges such as cultural differences, language barriers, and longer communication channels.
The classification of whether your organization is nearshoring or offshoring its operations can vary from one company to another, in the sense that it would depend on the specific context and criteria being considered by the company itself.
Strategies regarding nearshoring and offshoring are more crucial than ever for U.S. companies striving for competitiveness and sustainability. While cost efficiency remains a significant factor, it is not the only one that companies should consider; the real value lies beyond mere monetary considerations as companies are impacted by gaining access to global talent, expansion, and even increased resilience against risks. This empowers companies to position themselves for sustained success in a global landscape.
Data shows a growing interest of foreign direct investment in two countries: Mexico and Poland. Let's explore investment trends in these locations where Bravo LT has already established business operations.
U.S. & Mexico
Mexico's strategic location, coupled with its skilled workforce and favorable trade agreements such as the UMSCA, has attracted significant investments from U.S. companies across various industries. These two countries celebrated 200 years of diplomatic relations in 2022, a milestone that continues to underscore the significance of their long-standing partnership and shared history.
According to the Ministry of Economy, in the period January to December 2023, the Foreign Direct Investment (FDI) from United States to Mexico was $13.6 billion, representing 42% of FDI among other countries investing in Mexico. Another important fact is that in 2023, according to IMCO, Mexico became the top U.S. trading partner for the first time after nearly 40 years, with no other countries, such as China or Canada, ahead in line.
Monterrey, where Bravo LT’s offices are located, is the “land of business, land of possibilities”. It has become a vital state for the country due to its unprecedented economic development, drawing attention from numerous investors and companies globally. With a variety of thriving industries, from Automotive and Home Appliances to Aerospace and IT & Software, its significance as a hub of opportunity and innovation is undeniable. Let’s highlight some IT & Software Industry facts in Mexico according to Invest Monterrey:
More than 500,000 IT professionals.
19 IT clusters in 16 states across the country.
30 technology parks specialized in IT and BPO.
10th best destination for IT, BPO, and call center providers.
More than 400 IT companies.
Mexico is dedicated to advancing its business ecosystem on a national scale, prioritizing sustainable economic and social growth. By cultivating an environment that supports progress, Mexico is positioning itself for continued success, securing the landscape for future prosperity to succeed in the modern global economy.
U.S. & Poland
Poland stands as the largest Central-Eastern European country, sharing borders with seven neighboring nations. Its vibrant capital, Warsaw, hosts the offices of Bravo LT. Much like Mexico, Poland actively engages in diplomatic relations with numerous countries and holds membership in esteemed international organizations such as the European Union (EU), World Trade Organization (WTO), and Organisation for Economic Co-operation and Development (OECD). It’s known for its solid institutional foundations and political stability, plus it offers an attractive array of incentives, positioning it as a top destination for foreign investments in Europe.
According to a climate statement by the U.S. Department of State, U.S. companies constitute a significant portion of foreign investors in Poland. According to the National Bank of Poland, the annual inflow of U.S. investment in 2021 surpassed $4.2 billion, while the stock was estimated at approximately $13 billion by the U.S. Bureau of Economic Analysis and $26 billion by the American Chamber of Commerce (AmCham) in Warsaw.
Poland is also recognised for its innovative landscape, capacity of growth, and its highly skilled and well-educated workforce. There are some facts from the Polish Investment & Trade Agency specifically about the tech industry:
Poland's innovative tech sector has seen significant growth, boasting specialists who excel in AI, machine learning, fintech, IoT, Industry 4.0, and Big Data.
50,000 small, medium, and big software companies.
Society of tech-savvy early adopters.
Top-class programmers globally, ranked # 3 worldwide.
An alumni of 86,000 IT specialists with 11,000 graduates a year.
Poland is an interesting prospect for international investors in pursuit of lucrative opportunities. The consistent flow of U.S. investments, surpassing billions annually and exhibiting no signs of slowing down, attests to the undeniable attractiveness of Poland's investment landscape. This steadfast commitment from U.S. investors serves as a powerful testament to their unwavering confidence in Poland's economic potential.
By understanding the broader implications and focusing on value-driven strategies beyond cost efficiency, businesses can position themselves for sustainable growth and competitive advantage in today's global marketplace with nearshoring or offshoring initiatives. Mexico and Poland present abundant opportunities and mutually beneficial scenarios for both U.S. companies and the respective local economies—a true win-win proposition.
As companies navigate the complexities of global markets, Bravo LT serves as a strategic partner in facilitating successful nearshoring or offshoring talent. Leveraging our expertise and presence in key locations like Monterrey, Mexico, and Warsaw, Poland, we enable businesses to access top talent and capitalize on emerging opportunities, helping companies thrive in the ever-evolving global landscape.
Written by Melissa Bernaldez, Marketing Manager.