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As businesses prepare to navigate the complexities of 2025, various operational strategies have become focal points for decision-makers. A common conundrum is choosing between nearshoring and onshoring. Where should you get virtual assistants: Mexico or the U.S.?
With global markets evolving rapidly and consumer expectations rising, finding the right outsourcing model is critical for maintaining competitive advantage.
If you need help deciding which practice is best for your company, this article is for you. It explores the key differences between nearshoring and onshoring, their benefits and limitations, and strategies for choosing the best approach for your business in 2025.
Overview of nearshoring and onshoring trends
Globalization, digital transformation, and geopolitical shifts reshape how businesses manage their operations. Nearshoring and onshoring—two distinct outsourcing models—are gaining traction among companies seeking to optimize costs, improve collaboration, and minimize risks associated with long supply chains.
Several factors directly affecting decisions between nearshoring and onshoring emerge as businesses prepare for the challenges and opportunities of 2025. These include stabilizing supply chain, addressing talent shortages, and aligning with sustainability goals.
These trends underscore the importance of proximity, control, and collaboration—critical elements when deciding whether to keep operations domestic or shift them to a nearby country.
Here’s a closer look at how these factors can influence your decisions:
- Demand for resilient supply chains. Companies are prioritizing stability and adaptability in their operational strategies due to pandemic disruptions and global economic fluctuations
- Talent shortages. With labor pools shrinking in some regions, businesses are looking closer to home for skilled professionals. Korn Ferry reports that current talent shortages can result in an $8.5 trillion loss in annual revenues.
- Technology-driven collaboration. Tools such as artificial intelligence (AI), cloud platforms, data analytics, and automation make team integrations across geographies easier.
- Environmental and social governance (ESG. Consumers and stakeholders are pushing for more sustainable and ethical business practices, influencing location decisions.
Nearshoring and onshoring: Definition, benefits, and key drivers
To better decide between nearshoring or onshoring for your business plans in 2025, it’s best to first define them. These are two types of business process outsourcing (BPO), but what exactly makes them distinct?
Let’s dive into the two practices’ roles and nature.
What is nearshoring?
Although nearshore and offshore outsourcing sound similar, their primary difference lies in the distance between the countries where your business and its BPO partner operate. Nearshoring involves delegating business processes or services to a neighboring or nearby country.
Let’s say your company is U.S.-based. Nearshoring would imply that you subcontract to teams in South America. But why outsource to Latin America? Delegating tasks to a team from a neighboring region bridges the gap between offshoring and onshoring.
Some salient features of nearshoring include the following:
- Geographic proximity. Shorter travel time and overlapping time zones enable real-time collaboration.
- Cultural affinity. Shared cultural traits and languages often facilitate smoother communication.
- Cost-effectiveness. Nearshoring typically offers lower operational costs compared to onshoring, while avoiding the challenges of extreme time zone differences associated with offshoring.
Mexico is the most well-known nearshoring destination for companies in North America and might become more popular among businesses in 2025. According to Statista, the Mexico BPO sector could achieve a value at $5.55 billion in 2024 and grow to $6.48 billion by 2029.
Here are reasons why nearshoring in Mexico is popular:
- Proximity to the U.S.Mexico’s location offers seamless collaboration for North American businesses. Close proximity allows for easier and more frequent communication and collaboration and reduced logistics costs.
- Competitive labor costs. Wages in Mexico are generally lower than in the U.S. For instance, a Mexican customer service representative’s monthly salary is around $900 per month, which is lower than the $4,900-wage of its U.S. counterpart.
- Skilled workforce. Mexico is home to a growing pool of talent in information technology (IT), manufacturing, engineering, and customer support. In fact, Mexico’s IT industry prides itself with over 700,000 professionals.
- Trade agreements. The United-States-Mexico-Canada Agreement (USMCA) facilitates smoother cross-border business operations. This specific and exclusive trade regulation is what makes Mexico a good place to outsource.
These features significantly contribute to the growth of the BPO industry in Mexico.
What is onshoring?
Onshoring involves keeping business operations within the country, which might become more popular in 2025. According to Statista, the global onshore market saw an additional 40 global business service (GBS) centers in 2022 alone.
This strategy emphasizes control, quality, and alignment with local standards. Imagine a U.S.-based company in need of customer support staff but don’t have the talent to deploy or budget to hire. As a workaround, they employ an affordable third-party support team also based in the country.
Another example of this practice is when a manufacturing firm relocates production from overseas to domestic facilities.
Although the benefits of nearshoring are compelling, the advantages of onshoring might also be valuable for businesses in 2025. Here are the reasons why:
- Enhanced quality control. Proximity ensures better oversight of operations.
- Streamlined communication. The lack of time zones or cultural barriers simplify collaboration.
- Boosted local economies. Onshoring supports domestic job creation and economic growth.
- Compliance with regulations. Adherence to local labor and environmental laws is more straightforward.
As with any business practice, onshoring is not without its drawbacks. It’s two main challenges are as follows:
- Higher costs. Labor and operational expenses are typically higher than nearshoring options.
- Talent pool constraints. Finding specialized skills domestically can be challenging in some industries.
These limitations are critical considerations in informing decisions about where to locate operations for maximum efficiency and growth.
Comparative analysis: Nearshoring vs. onshoring for businesses in 2025
Whether to choose nearshoring or onshoring depends heavily on businesses’ priorities, industries, and goals in 2025.
Although nearshoring offers cost efficiency and access to skilled talent, it comes with challenges, such as potential cultural and regulatory misalignments. On the other hand, onshoring ensures maximum control and alignment with domestic standards. However, it can strain budgets and limit scalability.
To better understand their key distinctions, check out this table:
| Factor | Nearshoring | Onshoring |
|---|---|---|
| Cost | Lower operational costs | Higher operational costs |
| Talent pool | Broader, international access | Limited to domestic availability |
| Proximity | Close to home with minimal time lags | Immediate, within the same country |
| Control | Moderate control over operations | High control over operations |
| Cultural alignment | High, especially with neighboring countries | Perfect alignment |
This comparison reveals that neither model is universally superior. Their effectiveness depends on how well they align with a business’s specific needs. You must weigh the trade-offs between cost savings and control, scalability and talent constraints, and flexibility and compliance.
Considerations when choosing between nearshoring and onshoring
Choosing between nearshoring and onshoring for your business in 2025 requires a nuanced understanding of its needs and long-term goals. Here are some factors to guide your decision:
1. Industry-specific needs
The nature of your industry significantly shapes the ideal outsourcing strategy for your company.
Industries with complex supply chains or stringent regulatory requirements might benefit from onshoring for greater control and compliance. Conversely, industries that prioritize cost-effectiveness and speed to market might find nearshoring to be a more advantageous approach.
To give you a better idea of how industry-specific needs can influence your decision when choosing a BPO strategy, here are a few examples:
- Manufacturing. Nearshoring can offer cost advantages without sacrificing quality, while onshoring might be necessary for high-precision or innovative products.
- Technology. Onshoring can ensure compliance with data regulations and protect intellectual property, while nearshoring can be considered for non-core technology functions.
- Customer support. Nearshoring can balance cost and customer satisfaction with culturally aligned agents, while onshoring might be necessary for highly specialized or complex support.
2. Location of BPO provider
Geographic proximity is a crucial factor in outsourcing as it directly affects communication, collaboration, and cultural understanding. But how do you know if nearshoring or onshoring is the best strategy for your business plans in 2025?
When teams within close proximity, it becomes easier to coordinate efforts, resolve issues promptly, and strengthen working relationships. Additionally, similar time zones can streamline communication and improve operational efficiency.
Thus, nearshoring is best suited for businesses looking to reduce travel times and operating costs. Meanwhile, onshoring is ideal for industries requiring strict oversight or rapid turnaround times.
3. Scalability and flexibility
The ability to scale operations efficiently is critical for businesses to adapt to changing market conditions, customer demands, and organizational growth.
By having the flexibility to quickly scale, you can optimize resource allocation, reduce costs, and respond to emerging opportunities.
Nearshoring offers flexibility to scale operations quickly due to lower costs and broader talent access. Onshoring provides scalability within domestic markets, though higher costs can limit it.
The bottom line
The decision between nearshoring and onshoring hinges on priorities such as cost, quality, scalability, and proximity as your business plans for 2025.
While nearshoring offers cost advantages and access to skilled talent in neighboring countries, onshoring delivers unmatched control and alignment with domestic standards. Both strategies have their merits, and the right choice depends on your specific business needs and goals.
Ready to optimize your business strategy for 2025? Let’s connect and find the best outsourcing model for your needs!
