Mexico’s proximity to the US, competitive labor costs and stable trade agreements have propelled it to the forefront of the nearshoring phenomenon. If the trend continues at its recent pace, the country could benefit from the creation of millions of jobs, particularly in manufacturing, IT and business services. 

During the first quarter of this year alone, the country received $20.3 billion in foreign direct investment, a 9% increase compared to the same period in 2023, according to Mexico’s Ministry of Economy. 

Deloitte projects that over the next five years, new investments derived from nearshoring in Mexico could create up to 1.17 million additional jobs in the manufacturing industry alone.

Yet nearshoring growth doesn’t necessarily have a straightforward growth trajectory. Challenges include infrastructure and a talent shortage. To overcome them, staffing experts in the region say it will require a team effort. 

“Mexico possesses unparalleled conditions that make it highly attractive: proximity, trade agreement, demographic bonus; it is a true magnet for investments,” says Mónica Flores Barragán, president of ManpowerGroup for Latin America based in Mexico. “If we train talent at the necessary speed, demonstrate legal certainty and ensure safety, growth is limitless. Our industry can contribute significantly to this process.” 

Infrastructure Inequities

While nearshoring fuels job creation, the benefits are not evenly distributed. Major cities like Mexico City, Monterrey and Guadalajara attract significant investments, while other regions grapple with infrastructure and security challenges. 

The construction industry estimates a pressing need for expanded industrial parks to accommodate the surge in demand. Indeed, the Mexican Chamber of the Construction Industry estimates a need for 15 million square meters of industrial parks over the next five years.

Temporary work agencies are seen as a potential solution to provide agility.

“Nearshoring necessitates legal predictability, energy, infrastructure, security and, fundamentally, labor flexibility coupled with investment in training,” says Francisco Martinez Domene, CEO of Adecco Group in Mexico. “Fascinating developments are unfolding. The country requires the presence of temporary work agencies to provide a flexible, secure and formal solution.”

Growing the needed talent base, too, will require investment of time and money, experts say. The demand for skilled workers far exceeds the available talent pool. IT, engineering, supply chain management and English language proficiency are highly sought-after skills. 

Bridging the Gap

To address these inequities, public and private sectors are investing in training programs. Mexico has not yet ratified the International Labor Organization’s Convention 181 on private employment agencies. Ratification would allow for the development of an efficient strategy to coordinate public and private employment services to train workers in demand-based skills and provide quick access to the formal labor market.

About 68% of companies report difficulties finding qualified personnel for key positions in Mexico, according to ManpowerGroup’s Global Talent Shortage report.

“Investing in education and training, as well as making hiring conditions more flexible in the country, is crucial,” says Fernando Bermúdez Pire, president of AMECH. “Currently, Mexico lacks a hiring method that provides companies with substantial flexibility and agility while upholding all workers’ rights.”

Industry leaders emphasize the importance of education and training, legal stability and labor flexibility to fully capitalize on nearshoring opportunities. Temporary work agencies are seen as a potential solution to provide agility while respecting worker rights. 

At the same time, Mexico’s advantageous trade ties with the US and its young population create a fertile ground for investment to flourish. With proper investment in skills development and infrastructure, helped by temporary staffing companies, Mexico can solidify its role as a nearshoring leader, experts say. The staffing industry is poised to play a vital role in this process.