How do you choose between Nearshoring in Mexico or Brazil when opening an HQ in Latin America?

cover image for blog on Expansion into LATAM. Nearshoring in Mexico vs Brazil, and IT talent
  1. North America Presence
  2. Industry Targeted: Where are your customers?
  3. B2B or B2C Software Company?
  4. IT Services Provider / Systems Integrator
  5. Conclusion

For Tech Companies expanding into Latin America, the decision of where to open its Latin America HQ usually comes down to Brazil or Mexico. These two countries have the biggest economies in the region, so it makes sense to establish their LATAM office in one country and then expand into the rest of the region. While Brazil offers its unique advantages, such as being the largest economy in South America, size, and cultural influence, the strategy of Nearshoring in Mexico and the need for IT talent also play significant roles in the decision-making process.

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Both countries have significant IT markets with a growing demand for technology products and services. By opening a regional office in one of these countries, IT companies can tap into this demand and continue to expand their presence in the Latin American region. However, each country has its own unique strengths and challenges, so there is no clear-cut answer that will work for everyone. But what we can share are what were the key factors that made Tech Companies choose nearshoring in Mexico over Brazil.  

The decision can be straightforward when these characteristics are involved: The Company has a presence in North America, the industry targeted, and the type of Software Company or IT Services provider.

1. North America Presence

If the Tech Company has a presence in the United States and/or Canada or plans to target this region, it can use its Latin America center to support North and South America. The Mexico office will play a strategic role in both strategies, the entrance to the Latin American market and supporting their US operations. Nearshoring in Mexico brings an additional IT talent pool at lower costs because of a lower cost of living than the USA and Canada. Flights from Mexico to US cities are similar to traveling within the US. 

Nearshoring in Mexico has been the preferred option for delivering IT Services for the past 15 years, and accelerated post-pandemic, because of the hybrid workforce. Companies increased their hiring radius for IT talent that could fly in when needed but can work remotely most of the time.


  • According to Gartner 2017 Evaluation of nearshore/offshore countries, “Mexico is the premier nearshore country for the US, due to its talent pool size and proximity”, 2017 (2)  
  • key consideration is to evaluate if the US Market is in future plans. Mexico or even Miami (US), are often selected as regional headquarters of global organizations”. Microsoft Whitepaper for Geo Expansion to Latin America for Microsoft Partners, 2019 (1
  • Twenty-three of the top 30 software companies have local operations in Mexico. (ProMexico’ 2018) Industry Targeted: Where are your customers?

2. Industry Targeted: Where are your customers?

Mexico has been the top trade partner for the United States because of its manufacturing industry. Because of this, companies from all over the world have decided on nearshoring in Mexico and setting up manufacturing operations, bringing with them their ecosystems. Mexico boasts first-rate capabilities, with an abundance of expertise, especially in the automotive sector. Aerospace, medical equipment, and appliances are also highly successful industries.

Because of this, Tech Companies that target customers in the Manufacturing industry, prioritize nearshoring in Mexico over other countries in Latin America.


  • On average, Mexico accounted for 57% of the total manufacturing shipments from Latin America between 2019 and 2021. (3)
  • Because of the USA-China economic war and de-risking of supply chains after the Pandemic, the Nearshoring trend will accelerate, bringing more and more manufacturing companies originally located in Asia that serviced the North America region to Mexico (4). 
  • Before the 2023 North America Summit (USA-Mexico-Canada), the US administration proposed to shift the supply of some key technology components from Asia to North America (5). After the 2023 Summit, Mexican Foreign Minister announced that Mexico, the USA and Canada plan to produce in North America 25% of what they currently import from Asia. (6

3. B2B or B2C Software Company?

B2B and Enterprise Software companies treat Brazil as a different market versus the rest of the countries in LATAM because their solutions have to be highly localized in Brazil, not just their language (Portuguese) but because of its bureaucratic legislations and heavy taxation policies that profoundly impact business processes in their solutions, from documentation to additional steps for shipping, accounting, importing, inventory, sales, etc. This is why local companies like Microsiga/Tous have dominated the local market. Nearshoring in Mexico offers Solutions that are localized and can be replicated more easily in other LATAM countries, which is not the case in Brazil. 


  • The World Bank’s “ease of Doing Business” latest ranking of Mexico is #60, and Brazil is #124. The ranking evaluates regulations and local complexity, among other data (7
  • Brazil edges Mexico out when it comes to the size of the market. However, Mexico may be favored if the plan is to quickly move to other Latin American countries, as it is a Spanish-speaking country”. Microsoft Whitepaper for Geo Expansion for Partners (1
  • Latin American V.C. ALLVP found Mexico is the current choice market for expanding Latin American Tech startups. It is recognized as the starting point to expand and prove the market for other Spanish-speaking countries. (8)

4. IT Services Provider / Systems Integrator

The main asset/cost of this type of company is its people. So, if the company goal is to cover most of Latin America with almost the same team for implementing and supporting Enterprise Software Solutions, having Spanish-speaking personnel is a must. If the company in particular does ERP Rollouts in LATAM, their consultants need to know how to localize the solution, as LATAM Countries are bureaucratic, with local labor and tax laws.

A common practice is to group countries instead of having one full team for each, like Mexico-Colombia-Costa Rica, or Argentina-Chile-Uruguay, but Brazil is treated as its own group because it needs specialized consultants as Brazil’s requirements are vast and change often.


  • The World Bank’s “Doing Business” latest ranking of Mexico is #60, Colombia #67, Costa Rica #74, and Brazil #124. (7
  • other Latin American countries categorize Brazil as its own market with high entry barriers. To reduce the risk of audits and supply-chain interruptions, companies doing business in Brazil need to adopt systems capable of integrating and automating all the fiscal requirements by industry, including state-to-state regulations” Microsoft Whitepaper Geo Expansion into LATAM (1


With today’s technologies and safe landing options provided by host countries, companies can enter a new region faster and with fewer costs than before. Small companies are global overnight. But what has stayed the same is time. When a company decides on running a new operation in a new region, it takes resources and valuable time to get it right. A bad decision can open the window to a competitor while the company is trying to readjust, its organization and strategy. Lessons learned from other companies can add precious insights when making a decision as strategic as entering a new market.


1. Microsoft Global Expansion Whitepaper for Microsoft Partners (link 1link 2)

2. Gartner – Evaluate Offshore/Nearshore Countries for Outsourcing, Shared Services and Captives Worldwide, 2017 








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