Nearshoring in Guatemala: What are the Benefits?

Latin America has fast become an attractive destination for nearshoring, due to its proximity to North America, time zone crossover, and growing yet affordable talent pool. Nearshoring in Guatemala could be what your business is looking for. One of the countries in LATAM leading the way in nearshoring is Guatemala. It has the largest economy in Central America that continues to grow despite uncertain global conditions. Guatemala has a reliable electricity system, a strong manufacturing industry, and an increasing talent pool of young bilingual workers. 

These factors make nearshoring in Guatemala an appealing option for companies in 2023. This article will highlight the many benefits of nearshoring, especially for the IT, customer service, and tech industries. We will also look at what questions you need to consider before nearshoring in Guatemala, for example, what factors are involved in company formation in Guatemala

Infographic by Biz Latin Hub on Foreign investment in Guatemala on an article about Nearshoring in Guatemala
If you’re thinking of Nearshoring in Guatemala, it’s important to know the FDI in the country

What are the benefits of nearshoring in Guatemala? 

There are many advantages for your company to explore nearshoring in Guatemala. Below are five leading benefits of nearshoring. 

  1. Low labor costs
  2. Time-zone alignment 
  3. Educated talent pool
  4. Ease of doing business
  5. US Govt policy

1 – Low labor costs

Outsourcing can help businesses reduce costs and save time, ultimately leading to increased profit margins. 

Developing and training an internal staff can be both expensive and time-consuming, particularly in nations with high labor and operating costs. 

For example, an entry-level software engineer in the US can expect to receive a salary of about USD 99,000 per year, while a Guatemalan software engineer doing the same role can expect to make around USD 37,500 per year. That equals an incredible cost saving of well over 50 percent! 

Nearshoring in Guatemala also offers a lower cost of living in comparison to major cities in the United States, Canada, or Europe. 

2 – Time-zone alignment 

Guatemalan workers have similar work hours to their colleagues in the United States, Mexico, and Canada. 

Since Guatemala is on Central Standard Time (CST), there is a potential for up to eight hours of synchronous work. This enables seamless team collaboration and eliminates any delays in project completion.

It makes Guatemala the perfect place to set up a regional hub so that you can facilitate business operations across Latin America.

3 – Educated talent pool

Guatemala boasts a growing pool of tech talent, with 16 universities in Guatemala City alone. 

Among them, prestigious institutions such as Universidad del Valle and Universidad Francisco Marroquin offer outstanding business education. Furthermore, Universidad Galileo has gained international recognition as one of the top technology schools globally. 

Guatemalan developers are both highly skilled and well-educated. For instance, Guatemalan talent helped produce Duolingo and Hotels.com. 

4 – Ease of doing business

In the World Bank’s Doing Business 2020 report, a ranking system evaluates countries based on the ease of conducting business, Guatemala ranked ahead of Brazil, Argentina, Ecuador, and Uruguay. 

Guatemala welcomes foreign investment and there are very few barriers to foreigners starting a business there. For example, there are also no restrictions concerning the maximum proportion of foreign shareholders in a business.

Infographic by Biz Latin Hub on Latin American and Caribbean Countries with an Emerging Fintech industry on an article about Nearshoring in Guatemala
Nearshoring in Guatemala is helped by the country’s emerging Fintech industry

5 – US Govt policy

The US Congress has introduced two measures aimed at encouraging industry, manufacturing, and intraregional trade. These initiatives demonstrate an increasing recognition of Latin America’s significance, particularly Central America, for US geopolitical and strategic interests. Guatemala, in particular, is well-positioned to profit from both bills.

In short, the bills propose preferential treatment on trade, taxes, credit, and a host of other privileges to incentivize the movement of critical supply chains closer to home. 

Guatemala’s proximity to the US makes it primed to benefit from these new laws.

Is Nearshoring in Guatemala right for your business?

Before proceeding with nearshoring, you must consider several factors and ask yourself some important questions:

Is it difficult to find local talent? 

If finding employees in your current location is expensive or challenging, nearshoring in Guatemala may be cost-effective. Working with a local partner can also save time and effort in recruitment and local compliance. 

Are you comfortable with digital remote project management? 

Nearshoring relies heavily on digital connectivity, which may require a cultural shift in your organization if your business typically relies on in-person communication.

What is your overall goal? 

Do you plan to hire full-time employees in Guatemala, or do you need tech talent on a per-project basis? This decision will impact the local employment regulations you need to work with. For example, do you need an employer of record? 

Is Guatemala the right location for your business? 

While Guatemala is becoming a popular nearshoring destination due to its ease of doing business, other Latin American countries also offer attractive options with growing tech talent pools and potential cost savings.

FAQs When Nearshoring in Guatemala

1. What to do when nearshoring in Guatemala?

  1. Build Relationships.
  2. Understand the Legal Environment.
  3. Be Prepared for Bureaucracy.
  4. Embrace the Culture.
  5. Focus on Sustainability.

2. What is nearshoring in Guatemala?

Nearshoring in Argentina refers to the practice of outsourcing business processes or services to companies located in Argentina, particularly those that are geographically close to the business’s home country. It involves transferring tasks or projects to a nearby country, often in the same time zone or with minimal time difference, rather than outsourcing them to a distant location

3. How does nearshoring in Guatemala compare to offshoring in terms of cost?

Offshoring to Argentina offers competitive prices and proximity to the United States, making it a cost-effective alternative to offshoring.

4. How to apply nearshoring in Guatemala?

  1. Assess Needs: Evaluate which processes or services can be nearshored based on requirements and feasibility.
  2. Research Partners: Identify potential nearshore partners in Argentina with relevant experience and expertise.
  3. Establish Communication: Set up clear communication channels for effective collaboration and project management.
  4. Define Expectations: Clearly outline expectations, goals, and deliverables for the nearshored project.
  5. Monitor Performance: Continuously monitor partner performance and provide feedback to ensure alignment with standards and objectives.

5. Are there any time zone advantages when nearshoring in Guatemala?

Yes, nearshoring in Guatemala means you are on a similar time to much of North America

Biz Latin Hub can assist you with nearshoring in Guatemala

At Biz Latin Hub, we offer a comprehensive range of market entry and back-office solutions in Guatemala, Latin America, and the Caribbean. 

Our expertise encompasses nearshoring in Guatemala, hiring and PEO, accounting and taxation, company incorporation, and corporate legal advice.

With offices in major cities across the region and partnerships established in numerous other markets, we possess a vast network of resources, ideally positioned to support cross-border operations and market entry across multiple countries.

Contact us today to find out more about our services and how we can help you achieve your business goals in Latin America and the Caribbean.

If you found this article interesting, be sure to explore the rest of our coverage of the region. Additionally, you can learn more about our team and expert authors here

YouTube video
The video above highlights the benefits of nearshoring in Latin America. If you are looking into nearshoring in Guatemala, the video will explain the numerous benefits of doing so within the region.

The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.
Craig Dempsey

Craig Dempsey

Craig is a seasoned business professional in Latin America. He is the Managing Director and Co-Founder of the Biz Latin Hub Group that specializes in the provision market entry and back office services. Craig holds a degree in Mechanical Engineering, with honors and a Master's Degree in Project Management from the University of New South Wales. Craig is also an active board member on the Australian Colombian Business Council, and likewise also active with the Australian Latin American Business Council.

Craig is also a military veteran, having served in the Australian military on numerous overseas missions and also a former mining executive with experience in various overseas jurisdictions, including, Canada, Australia, Peru and Colombia.

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