How Nearshore Outsourcing Drives Economic Growth and Skill Development

Originally published in APG Nation

When people talk about the benefits of nearshore outsourcing, much of the focus is on the businesses in the U.S. that use the services. Yet, as Amalga Group CEO Jens Erik Gould explains, there are numerous ways in which nearshore outsourcing is significantly impacting the economies of Latin America. “

With the increased demand for nearshore outsourcing, investments are ramping up in Latin American countries, leading to further opportunities across many sectors,” Jens Erik Gould says.

Below are some main ways nearshore outsourcing in the IT and BPO sectors drives economic growth and skill development.

Significant Investment

Many Latin American countries have seen a significant uptick in foreign direct investment in recent years, as companies based in the U.S. and other countries are shifting some of their IT and BPO work there. For instance, Mexico experienced a 12% increase in its FDI in 2022. According to the Mexican Central Bank, that represented the highest amount of foreign direct investment in the country over the last seven years.

What’s more, the central bank believes that the real impact of nearshore outsourcing will be seen even more over the next few years when these recent investments start to play out.

“When countries such as Mexico receive large investments inflows like this, it leads to more employment opportunities,” Jens Erik Gould says. “That can increase wages and local government revenue, which has a positive impact on purchasing power and local infrastructure.”

Employment Opportunities

Nearshore outsourcing in the IT and BPO sectors has created many new employment opportunities that didn’t exist before. While these aren’t new sectors in Latin American countries, they are in higher demand today. In other words, these new jobs being created are well-paying since they’re in such demand.

Skill Development

One trickle-down effect of the increased demand for nearshore outsourcing in the BPO and IT sectors is that it fosters the development of advanced skills. The jobs that are in demand require specific skill sets that need to be learned through top-notch university and workforce development programs.

With Latin American countries seeing the immense opportunity that direct foreign investments can bring, they are investing in these educational systems to support their residents and build them up.

“Talent in Mexico, Central America and South America are highly skilled and able to take on any job opening a U.S.-based company may have,” Jens Erik Gould says. “This is due, in no small part, to the growth of nearshore outsourcing and increased investment in education over the last few years.”

So, while U.S. companies focus heavily on the benefits nearshore outsourcing brings them, it’s important to also note that they are also having a positive impact on the workforce in Latin America.

About Jens Erik Gould

Jens Erik Gould is the Founder & CEO of Amalga Group, a Texas-based nearshore outsourcing company specializing in providing highly qualified talent in IT, software engineering, and contact centers. Previously, Gould spent over a decade as a business, politics, and energy reporter who covered the U.S. and Latin America for esteemed media outlets like Bloomberg News, The New York Times, and TIME Magazine.