Why US Companies Are Fueling Growth by Nearshoring to LatAm

The reasons for this are no secret:

1. It is more affordable than hiring local talent 
2. There are skill shortages that make it hard to find the right talent locally 

As a common strategy to save costs while acquiring skilled talent, US companies once primarily turned to Asian countries like China and India to outsource business functions because these regions have plenty of professionals skilled in areas such as IT and lower salary expectations compared with the US market.
However, this often makes collaboration trickier due to different time zones.

Therefore, US companies are increasingly turning to Latin American (LatAm) countries for outsourcing, finding them to be a practical choice due to their closer geographical and time zone alignment. The similar working hours and shared cultural understanding with the US translate to better communication and collaboration. This approach is known as nearshoring.

Let’s look deeper into why US businesses find it challenging to fill positions with local talent, how nearshoring from LatAm can address this gap, considerations to account for before you start nearshoring, and the advantages of working with a nearshore hiring company.

Why Do US Companies Need To Hire Global Talent? 

According to ManpowerGroup, 75% of US employers struggle to fill open positions. 

This means that companies are:

• Understaffed: If you’re not able to fill open positions, your teams are not working at their full potential because they are not operating at full capacity. 
• Losing a competitive edge: If your competitor is able to hire someone you cannot, they are getting ahead of you. At the end of the day, your team is what drives your company. 
• Wasting time hiring: If your team is actively recruiting without being able to make a hire, you are losing time and money in the hiring process.

The consequences of this critical issue underscore the urgent need for a reliable solution that can help businesses quickly fill roles with qualified talent.

Why Are Companies Struggling To Hire Local Talent?

According to the US Chamber of Commerce, these are some of the reasons it has become harder to hire talent in the US:

• Among US employees who lost their jobs during the pandemic, 66% are not actively looking for a new job. 
• Early retirement rates have increased—in 2021, the number of adults over 55 years old who retired went from 48.1% to 50.3%.
• Younger demographics (ages 25–34) are prioritizing other areas of their lives, such as personal growth and education, over entering or re-entering the workforce. 
• Migration to the US has decreased.
• The number of new businesses has increased. In 2023, there were 5.5 million new businesses, a record high in the past few years. 

With a smaller workforce and an increasing number of companies, the demand for top national talent is as competitive as ever, which makes it harder for smaller companies and startups to compete against industry giants for talent.

As companies often lose their ideal candidates to organizations offering higher salaries, they are now forced to evolve their talent acquisition strategies to look beyond their borders.

Why Is Nearshoring From LatAm the Solution for US Companies? 

Nearshoring to LatAm has emerged as a strategic solution for US businesses that need to build their teams with skilled talent in a challenging domestic job market. Here are the main ways it can help:

It expands your talent pool

With nearshoring, you gain access to a vast talent pool that helps curb the shortage of specialized talent, such as developers, marketers, and accountants.

You can hire from this largely untapped market of potential candidates as opposed to competing with larger US companies for local talent.

It enables you to hire top professionals

By hiring from LatAm, you can make more competitive offers and acquire top talent that would have been out of your reach in your country.

It’s understandable to have some reservations about the quality of talent in LatAm; however, there are some things you need to keep in mind:

• LatAm talent is very well educated and competent 
• They are driven professionals who are motivated by receiving growth opportunities that are not available in their home countries, pushing them to step up and grow.
• They adapt seamlessly to the US culture due to their high level of English proficiency and the cultural affinity between LatAm and the US.

It fuels growth

Making the right hires allows your company to operate at full capacity. In turn, this helps your company to continue growing and scaling.

How To Start Nearshoring To LatAm

Before you start nearshoring, it’s critical to decide whether you are capable of hiring from LatAm on your own or if you’ll need to partner with a nearshoring company.

Here are some of the most important things to consider if you decide to take on this practice in-house:

• Legal compliance: Are you well versed in international hiring regulations and the steps you need to take to be able to legally hire and pay foreign contractors? 
• Sourcing strategies: To find the right candidate, you need to know how to look for qualified talent and feed your candidate pipeline.
• Screening process: Many LatAm professionals will be interested in opportunities to work for US companies, so you need to be able to screen for only the best candidates and avoid making the wrong hire.
• Compensation: Remember, you want to stay within your hiring budget, but you also need to understand the local talent market so that your offer is competitive for their region.

Unless your company is proficient in addressing the elements above, it would likely be a more strategic decision to partner with a nearshoring company.

Benefits of Partnering With a Nearshoring Company

The main benefits of hiring a specialized third-party organization to help you find the best talent for LatAm are all about efficiency:

1. It will be faster: Nearshoring companies already have a streamlined sourcing and screening process in place that will help you reach the interviewing and decision-making stages faster. ‍
2. It can be cheaper: The faster you make the right hire, the fewer resources you spend, and the quicker your team will be operating at full capacity by filling crucial open roles.‍
3. It will be effective: Your chances of making the right decision go up significantly when you utilize a nearshoring company’s pool of pre-vetted candidates and its efficient hiring process.
   

Final Thoughts

Nearshoring is a strategic evolution for US businesses adapting to the new realities of the local talent market. By embracing this pivot and hiring smarter, you can scale and grow your company faster.

However, it is important to remember that several factors come into play to make the nearshoring model successful, like legal compliance and a deep understanding of the hiring process. So, if you decide to take this step, consider talking to a nearshoring expert to receive guidance on how to get started.Looking for talent in foreign countries is by no means a new practice. For decades, companies have been offshoring software development and customer support, among other roles or departments.