nearshore talent

How Nearshore Talent Can Help Offset Rising Labor Costs in the U.S.

Leveraging Nearshore Talent: A Strategic Solution for Reducing US Labor Costs 

The emergence of remote work has brought a rise in diversified talent, resulting in more quality candidates for job positions. However, with so many roles in demand and the expanded skill sets of candidates, the cost of labor has also risen. This has left employers looking for alternative talent solutions. Nearshoring offers a strategic approach not only mitigating these rising expenses but also enhancing operational efficiency.  

We’ll discuss the benefits of nearshoring as a cost-saving solution and how businesses can leverage this option to optimize operations 

Understanding the Impact of Inflation and Rising Labor Costs on Businesses 

Small to medium-sized businesses should take into account the current state of the economy when considering rising costs associated with hiring talent. The current inflation issue in the U.S. has resulted in significant increases in business costs across the board, from overhead expenses to recruitment and operational costs. This trend is making it increasingly difficult for businesses to remain competitive. Moreover, healthcare costs and minimum wage requirements are also contributing to the overall increase in labor costs, adding further pressure to small and medium-sized businesses. 

Offering health benefits can be expensive for businesses, but can also be a powerful tool for recruiting and retaining top talent. With the impending minimum wage increases across various states, employers will need to update pay rates accordingly, which may increase payroll and labor expenses.  

Not only do increased costs mean greater expenses for businesses, but there are other implications as well. To offset the rising costs of doing business, companies may be forced to downsize and reduce budgets—oftentimes cutting back on healthcare and retirement benefits—all impacting the company’s competitive edge and profitability.  

Nearshoring: A Proven Cost Reduction Strategy 

To reduce expenses, many companies are now adopting the strategy of nearshoring. This involves hiring talent from countries close to their area of operations but outside of it. For businesses operating in the United States, the most popular option is to nearshore to Latin America. Nearshoring presents a significant advantage to organizations, as it provides them access to skilled workers without incurring typical expenses associated with recruitment and without facing obstacles like language barriers or mismatched time zones. 

By tapping into nearshore talent, businesses can reduce their costs by avoiding the overhead expenses related to recruitment, payroll, benefits, and more. Moreover, since nearshore employees work in areas closer to their business, cultural differences, time zone discrepancies, and language barriers are less of an issue as compared to offshoring, where employees could be 12 or more hours ahead. Nearshoring is also an excellent approach for businesses to leverage diversified and top-notch talent, as nearshore teams are hired and trained specifically to meet the needs of the company they work for. 

Nearshore Talent Costs Vs. U.S. Hiring Expenses 

Businesses can benefit greatly by utilizing nearshore talent for positions that can be done remotely, such as customer service representatives and web developers. Companies can enjoy significant cost savings by choosing to hire through nearshoring, which eliminates recruitment costs, mandatory payments like employee tax, and additional expenses like insurance and overhead costs.  This leads to significant savings when compared to hiring domestically within the U.S. 

  Cost to Hire in the U.S.  Cost to Hire Nearshore  Savings 
Customer Service Rep  $52,000  $24,000  $28,000 
Web Developer  $94,000  $30,000  $64,000 

* US salary is based on industry averages and calculations are from Solvo’s Cost Savings Calculator 

Additional Benefits of Nearshoring 

Nearshoring provides businesses with several advantages beyond labor cost savings, such as the ability to access a wider range of skills from a global talent pool. When compared to offshoring, a significant advantage of nearshoring is the cultural compatibility, particularly in Latin America, where cultural nuances are shared and language barriers are minimal, enhancing collaboration and understanding.  

Another benefit of nearshoring is time-zone alignment, as it is likely that the nearshore team will be in the same time zone as the business or able to adjust to it easily. This makes it easy for your nearshore team to efficiently assist clients, promptly resolve issues, or participate in meetings without difficulty. 

Leveraging Nearshoring to Optimize Business Operations 

Nearshoring provides businesses with a cost-effective strategy for optimizing operations and reducing expenses. By tapping into nearshore talent, businesses can enjoy access to skilled workers without incurring recruitment costs, mandatory payments, or additional expenses. Furthermore, nearshoring enables businesses to leverage diversified and top-notch talent, while cultural compatibility and time-zone alignment enhance collaboration and understanding. With rising labor costs affecting businesses in the U.S., nearshoring offers a viable solution for staying competitive and achieving long-term success. 

Solvo Global drives business growth by connecting North American companies with exceptional remote workers and AI-powered tools. Our unique nearshoring model ensures efficient collaboration in the same time zone, reducing turnover, and driving cost efficiencies. With a focus on fostering a great work environment, Solvo is dedicated to attracting top talent, ensuring our partners never have to choose between cost and quality.