Cost savings analysis: Why nearshoring is the right choice for your bottom line

Cost savings analysis: Why nearshoring is the right choice for your bottom line

In a market with fierce competition and thin margins, third-party logistics providers and other companies within the industry need to prioritize efficient operations and streamlined budgets. The ability to save on operating costs impacts competitiveness, growth potential, and the value you can deliver to clients. Many logistics companies are turning to nearshoring to reduce their spending. The average cost of labor and commercial real estate is significantly lower in countries like Mexico, allowing businesses to improve their bottomline without sacrificing operational output. 

What is nearshoring? 

When discussing nearshoring, we’re referring specifically to nearshore staff augmentation. This is the practice of leveraging skilled labor from neighboring countries, like Mexico, to supplement their local teams. With nearshoring, you can streamline your operations and improve margins while continuing to deliver superior customer service. Compared to offshoring, the benefits of nearshoring are better cultural alignment, fewer language barriers, lower travel costs, and more efficient operations with time zone alignment. 

The cost benefits of nearshoring 

When thinking about how nearshoring can reduce spend, most people think of the lower labor costs. While nearshoring does help lower expenses by providing access to skilled talent at lower costs compared to onshore options, it also offers several additional saving opportunities. 

Labor costs 

The cost of labor in Mexico allows you to access skilled talent at lower hourly rates than domestic options, reducing overall labor expenses.

Back-office functions 

You can reduce the time and resources spent on hiring and training new employees by offloading recruitment, onboarding, and training responsibilities to a nearshore provider. Your nearshore partner will also reduce other back-office expenses, such as payroll and IT. 

Office space and equipment 

Commercial real estate costs in nearshore locations are far less than in the US. Nearshoring saves on infrastructure such as office space, IT equipment, and internet. 

Scalable workforce 

Nearshoring allows you to quickly scale your workforce based on project demands. The ability to onboard new teams promptly improves operational efficiency and helps avoid delays and lost revenue. 

Taxes and compliance 

Your nearshore partner handles tax calculations and compliance, alleviating the complexities and potential costs of managing international payroll and tax regulations.

Cost savings analysis with Rapido 

When looking at the cost of hiring a rep with Rapido compared to hiring the same role in the US, you need to look at more than just the salary. Fringe benefits can add an additional 25% on top of the salary in the US. Additionally, the average cost of rent for commercial property in the States is $1,000 per employee. When you factor in fringe benefits and rent for office space, the average cost per Rapido rep is 46.55% less than the cost for the same role in the US.

Partner with Rapido for your nearshore needs 

Cost savings are just the beginning of the benefits you can experience by partnering with Rapido for your nearshore staffing needs. Rapido offers a scalable workforce, skilled talent, cultural alignment, and time and resource savings. 

‍Contact Rapido to learn more about our solutions and how we can help drive cost savings and operational efficiency.

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