Why Guatemala is Becoming a Hotbed for Nearshoring

By Mayora IP

Guatemala is quickly becoming a popular destination for nearshoring, the practice of outsourcing business processes to a company in a neighboring country. It is a type of offshoring, but it differs from traditional offshoring in that the outsourced company is located in a country that is geographically close to the company that is outsourcing the work.

There are a number of factors that are driving the growth of nearshoring in Guatemala. The country has a large and growing pool of bilingual workers. This is due to the fact that Guatemala is a multilingual country, with Spanish, English, and Mayan languages all spoken in the country.

Guatemala has also a relatively low cost of living. This makes it an attractive destination for businesses that are looking to reduce their operating costs.

But mainly, Guatemala is one of the largest industrial countries in the region, has a stable economic environment, international trade agreements in place and a key geographical location. This makes it a safe and reliable place to do business. According to the Chamber of Industry of Guatemala (CIG) Guatemala is an ideal candidate for nearshoring due to having the same time zone as several southern U.S. states, speed in decision making, reduced travel costs and regulatory harmonization.

A 2021 report from the United States Agency for International Development (USAID) also highlights the fact that Guatemala offers speed to market to the region with Mexico City and Miami about two hours flights away and two to four days via ocean; three international ports, one on the Atlantic and two on the Pacific; and airtransport that offers 22 international and 11 cargo carriers.

As a result of these factors, Guatemala is seeing an increasing amount of investment in nearshoring. In 2022, the country attracted over $1.8 billion in foreign direct investment (FDI), and much of this investment was in nearshoring projects. Also in 2022, nearshoring created over 48,000 jobs in Guatemala. Some of the major companies that have invested in nearshoring in Guatemala include Nextil Group, EmergentCold, Alórica and Tata.

Among the strategic sectors identified for nearshoring are agriculture, forestry and fishing, food products, chemicals, plastics and rubber, clothing, non-metallic products and electronic equipment.

Nearshoring can be a valuable strategy for businesses that want to reduce costs, improve efficiency, and maintain close relationships with their suppliers and customers. However, businesses need to be aware of the challenges of nearshoring for intellectual property and take steps to protect their IP, such as registration of IP rights and use of non-disclosure agreements (NDAs) with nearshoring partners to protect confidential information.