Nearshore Outsourcing in Mexico: Advantages and Benefits Explained

Virtual assistants (VAs) in Mexico are sought-after professionals in the U.S. because of the benefits and services they offer to clients. 

Mexican VAs are among the many third-party contractors that comprise the nation’s outsourcing industry. Mexico’s edge over other outsourcing destinations is that it provides nearshore outsourcing to the U.S.

Nearshore outsourcing involves hiring workers from neighboring countries to fulfill services, mostly back-office, such as customer support or help desk.

This article discusses the outsourcing advantages companies receive when engaging in nearshoring in Mexico.

Keep reading to discover more. 

Primary Nearshore Outsourcing Advantages in Mexico 

The following are the benefits businesses can enjoy when engaging in nearshore outsourcing in Mexico:

Compatibility with U.S. Time Zones

Time zone gaps are one of the primary issues with offshore outsourcing. In particular, leading offshoring destinations such as the Philippines and India are 12–14 hours and 10 hours ahead of the U.S. So, when a company in California starts working at 9 a.m., the third-party team in Asia should report for duty at night, at 9 p.m. at the earliest. 

In contrast, minimal to zero time zone differences are among Mexico’s major nearshore outsourcing advantages. Most states in the U.S. have the same time zone as Mexico. The parts that differ are scheduled at most three hours in advance.

So when a business in California begins work at 9 a.m. and ends at 6 p.m., the Mexican outsourcing team should start at 10 a.m. and leave at 7 p.m. Mexico is only one hour ahead of California. The client company and the nearshore team have nearly the same shift. 

Check out the perks of working in similar time zones:

• Work-life balance. One advantage of nearshore outsourcing is that third-party contractors have fewer health issues or mental risks such as loneliness, isolation, or burnout. Remote offshore staff working late-night or graveyard shifts can be more susceptible to these concerns.

• Easy meeting scheduling. Scheduling the most convenient time to meet the third-party team is taxing when they are in a separate time zone. Thus, delays in relaying important project information might be common. Arranging online conferences or sessions with a nearshore team is more effortless.

• More fluid interaction and teamwork. Another nearshore outsourcing advantage is better collaboration and communication. With a smaller time zone gap, there are fewer delays or lag times in replying to customer concerns, requests, or questions. 

Cultural Sameness

Another nearshore outsourcing advantage is that Mexico and the U.S. have similar cultural settings. Many Mexicans and Americans have families, relatives, and friends living on the other side of the border. 

A recent Pew Research study reports that 37.2 million, or 61.5%, of the overall Hispanic population in the U.S. were of Mexican origin in 2019. This number will continue to grow in the next few years. 

Below are some similarities connecting the two countries:

• History. Mexico and the U.S. experienced European colonization hundreds of years ago. Each celebrates its freedom from colonial rule annually. Mexico commemorates its independence from Spain every September 16, while the U.S. remembers its freedom from the UK every July 4.
• Geography. Both countries have spacious areas, long coastlines, and ethnically diverse populations. The varied climates range from desert heat to mountain-cold weather. 
• Government system. Mexico and the U.S. follow the federal system, with the president as the head of state. Each nation is classified into states with a governor and legislators. The constitution is the fundamental law of both countries.
• Culture of wealth. Many Mexicans and Americans adhere to the supersize belief: the bigger, the better. They prefer larger sizes, more options, and better features. 
• Love of sports. Americans like baseball and football, while Mexicans like boxing and soccer. 
• Food and drink. Many Americans appreciate Mexican foods, including enchiladas, burritos, and quesadillas. Mexicans enjoy hot dogs, fries, burgers, and other U.S.-made food. Beer is the favorite drink in both nations. 

Mexican third-party teams are more comfortable and assertive when interacting with Americans. They can talk about many topics that build better customer relations. Their cultural resemblance gives them an advantage in back-office outsourcing over their foreign competitors. 

Cost-effective but Efficient Workforce

One advantage of nearshoring outsourcing is access to high-quality third-party staff. Mexican professionals possess technical qualifications, communication skills, and education levels comparable to its neighboring countries, Canada and the U.S. But while the local talent is on par with these advanced economies, its labor costs are more affordable. 

According to Salary Explorer, the average basic salary of a full-time customer service representative (CSR) in Mexico is MXN 12,600, roughly $716 monthly, or MXN 151,000 ($8,581) annually. A CSR in the U.S. can cost almost $3,000 per month or nearly $36,000 yearly, depending on experience and skills. 

Based on these amounts, a business can attain annual savings of $27,419 ($36,000 minus $8,581) when hiring a Mexican CSR. This is a nearshore outsourcing advantage a U.S. company can gain. The wide salary difference makes the company more cost-effective while maintaining, if not raising, performance and output with Mexican CSRs. 

Mexico’s competitive labor costs can be attributed to its modest living standards. Global consumer price information base Numbeo reports that Mexico’s average monthly cost of living for a single person amounts to MXN 10,213 or $580 without rent. On average, living expenses and rent in Mexico are 44.7% and 69.9% more affordable than in the U.S.

Partnering with a reputable and established business process outsourcing (BPO) provider will allow the business to enjoy this nearshore outsourcing advantage. The Mexican BPO firm can offer a third-party team that suits the client’s budget and requirements. It will also help find the right talent and save on labor expenses.

Ample Competent Workforce

Among the advantages of nearshoring outsourcing is that Mexico has skilled, young, and active workers, mainly in engineering and technology. Approximately 500,000 students who complete undergraduate courses annually become part of the labor market. According to Forbes, over 130,000-plus computer science graduates are open to work each year. 

The large supply of mostly technical professionals is well adapted to remote work since they are proficient in using digital devices, social networks, and computer systems. They are also fluent English speakers. These young workers are also used to American work culture and processes, enabling them to operate with less supervision and properly address task-related issues. 

An additional nearshoring outsourcing advantage is that Mexico’s educational establishments have shifted to meet the changing international business environment and provide better education to the populace. The National Autonomous University of Mexico and the Monterrey Institute of Technology rival well-known universities worldwide. 

Many Mexicans strive for a college degree for better financial and social mobility. They believe that higher education contributes to one’s success in life. Many people still attempt to enter and complete college despite economic, familial, and geographic challenges.  

Businesses must work with the right BPO provider to enjoy nearshore outsourcing advantages. The service provider must ensure its third-party teams have the necessary work experience, educational levels, and technical and soft skills. Teams must have the knowledge and expertise to provide various services such as:

• Administrative support
• Bookkeeping and accounting
• Contact center as a service (CCaaS)
• Customer service or support
• Data entry services 
• Email and chat
• Healthcare outsourcing
• Help desk support
• Information technology (IT) support
• Outsourced e-commerce customer service
• Virtual assistance 

Growing Outsourcing Industry for Long-term Business Stability 

One of the advantages of nearshore outsourcing in Mexico is that the country has become a popular outsourcing hub in Latin America, along with Colombia and Brazil. The BPO industry’s beginnings date back to the 1990s when telemarketing companies came in droves to establish operations in Mexico City and other parts of the nation. 

Currently, call center services represent over 70% of all BPO operations in the country. The rest is distributed among technical support outsourcing, virtual assistance, back-office, and consulting services. The outsourcing sector has grown rapidly in the past few years and greatly contributes to the domestic economy. It is expected to continue its uptrend in the years ahead. 

Statista released the following reports about Mexico’s BPO industry:

• Total revenue in the outsourcing segment is expected to reach €3.28 billion ($3.57 billion) in 2023.
• Revenue is projected to register a compounding annual growth rate (CAGR) of 6.04% from 2023 to 2027. The market volume will reach €4.15bn ($4.52 billion) in 2027.
• The average cost per employee in the BPO segment is forecast to hit €54.30 in 2023.

Call center operations are spread across Mexico, including Mexico City, Tijuana, Guadalajara, Ixtapa, Baja, Monterrey, Puerto Vallarta, and Hermosillo. These cities register the greatest number of inbound and outbound call centers offering various services. Access to these cities is a nearshore outsourcing advantage that companies can acquire.

Inbound call centers in Mexico cater to managed services, customer care, and tech support. They also help with human resources (HR) activities, including employment and education background verification. On the other hand, outbound call centers specialize in telemarketing, lead qualification, and lead generation. 

English Proficiency

Among the nearshoring outsourcing advantages in Mexico is the third-party teams’ familiarity with English, the country’s most commonly used foreign language. Nearly 13 million Mexicans, or about 10% of the population, can converse in English at different skill levels. The cities of Guadalajara, Nuevo León, Querétaro, and Jalisco have high proficiency.

Higher-than-normal English skills make communicating and working with Mexican professionals easier. Americans and other English-speaking customers and clients can easily comprehend them. Thus, third-party teams can discuss projects, tasks, and business plans with U.S. clients while resolving customer issues without the language barrier. 

Moreover, many local workers speak English with a neutral accent and can engage in formal or informal conversations. Their accent is slightly more nasal and elevated than that of a natural American speaker. Regardless of the tone, Mexican English is generally more understandable than other English variants. 

Many Mexicans have a stronger grasp of American English grammar and expressions because of the country’s broad history with the U.S. This natural English usage is one advantage of nearshore outsourcing. They can better understand the nuances while conversing with customers and clients. Mexican professionals are also bilingual and fluent in Spanish.

Collaborating with the right BPO company enables businesses to obtain this nearshore outsourcing advantage. The third-party company can provide bilingual professionals to help improve and expand client relationships. Many U.S. firms look for Spanish-speaking workers for their processes.  

Outsourcing-Friendly Government Efforts

One of the nearshore outsourcing advantages in Mexico is the government’s strong support for the BPO sector, as detailed in a nearshore business process outsourcing guide.

Here are some programs, regulations, and trade agreements the Mexican government has carried out: 

• Internet para Todos program. In line with the current administration’s call for universal connectivity, the program utilizes advanced digital technologies, such as satellites, fiber optic lines, wireless broadband, and mixed solutions. When the program is in full swing, this presents wider business opportunities, particularly for the BPO industry. 

• 2021 Amendments to Mexican Labor Law. This is also a nearshore outsourcing advantage in Mexico, as the revision can raise work productivity in the outsourcing industry. Along with year-end bonuses, the law mandates companies provide employees with a profit-sharing plan equivalent to a three-month salary. 
• U.S.-Mexico Cybersecurity Cooperation. The U.S. and Mexican governments recognize the importance of robust cybersecurity activities between them to safeguard joint supply chains and critical infrastructure. It aims to minimize cybercrime, considering Mexico places second after Brazil in Latin America for the most online attacks. 
• North American Free Trade Agreement (NAFTA). Another nearshore outsourcing advantage in Mexico, the 1994 treaty set up a free-trade area for Canada, the U.S., and Mexico. It helped boost foreign funds into the local economy, including the BPO industry, encouraging innovative services and products. 

One benefit of outsourcing to Mexico is its enhanced connectivity, which helped accelerate the growth of the domestic digital economy. Statistics from the Mexican Association of Online Sales reveal that the country’s e-commerce grew 27% in 2021 compared to the previous year. Mexico is in the top five nations with the world’s largest online business growth. 

Multichannel Features for Uninterrupted Customer Communication

One advantage of nearshore outsourcing is that third-party Mexican companies can provide various communication services, including audio, video, and text, and incorporate them into a unified platform for full customer interaction. This technology guarantees glitch-free and smooth agent-customer communications despite changing modes during the engagement.  

Consider the common types of multichannel communication:

• Standard phones are traditional, fixed-line phones that callers use to contact customer service or tech support. This communication technology remains durable, dependable, and convenient to use. 
• Email allows existing and prospective customers to send electronic messages to the third-party team. Senders can privately and securely attach images, notes, and files to their emails. This is ideal for non-urgent, complex, or lengthy requests and issues. 
• Social media is a popular internet-based communication form that customers use to contact the third-party team quickly. They can also post comments, suggestions, and feedback on the company’s products or services. Twitter, Instagram, TikTok, Facebook, and LinkedIn are examples of social platforms.  
• Voice over internet protocol (VoIP) telephony enables calls via the internet using a VoIP-enabled phone and a broadband connection. VoIP phones are more expensive than standard phones. 

• Short message service (SMS) permits a third-party team to deliver short text messages from mobile phones. Consumers can also inquire via SMS and receive answers immediately. 

• Chatbots enable users to chat using text or voice instructions with an intelligent application. Answering common customer questions is the chatbot’s primary duty. 
• Live chat is similar to a chatbot, but the user chats with a live agent instead. They post questions in a small window panel on the company’s website. Answers are typically received right away. 

• A self-service portal is an online site containing resources customers can use to fix problems alone, without an agent’s help. The frequently asked questions (FAQs) are included in this tool. 

Reduced Operating Expenses

Reducing operating costs is one of Mexico’s main advantages of nearshore outsourcing. 

The following are possible cost savings when delegating processes to BPO providers:

• Recruitment. Avoiding costly hiring activities is among the nearshore outsourcing advantages that a company can obtain. The service provider handles all the recruitment processes to get the right personnel. These include employment advertisements, candidate screening, examination, and onboarding. 
• Salaries. Another nearshore outsourcing advantage is minimal or zero salary costs. Having regular employees involves paying them fixed monthly salaries regardless of the business situation. The company also incurs other compensation costs, such as payment for staff income taxes, social security, health insurance, and holiday leaves. 
• Re-training and upskilling. The third-party provider shoulders employees’ re-training and upskilling costs to keep pace with the latest work practices and methods. Their knowledge and skills must be upgraded to meet new challenges. Sending them to workshops, post-graduate studies, and seminars requires bigger spending. 
• Equipment, work supplies, and office space. Lowering capital or investment costs is an added nearshore outsourcing advantage. Outsourcing secondary operations, such as bookkeeping, accounting, and data entry services, means the business is not required to buy computer systems, machines, and other supplies. The provider has the resources.

Capable Third-Party Remote Teams

Acquiring effective remote workers to take on outsourced tasks is one of Mexico’s essential nearshore outsourcing advantages.

When a business delegated back-office functions to a Mexican BPO company, the third-party team likely used a work-from-home (WFH) or hybrid work setup with a flexible schedule option to comply with COVID-19-related restrictions. 

Remote work also saves BPO staff from performing required, time-consuming activities, including preparing an extra hour or two before work and commuting to and from the office. 

Since reporting daily to the office is no longer a prerequisite, the third-party team can serve end users better and address their concerns more quickly than on-site employees. The WFH staff also utilizes private systems remotely to protect data, information, and internal communication. 

More productive WFH contractors and faster service delivery are nearshore outsourcing advantages. The following factors result in a highly productive remote team: 

• Fully geared WFH team. The service provider equips remote workers with the proper hardware, software, and digital devices to promptly and accurately finish daily tasks. 
• Structured remote work. The BPO company executes straightforward, strict (but fair) WFH policies for better employee conduct, workflow, and teamwork. This is an extra nearshore outsourcing advantage. 
• Regular web meetings. Supervisors organize and conduct video or audio calls to keep track of the third-party teams’ work status and progress.
• Heavy use of communication apps. The third-party team counts on collaboration programs for simultaneous and smooth interaction. They regularly use Microsoft Teams, Skype, Zoom, Slack, and Google Meet.  
• High data security. Remote workers use virtual private networks (VPNs) and the latest antivirus programs to safeguard vital client and customer data from hacks and breaches.

Ideal Option to Address the Skill Shortage in the U.S. 

Helping resolve the U.S. labor shortage that will persist in the years ahead is among Mexico’s major nearshore outsourcing advantages. The Great Resignation, or the Big Quit, was a pandemic-caused event in which many Americans willingly resigned. The U.S. Bureau of Labor Statistics states that 71.6 million workers quit between April 2021 and April 2022. 

Here are the main reasons Americans voluntarily leave their jobs:

• COVID-19 pandemic. The pandemic drove the Big Quit. Since it began in 2020, the U.S. and other parts of the world have gone through periodic lockdowns and social distancing codes. These compel American workers to focus more on their personal lives than their careers. Remote work spread and became the new work setup. 

• Inadequate wages. The monthly salaries of many American workers are not enough anymore to cover the essential cost of living. Employees living in urban areas close to their workplace can hardly survive due to the continued hike in the prices of basic goods and services. Regular pay has not increased sufficiently to match the rising cost of expenses.

American companies are adversely affected by the Great Resignation. Various industries have experienced higher employee turnover rates, impacting staff morale, output, and performance. The labor shortfall also interrupts production and customer support workflows, reducing productivity and consumer service. 

A recent survey shows that 73% of employers (or three in four) in the U.S. and Canada will find hiring and retaining staff difficult in 2021, three times more challenging than in 2020. 

BPO companies providing professionals to short-staffed companies is a nearshore outsourcing advantage. They can help address the current employee shortage facing American businesses. The service providers have access to a wide talent pool to meet their requirements. 

High Level of Compliance and Security

Strictly adhering to government regulations and industry standards to avoid steep penalties is a nearshore outsourcing advantage in Mexico. 

An established and reputable third-party provider helps companies comply with the laws, policies, and standards imposed by federal authorities and industry watchdogs. Noncompliance can lead to legal and financial consequences, including lawsuits, criminal charges, fines, and reputational damage.  

The following are some general and industry-specific regulations the service provider monitors and observes for their clients:

• The Payment Card Industry Data Security Standard (PCI DSS) requires businesses of all types to process credit card data securely. PCI DSS aims to enhance cardholder information management to minimize credit card theft, scams, and fraud. Companies will get a nearshore outsourcing advantage when partnering with the BPO firm.

• The General Data Protection Regulation (GDPR) regulates businesses with customers and clients in the European Union. It has the world’s most stringent privacy law, mandating companies to protect their customer and business data. Well-known organizations were slapped with huge fines due to GDPR infractions.  
• The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is a federal law for the healthcare industry. It requires medical practitioners and providers to safeguard patient health information from unauthorized release. Organizations can acquire another nearshore outsourcing advantage when working with a service provider.
• The International Organization for Standardization (ISO) is an independent international group that issues certification to every organization that fulfills its high-quality assurance policies. Its strict standards include all industries, from manufacturing and retail to financial institutions and healthcare. 

• The Telemarketing and Consumer Fraud and Abuse Prevention Act is a federal regulation that protects individuals from telemarketing abuse. It requires telemarketers to secure a license before performing their roles.

Better Customer Experience (CX) and Content

Providing an excellent customer experience consistently is among the advantages of nearshore outsourcing in Mexico. CX is the total experience a buyer has with the company. It includes every engagement, from the customer’s initial purchase to reimbursement and returns—all of which help to establish a loyal and happy consumer base.

Here are some benefits of greater CX for the business: 

• Higher return on investment (ROI). Focusing on CX activities raises ROI. A better customer journey translates to buyers shopping more. They also tend to spread the word to others about their great experience with the service, which can draw more potential customers. 
• Increased brand image. More efforts on CX enable the company to stand out from the competition. A good brand image makes a big difference in giving the product or service a market edge. It also allows the company the opportunity to expand its industry share.
• Improved positive feedback. Delivering pleasant experiences that fortify the brand loyalty of end users is a nearshore outsourcing advantage. Customers will likely support a product or service for as long as they are satisfied. They return to purchase more or new items, enhancing customer retention and lowering marketing expenses. 
• Reduced operating expenses. Higher CX does not only generate more revenue, but it can also control operating costs. The company no longer needs to shell out more advertising costs to attract new buyers. It also reduces its need to hire additional employees to manage customer complaints and fix product or service defaults. 
• Heightened consumer awareness. CX offers insights into customer behavior, feature or service preferences, and buyer attitude. The third-party team gathers and reviews consumer information to enhance products and services for a greater experience. This is another nearshore outsourcing advantage the business can enjoy. 

Convenient Access to Advanced Technologies

Enhancing and simplifying processes using next-generation technologies, state-of-the-art platforms, and the latest applications is one of the advantages of nearshore outsourcing. 

A BPO provider with operations in Mexico can also provide advanced solutions that help the third-party team manage outsourced processes. The technology can track and record each team member’s efficiency and output. They allow agents to use self-service options, lower human error, and handle higher call or task volumes. 

The latest solutions and software assist in monitoring and addressing customer and end-user support tickets. It can handle many questions and resolve issues through knowledge-based features. Increasing customer centricity and collaboration among third-party agents is a nearshore outsourcing advantage the company can acquire. 

Additionally, service providers harness cloud-based systems to boost work and team performance. These virtual technologies take the consumer experience to the next level. They unify all applications and systems, such as the customer relationship management (CRM) program, for an uninterrupted workflow. 

BPO providers also utilize the following technologies to offer innovative approaches to managing tasks: 

• Artificial intelligence (AI) simulates human intelligence in devices or machines. This technology is similar to RPA, offering cost-effective solutions to improve team productivity.

• Robotic process automation (RPA) handles software robots that perform particular duties, such as answering common customer questions. With RPA, human agents can focus more on high-value, urgent, and critical assignments. 

• Cybersecurity is another nearshoring outsourcing advantage that the business can have. The solution protects the IT infrastructure against data intrusion, threats, and breaches. 
• The Internet of Things (IoT) is the interconnection of physical and digital devices and machines. IoT taps the internet to distribute data throughout the network for quicker information access.

Scalable Operations to Control Costs Better 

One nearshore outsourcing advantage in Mexico is expanding or decreasing operations, volume, or service features to match the company’s business needs. 

The third-party provider can scale the number of third-party agents, functionalities, or processes involved without impacting the company’s current operations. It helps the company optimize growth and costs by spending financial resources properly. 

Check out some perks of scalable activities:

• Cost efficiency. The business saves on ongoing expenses by acquiring the right number of third-party contractors. The BPO provider also helps determine the specific operations needed to boost performance and output. 

• Agility. The service provider helps the organization deal with unexpected events without hurting customer support processes. This is among the advantages of nearshore outsourcing that businesses can achieve.  

• Flexibility. Delegated back-office functions can promptly adjust to changing business, client, or end-user demands. Flexibility is an edge for organizations that aim to strengthen their business competitiveness.   

Minimal Legal and Administrative Accountabilities

Decreased legal and management responsibilities are additional nearshore outsourcing advantages. Establishing an offshore company or an office branch in Mexico entails monitoring and complying with different tax codes, labor laws, and administrative policies. 

Acquiring Mexican BPO services will minimize direct staff hiring risks or legal consequences, such as labor strikes and employee lawsuits. Having the service provider handle staff-related concerns is a nearshore outsourcing advantage. 

Other benefits of outsourcing associated with HR include:

• Experienced professionals. The BPO provider has a competent HR group to oversee processes and job-related issues. The team promotes cultural diversity and a harmonious work environment. 

• Extensive connections. Allowing the organization to select the best candidates is another nearshore outsourcing advantage. A service provider has a better reach to a local talent pool.

The Bottom Line

Tapping into services in Mexico brings different rewards to businesses. Apart from the abovementioned advantages, third-party Mexican teams are willing to work in shifts. They are amenable to any schedule—on holidays, on weekends, and according to varied time zones—to serve clients and end users regardless of location. 

Mexico’s nearshore outsourcing advantages are not temporary but sustainable, serving as a prime example of nearshore outsourcing. Companies outsourcing to the country can experience the benefits while mitigating outsourcing disadvantages, provided they find the right BPO company to work with  

Let’s connect if you want to learn more about nearshore outsourcing in Mexico!