A Global Industry Under Pressure

The global automotive industry is undergoing a period of profound disruption, and the automotive sector in Argentina is no exception. From global supply chain constraints to shifting international trade policies and the rise of electric vehicles, automotive manufacturers face difficult choices in an increasingly unstable environment.

At the center of recent turmoil is a controversial 25% tariff imposed by the administration of U.S. President Donald Trump on imported vehicles from Canada and Mexico. Intended to protect American jobs and stimulate domestic production, this protectionist move has had far-reaching and unintended consequences that ripple across borders, affecting not only the U.S. but also Canada, Argentina, and others.

Trump’s Tariffs Spark an Industry Backlash

The Trump administration’s decision to apply steep tariffs to foreign-manufactured vehicles has sparked criticism from multiple quarters. The 25% levy on cars imported from Canada and Mexico was expected to boost local job creation in the U.S. However, it has triggered an unprecedented crisis in the American automotive industry. Rather than shielding American workers, the policy has led to significant layoffs, suspended operations, and plant closures across North America.

General Motors (GM), one of the largest automakers in the United States and a major player globally, was among the first companies to respond. GM announced a production halt at its facility in Ingersoll, Ontario, where it had been manufacturing BrightDrop electric vans. The company cited two primary reasons: a steep drop in demand and the negative impact of U.S. trade policy. The decision will result in the permanent layoff of at least 500 employees, with many more facing temporary suspension or uncertain re-employment.

Unions Speak Out Against the Tariff Fallout

In response to the shutdown, Unifor, Canada’s leading union representing autoworkers, blamed the Trump administration squarely. Union leaders criticized the tariffs as a direct assault on working families and an impediment to North America’s transition to clean technology. They argued that the U.S. government’s approach is undermining years of investment in the electric vehicle sector and could stall progress on sustainability.

Economists and analysts alike echo this sentiment. The U.S. Federal Reserve issued a stark warning, highlighting the broader macroeconomic risks associated with the tariff policy. According to the Fed, the tariffs could lead to slower GDP growth and higher inflation—conditions may push the country toward stagflation, a rare and concerning economic scenario marked by stagnation and rising prices.

Repercussions Reach Argentina

As the effects of these trade decisions ripple outward, the automotive sector in Argentina finds itself navigating uncertain waters. General Motors Argentina, operating a plant in Alvear, Santa Fe, is experiencing a series of setbacks related to global trade conditions and regional economic headwinds.

Most recently, GM Argentina announced the temporary shutdown of its production facility from March 25 to April 14, 2025. The Alvear plant produces the Chevrolet Tracker, the only model manufactured in the country. The company attributed the shutdown to two key factors: a significant decline in vehicle demand from Brazil, Argentina’s largest automotive export market, and difficulties obtaining imported components essential for assembly.

These production halts follow a troubling trend in Argentina’s automotive sector, which has been under pressure for months. In February 2025, GM laid off 309 workers and announced a voluntary retirement plan to reduce its workforce by 50%. Today, the future remains uncertain for nearly 600 employees, and union leaders have expressed growing concerns about job security, social protections, and the long-term viability of the industry.

The Brazilian Connection and Regional Dependencies

Brazil is the most critical trade partner for Argentina’s automotive industry. Approximately 70% of vehicles manufactured in Argentina are exported to Brazil under the terms of the Mercosur agreement. However, sluggish demand in the Brazilian market has led to a cascading effect throughout the region, causing disruptions not only in output but also in the procurement of materials and the overall operational tempo of plants like GM’s Alvear facility.

This interdependence has become a vulnerability. When external shocks—such as tariffs or demand slumps—hit Brazil, they ripple through the automotive sector in Argentina. Consequently, local manufacturers struggle to make long-term investment plans, increase output, or maintain current employment levels.

Structural Challenges and an Uncertain Future

While tariffs and declining exports are significant concerns, they are only part of the broader picture. Argentina’s automotive sector also faces structural challenges, including volatile inflation, a changing regulatory environment, currency fluctuations, and limited access to foreign currency needed for importing components.

Furthermore, the automotive industry is undergoing a shift in its paradigm with the transition to electric vehicles (EVs). Argentina has yet to develop a complete national EV production or infrastructure strategy. As countries like the United States and China race ahead in EV innovation and supply chain localization, Argentina risks being left behind in the global automotive evolution.

A Global Company in Local Crisis

General Motors’ predicament in Argentina illustrates the vulnerabilities of global automakers operating in emerging markets. Decisions made in Washington, D.C., or Ottawa directly and often immediately impact facilities in places like Santa Fe. GM’s strategy in Argentina has become increasingly reactive, adapting to falling exports, managing cost structures, and scaling operations down as needed.

Despite these challenges, GM has not signaled a complete withdrawal from the country. However, the reduction in staff, operational suspensions, and an uncertain outlook for Brazilian demand suggest a cautious stance going forward. Without a marked recovery in regional demand and clearer industrial policy support from the Argentine government, the company will likely maintain minimal production levels.

Policy Uncertainty and the Way Forward

More predictable and supportive policy frameworks are needed to stabilize the automotive sector in Argentina. Industry leaders have called for enhanced trade agreements, incentives for local production of parts, and clearer policies to support the transition to electric vehicles. While domestic car sales remain sluggish, targeted incentives and improved integration with global supply chains could help the sector weather current challenges.

Argentina also needs to diversify its automotive trade relationships beyond Brazil. Building stronger ties with countries in Asia, Europe, and the rest of Latin America could reduce the sector’s dependence on a single market and increase resilience.

Conclusion: A Sector in Flux

The automotive sector in Argentina is facing a critical juncture. External shocks such as U.S. tariffs and regional demand volatility have exposed deep vulnerabilities. At the same time, structural issues within Argentina’s economy are exacerbating the crisis.

General Motors’ ongoing troubles in the country highlight the fragility of multinational operations in an interconnected world. As the global auto industry moves toward a new technological and geopolitical reality, Argentina must act decisively to remain competitive in the automotive space. Strengthening local supply chains, fostering innovation, and ensuring supportive government policies will be key to navigating the road ahead.

Brazil, the largest economy in Latin America, is a key destination for multinational corporations seeking to manufacture and distribute across South America and beyond. Strategic location, access to significant markets, competitive labor costs, and expansive infrastructure make industrial parks in Brazil attractive for companies in various sectors. This overview examines the country’s leading industrial parks, highlighting factors such as market access, labor conditions, infrastructure quality, regulatory incentives, operational costs, and tenant ecosystems to support strategic site selection decisions.

Strategic Location and Market Access

Industrial parks in Brazil are strategically distributed to provide direct access to domestic consumer markets, key suppliers, and export ports. Parks in the southeastern region, including São Paulo, Minas Gerais, and Rio de Janeiro, benefit from their proximity to Brazil’s most populous areas and its largest ports (Santos, Rio de Janeiro, and Paranaguá), serving both domestic consumption and global exports.

For example, the Camaçari Industrial Complex in Bahia is a hub for petrochemicals and the automotive industry, offering access to northeastern ports like Salvador. The Industrial District of Manaus, located in the Amazon region, offers tariff and tax exemptions under the Manaus Free Trade Zone framework, as well as logistical advantages for companies targeting North and Central America.

Prominent Industrial Parks and Clusters

Some of the most established industrial parks in Brazil include:

• Camaçari Industrial Complex (Bahia): Home to automotive, chemical, and textile companies, including Ford and BASF. It offers multimodal connectivity and robust supplier ecosystems.
• Industrial District of Manaus (Amazonas): This district offers tax exemptions and supports the assembly of consumer electronics and motorcycles. Global companies like Samsung, LG, and Honda operate here.
• Suape Industrial and Port Complex (Pernambuco): A growing logistics and manufacturing hub for petrochemicals, shipbuilding, and food processing, located near the Suape Port.
• Campinas Industrial Park (São Paulo): Near Brazil’s tech and manufacturing capital, with access to skilled labor and high-tech infrastructure. Companies in electronics, logistics, and pharmaceuticals dominate.
• Betim Industrial Park (Minas Gerais): Anchored by Stellantis (Fiat), this park supports automotive manufacturing and its supply chain. Strong transport links and a supplier base are ideal for Tier 1 and 2 suppliers.
• Barueri and Jundiaí Logistics and Industrial Parks (São Paulo): These parks are favored by e-commerce and logistics firms for fast delivery to the São Paulo metropolitan region.

These parks often specialize in industry clusters, such as automotive in Betim and electronics in Manaus, facilitating synergies and cost-sharing in logistics, labor training, and waste management.

Infrastructure: Transportation, Utilities, and Telecommunications

Brazil’s industrial parks offer varied levels of infrastructure quality:

• Transportation: Industrial zones in São Paulo, Minas Gerais, and Rio de Janeiro have extensive road networks and are close to ports and airports. Rail links are improving through private investment and public concessions, especially in the Southeast and South. Manaus, while remote, is connected by air and river transport, with government subsidies to offset logistical costs.
• Utilities: Electricity is widely available, with parks like Suape and Camaçari offering direct connections to power plants. However, energy costs are relatively high compared to other emerging markets. Water and wastewater services are generally reliable in larger parks, with ongoing investments to improve sustainability.
• Telecommunications: Fiber-optic internet is standard in most industrial zones. Campinas and Barueri benefit from advanced digital infrastructure, which supports data-intensive industries.
• Energy: While grid reliability is strong in southern Brazil, companies in Manaus and northern regions often supplement with backup generators due to occasional instability.

Labor Availability, Cost, and Workforce Development

Industrial parks in Brazil benefit from a large and diversified labor pool. The Southeast and South regions boast high literacy rates and a steady supply of skilled technicians and engineers. For example, Campinas and São José dos Campos are home to major research institutions and engineering programs. The Federal Institutes of Technology and SENAI (National Service for Industrial Training) provide vocational and on-the-job training, often in collaboration with employers.

• Labor Costs: In major urban areas like São Paulo, the average monthly wage for industrial workers ranges from USD 600 to USD 1,200. In less developed regions such as Pernambuco or Bahia, wages can be 20–30% lower.
• Labor Laws: Brazil’s Consolidação das Leis do Trabalho (CLT) sets strict working hours, benefits, and termination standards. Though recent reforms have increased flexibility, companies still face significant payroll taxes—up to 30% on top of gross salaries.
• Union Activity: Union presence is strong, especially in the automotive and manufacturing sectors. While collective bargaining is common, industrial action is less frequent due to structured negotiation channels.

Tax Incentives and Regulatory Environment

Several fiscal incentives exist to attract investment in industrial parks in Brazil:

• Manaus Free Trade Zone: This zone offers a total exemption of import duties, IPI (tax on industrialized products), and reductions on other federal taxes. These benefits are guaranteed through 2073.
• SUDENE and SUDAM Programs: Companies investing in the Northeast and Amazon regions can receive up to 75% corporate income tax reduction for 10 years.
• State-level Incentives: São Paulo, Minas Gerais, and Paraná offer ICMS (state VAT) reductions, financing programs, and fast-track licensing for strategic sectors.
• Ease of Doing Business: Brazil has progressed in digitalizing business registration and tax filing. However, bureaucracy and complex tax codes remain a hurdle. Incentives often require compliance with strict documentation and performance metrics.
• Environmental Regulations: Industrial activities are subject to environmental licensing by federal and state agencies. Parks in ecologically sensitive areas, such as the Amazon, must comply with rigorous assessments, although sustainability incentives for eco-friendly operations help balance these.

Real Estate and Operational Costs

• Lease Costs: Average industrial lease rates vary from USD 4 to USD 6 per square meter per month in São Paulo and Rio to USD 2 to USD 3 in secondary markets like Recife or Fortaleza.
• Construction Costs: Building a standard industrial facility costs between $500 and $750 per square meter, depending on the location and infrastructure needs.
• Facility Management: Monthly waste management, cleaning, and maintenance costs range from $0.75 to $1.50 per square meter. Integrated parks, such as Suape and Camaçari, offer bundled services at discounted rates.
• Security: Parks often provide perimeter security and surveillance, with costs shared among tenants. Private security contracts typically add $0.50–$ 1.00 per square meter per month.

Logistics and Freight Costs

Brazil’s large territory increases freight costs, especially from interior regions to export ports. Average logistics costs include:

• Road Freight: Transport from São Paulo to Santos port costs approximately USD 600–800 per container. From Manaus to southeastern ports via transshipment or road, the cost can exceed USD 1,500 per container.
• Domestic Shipping: Interstate shipping by truck averages $0.10–$ 0.15 per ton-kilometer.
• Export Logistics: Ports in Santos and Paranaguá are modern and efficient, though congestion during harvest season can delay shipments.

Many parks have on-site or nearby logistics terminals and container yards to mitigate these costs. Some, like Barueri Logistics Park, are operated by third-party logistics providers that offer bundled warehousing and transportation.

Tenant Mix and Global Track Record

Industrial parks in Brazil host a diverse tenant base, including global players and local champions:

• Camaçari: Anchored by Ford (until 2021), Braskem, and Kimberly-Clark, with suppliers in chemicals, logistics, and light manufacturing.
• Manaus: A center for consumer electronics (Samsung, LG), pharmaceuticals, and two-wheel vehicle assembly (Honda).
• Betim: Stellantis and its automotive suppliers, including Magneti Marelli and Teksid.
• Campinas and Barueri: Tech firms (IBM, CPQD), logistics firms (DHL, FedEx), and pharmaceutical companies (EMS, Merck).

Cluster benefits include shared infrastructure, training programs, tax optimization strategies, and integrated supplier networks. Many parks have proven records supporting multinational expansions, offering one-stop-shop support for permitting, recruitment, and compliance.

Conclusion

Brazil offers a broad spectrum of industrial locations, each with unique benefits depending on proximity to markets, logistics costs, and fiscal advantages. The most prominent industrial parks in Brazil combine access to skilled labor, robust infrastructure, and government incentives with strong tenant ecosystems and a supportive regulatory framework. Whether targeting high-tech industries in Campinas, export-driven production in Suape, or tax-advantaged manufacturing in Manaus, companies can find tailored opportunities aligned with long-term business strategies. As Brazil continues to invest in infrastructure and streamline regulations, its industrial parks are poised to play an even more significant role in the region’s economic transformation.

Peru is positioning itself as one of Latin America’s most dynamic and promising economies in 2025. With a projected GDP growth of up to 4%, the country demonstrates resilience and adaptability in the face of global economic uncertainty. This projected expansion is driven by increased foreign investment, robust domestic demand, the expansion of key sectors, and a suite of reforms aimed at improving competitiveness and economic freedom. As a result, economic growth in Peru in 2025 is expected to create a favorable environment for both emerging startups and large-scale industrial ventures.

Luis Fuentes, director of Grupo Fuentes and Alligare Internacional, highlights the positive transformation of the business environment in Peru:

“The Peruvian business ecosystem is evolving rapidly. Companies that understand the new market dynamics and adapt quickly are making a difference. The country is making strategic decisions to position itself as a regional business hub. The opportunities exist for those who know how to identify them and act with vision.”

Sectors with High Growth Potential

According to Fuentes, Peru presents significant investment and expansion opportunities across a wide variety of economic sectors, many of which are crucial to driving sustained national development:

Infrastructure and Logistics:

One of the cornerstones of economic growth in Peru in 2025 is the modernization of its infrastructure. The Chancay megaport, backed by significant Chinese investment, is a flagship project poised to transform the nation’s logistics network. Once operational, this deepwater port will dramatically cut shipping times between South America and Asia, making Peru a vital gateway for international trade. Improvements in roads, railways, and airport logistics are also helping connect Peru’s remote regions to global markets.

Energy and Mining:

Peru continues to build its reputation as a global mining powerhouse, with a mining investment portfolio exceeding $ 50 billion. As one of the world’s top producers of copper, gold, and silver, the country is also focusing on the environmental sustainability of its extractive industries. Efforts include tighter environmental regulations, promoting community engagement, and a growing interest in clean energy investments, such as solar and wind. These initiatives support the dual objectives of resource development and environmental stewardship.

Technology and Digital Services:

Digital transformation is another key driver of economic growth in Peru in 2025. The rapid adoption of mobile technologies, cloud computing, and digital platforms is fueling a new wave of tech startups. These young enterprises deliver innovative solutions tailored to Peru’s evolving consumer base in education technology (EdTech), telemedicine, fintech, e-commerce, and streaming services. Government support for digital entrepreneurship and the growing availability of venture capital are accelerating this trend.

Automotive Industry and Manufacturing:

The Peruvian government is negotiating with international electric vehicle (EV) manufacturers to establish production facilities in designated industrial zones. These initiatives could significantly alter the country’s industrial profile, creating skilled jobs and reducing reliance on fossil fuels. Enhanced manufacturing capabilities, supported by tax incentives and special economic zones, further strengthen Peru’s appeal as a production hub in South America.

Reforms and a Favorable Business Climate

Behind these sectoral advancements lies a broader commitment to reform. Over the past few years, the Peruvian government has implemented over 400 deregulation measures across 13 critical economic sectors. These actions have reduced red tape, eliminated bureaucratic hurdles, and streamlined business registration and operation procedures. This regulatory overhaul is complemented by macroeconomic stability, low inflation rates, and prudent fiscal management—pillars that underpin economic growth in Peru in 2025.

Moreover, Peru’s vast network of trade agreements—with economic powerhouses such as the United States, China, Canada, Japan, and the European Union—has positioned the country as a strategic trade hub. These agreements lower tariffs, increase export potential and incentivize foreign firms to establish regional operations in Peru.

Outlook and Regional Opportunities

While Lima remains the epicenter of economic activity, a significant trend toward regional decentralization is unfolding. Secondary cities such as Arequipa, Piura, Trujillo, and Cusco are experiencing rising investment inflows. These cities are developing as industrial, agro-export, and technology hubs, benefiting from improved infrastructure, regional tax breaks, and lower operational costs. This shift will contribute to Peru’s more balanced and inclusive economic growth model in 2025.

In particular, the agro-industrial sector is seeing increased interest thanks to Peru’s rich biodiversity, favorable climate zones, and strategic export locations. The rise of agrotechnology—leveraging data, automation, and climate resilience—enables higher yields and access to international markets. Likewise, the fintech sector is growing rapidly, supported by a young, digitally native population eager for accessible financial services.

Sustainable tourism is another area experiencing renewed momentum. With destinations like Machu Picchu, the Sacred Valley, and the Amazon rainforest, Peru invests in responsible tourism that balances economic gain with ecological protection. Government and private sector actors work together to develop eco-friendly lodges, community-based tourism models, and sustainable travel infrastructure.

Consumer Trends and Investment Climate

The modern Peruvian consumer is more connected, demanding, and aware of environmental and social issues than ever before. This transformation is compelling companies to rethink their business models. Sustainability, transparency, digital accessibility, and personalized services are no longer optional—they are expected. This evolution presents ample room for new entrants that can offer differentiated, impact-driven solutions.

While investor caution persists due to past political instability, recent efforts to improve institutional transparency and enforce regulatory consistency are improving business confidence. The current political climate, although not without its challenges, has shown signs of stability, offering a more predictable environment for domestic and international investors alike.

Luis Fuentes concludes,

“This information is available on our platform, perubizconnect.com, where you can learn more about these trends and other insights related to the Peruvian market, taxation, legal matters, and business. The outlook encourages those with the vision and strategy to engage with this market.”

As the country continues investing in sustainable development, digital transformation, and export-oriented growth, Peru’s economic growth in 2025 will likely surpass expectations. Businesses that enter now with an understanding of local dynamics and a long-term perspective stand to gain significantly from one of the region’s most vibrant and future-ready economies.

Companies continuously seek efficient, cost-effective solutions to maintain their competitive edge in a world driven by digital transformation and global competition. One such solution is business process outsourcing in Latin America, which has become increasingly popular due to the region’s cost advantages, skilled labor force, and growing technological infrastructure. With proximity to North America, cultural alignment, and rising government support, Latin America offers an array of destinations where companies can outsource key business processes, from customer service to IT support, finance, and HR operations.

This blog explores Latin America’s most promising countries and cities for business process outsourcing based on critical factors such as labor costs, workforce quality, infrastructure, time zone compatibility, and legal frameworks.

Colombia: A Rising Star with Strong Government Support

Key Cities: Bogotá, Medellín, Barranquilla

Colombia has become a top contender for business process outsourcing in Latin America, especially in customer service, IT support, and back-office operations. Medellín, once known for its turbulent history, has transformed into a hub for innovation and digital services. Bogotá and Barranquilla also offer vast talent pools and competitive costs.

• Labor Cost: Moderate, with competitive wages and high quality of service.
• Workforce Quality: Colombia boasts over 500,000 university graduates annually, many of whom are bilingual.
• Infrastructure: Modern office parks and expanding broadband penetration.
• Time Zone: Same or close to Eastern Standard Time, making communication seamless.
• Incentives: Free trade zones and tax benefits for tech and BPO companies.
• Security & Data Protection: Colombia has enacted laws aligned with international standards.

With a strong push from ProColombia and municipal governments, Colombia’s position as a preferred destination for business process outsourcing in Latin America continues to solidify.

Mexico: North America’s Nearshore Powerhouse

Key Cities: Mexico City, Guadalajara, Monterrey, Tijuana

Mexico’s geographical proximity to the U.S., cultural similarities, and large bilingual workforce make it one of Latin America’s best countries for business process outsourcing. Guadalajara is Mexico’s Silicon Valley, while Monterrey and Tijuana offer strategic access to U.S. markets.

• Labor Cost: Higher than some Central American countries, but still cost-effective compared to the U.S. and Canada.
• Workforce Availability: A strong pool of bilingual talent in IT, customer service, and finance.
• Infrastructure: Extensive fiber-optic networks, tech parks, and co-working spaces.
• Time Zone: Shares several time zones with the U.S., ideal for real-time collaboration.
• Business Environment: NAFTA/USMCA provides regulatory stability.
• Track Record: Home to major BPO providers like Teleperformance, Conduent, and Atento.

Mexico’s consistency in providing high-quality services and diversified economy makes it a reliable hub for business process outsourcing in Latin America.

Costa Rica: The Premium Outsourcing Destination

Key Cities: San José, Heredia, Alajuela

While Costa Rica has relatively higher operating costs, it compensates with a stable business environment, high English proficiency, and a reputation for quality.

• Labor Cost: On the higher end, but justified by workforce efficiency and language skills.
• Workforce Quality: A highly educated population with strong English capabilities.
• Infrastructure: Tech parks like Global Park and America Free Zone provide plug-and-play solutions.
• Government Support: Procomer and CINDE (Costa Rican Investment Promotion Agency) and provides assistance and incentives.
• Security & Legal Framework: Ranked high in political and economic stability.

Costa Rica is especially attractive to U.S. companies seeking business process outsourcing in Latin America without sacrificing quality or security standards.

Argentina: Talent-Rich and Technologically Sophisticated

Key Cities: Buenos Aires, Córdoba, Rosario

Argentina is renowned for its highly educated workforce and strong IT services sector. It has a growing reputation for software development, digital marketing, and financial outsourcing.

• Labor Cost: Relatively low due to currency fluctuations.
• Talent Availability: Argentina has one of Latin America’s highest literacy and education levels.
• Technology Ecosystem: Buenos Aires is a recognized tech hub with vigorous startup activity.
• Time Zone: Similar to U.S. Eastern Time.
• Legal & Economic Environment: While there are challenges with economic volatility, the quality of services remains high.

Companies focused on tech-driven solutions often turn to Argentina for business process outsourcing in Latin America, especially in niche areas like fintech and app development.

Chile: A Stable and Business-Friendly Option

Key Cities: Santiago, Valparaíso

Chile is known for its strong institutions, legal transparency, and ease of doing business. It is especially well-suited for high-end outsourcing services, including legal process outsourcing (LPO) and IT support.

• Labor Cost: Moderate to high.
• Infrastructure: Chile has one of the best broadband networks in the region.
• Political Stability: Ranked among the most stable countries in Latin America.
• Language Skills: High English proficiency, especially in Santiago.
• Regulatory Framework: Transparent laws and protection for foreign investors.

Chile’s emphasis on technology and innovation strengthens its case as a premier location for business process outsourcing in Latin America.

Uruguay: Small but Mighty

Key Cities: Montevideo

Uruguay may be small in population, but it punches above its weight regarding digital capabilities and governance. It is a leader in data privacy and technology adoption.

• Workforce Quality: Strong focus on STEM education and English fluency.
• Cost of Doing Business: Higher than average, but with added service quality and reliability value.
• Legal Framework: One of the most progressive regarding data protection.
• Track Record: Companies like Tata Consultancy Services and Mercado Libre have long-term operations here.

Uruguay offers one of Latin America’s safest, most reliable platforms for business process outsourcing.

Dominican Republic: The Caribbean’s BPO Leader

Key Cities: Santo Domingo, Santiago

With a large English-speaking population and proximity to the U.S., the Dominican Republic has built a robust BPO industry in recent years.

• Labor Cost: Low to moderate.
• Workforce: More than 30,000 people are employed in call centers alone.
• Incentives: Free trade zones and tax breaks.
• Infrastructure: Growing investment in telecom and business parks.
• Industry Presence: A large number of contact centers and back-office providers.

The Dominican Republic is a top choice for companies seeking cost-efficient business process outsourcing in Latin America with minimal language barriers.

Guatemala and El Salvador: Competitive and Growing

Key Cities: Guatemala City, San Salvador

These Central American countries offer low labor costs and increasing foreign direct investment in the BPO sector.

• Labor Cost: Among the lowest in the region.
• Time Zone Alignment: Same as U.S. Central Time.
• Cultural Compatibility: Close affinity with U.S. work culture.
• Incentives: Government policies aimed at encouraging IT and BPO growth.

While there are concerns about political stability, many companies have successfully operated in Guatemala and El Salvador for over a decade, contributing to the momentum behind business process outsourcing in Latin America.

Key Factors Driving Site Selection

When choosing the correct location for business process outsourcing in Latin America, companies must weigh several strategic variables:

• Labor Cost vs. Service Quality: Costa Rica and Chile offer high service quality but at a premium, whereas El Salvador and Guatemala are highly affordable.
• Time Zone and Communication: Countries like Mexico, Colombia, and Central American nations offer strong time zone alignment with North America.
• Infrastructure and Connectivity: Uruguay, Chile, and Costa Rica are front-runners in digital infrastructure.
• Regulatory Framework: Countries like Uruguay and Chile lead in data protection and investor-friendly laws.
• Government Support and Incentives: ProColombia, CINDE (Costa Rica), ProDominicana, and Invest in Guatemala actively attract BPO investment with incentives and logistical help.

Conclusion: Choosing the Right Destination for Long-Term Success

Latin America’s business process outsourcing landscape is as diverse as the region. Mexico remains a leader in nearshoring due to its proximity and scale, while Colombia is quickly ascending as a digital outsourcing powerhouse. Costa Rica is the premium destination for high-end services, while countries like Argentina and Chile attract niche operations in tech and finance.

Central America and the Dominican Republic provide strong returns for companies prioritizing cost, while Uruguay offers exceptional stability and data security. With each location offering its unique blend of benefits, the key lies in aligning your business goals with the right environment.

In today’s global economy, business process outsourcing in Latin America isn’t just a cost-saving strategy—it’s a growth strategy. By selecting the correct country and city, businesses can tap into a thriving ecosystem that supports innovation, scalability, and operational excellence.

Whether you’re a startup looking to scale operations or a multinational corporation seeking efficiency, business process outsourcing in Latin America offers a path to sustained competitive advantage.

Long-Term Business Outlook Drives Continued Interest

Companies from the Netherlands continue to view Mexico as a strategic destination for international expansion. Despite ongoing global economic shifts and the uncertainty triggered by U.S. tariff policies, Dutch investment in Mexico is gaining momentum. According to Steven Büter, representative of the Netherlands Business Support Office (NBSO) at the Dutch Embassy in Mexico, Dutch companies are drawn to the country not for short-term gains but for long-term operational plans that span decades.

“There is a solid long-term vision behind these investments,” Büter explained. “Even in the face of short-term challenges, Dutch businesses are planning for the next 30 to 40 years, not just for the next U.S. administration or policy cycle.”

Ten Projects Underway Across Strategic Regions

The NBSO currently tracks at least ten Dutch investment projects in various stages of development. These initiatives are being launched in strategically important Mexican states, including Querétaro, Jalisco, and Nuevo León. These regions have become magnets for foreign investment thanks to their robust industrial ecosystems, well-developed infrastructure, and skilled labor pools.

Specifically in Querétaro, two manufacturing-related investments are underway. One company from the Netherlands is entering the automotive sector, while another will produce television stands. “We’re working on about 10 projects for Mexico and about two or three for Querétaro, which are almost finalized—they are going to happen,” said Büter, highlighting the growing confidence in the local business climate.

Job Creation and Capital Inflows

These new investments will have a significant economic impact at the local level. Bueter estimates that the two projects in Querétaro alone will result in an influx of €30 to €40 million and create between 300 and 400 jobs. One of these ventures is already in the installation phase, while the other is set to commence operations within the month.

Dutch investment in Mexico brings capital, technology, innovation, and best practices in sustainable and efficient manufacturing. These advantages enhance Mexico’s position as a preferred destination for nearshoring and foreign direct investment.

Expanding Beyond Manufacturing: Interest in Agriculture

While the manufacturing sector remains a dominant attraction for Dutch investors, there is also rising interest in the agricultural industry, particularly in protected agriculture, such as greenhouse farming and high-tech cultivation systems. Bueter pointed out that Dutch companies involved in greenhouse technology have found a receptive and mature market in Mexico.

“When 50 Dutch companies are coming here, it shows strong interest in Mexico’s agricultural sector,” he said. “For example, if you go to the area in the Netherlands where greenhouses are located, they’re all already here in Mexico, they already have business in Mexico—so it’s a very mature market, and the production market can mature even more. That’s why Dutch companies keep coming.”

This segment of Dutch investment in Mexico is helping to introduce advanced agricultural technologies that improve productivity and reduce environmental impact, aligning with global sustainability goals.

Navigating U.S. Tariff Uncertainty with Long-Term Strategies

The threat of U.S. tariffs, such as the proposed 25% duties on goods from Mexico, has introduced uncertainty into global supply chains. However, Bueter emphasized that these developments do not deter Dutch companies because their investment decisions are made with a long-term perspective.

“It’s challenging to gather all the information about what’s happening,” Bueter said. “We’re trying to bring all the companies together and have conversations to figure out what’s happening. Even so, companies that invest in Mexico don’t do so for just four years—they do so for 30 to 40 years. So, they’re looking at the long-term horizon of the investment, which means the projects continue.”

While higher tariffs could temporarily increase production costs, the structural advantages of producing in Mexico, such as lower operating expenses, trade agreements, and access to regional markets, still outweigh the risks.

Talent Availability: A Critical Asset for Investors

One of the most cited advantages driving Dutch investment in Mexico is the availability of skilled human talent. Mexico offers a young, trained, and competitively priced workforce compared to the United States, where labor shortages in specific sectors have created bottlenecks.

“Obviously, 25% tariffs are significant, but sometimes it’s still easier to produce in Mexico,” Bueter noted. “Especially due to the availability of human talent, which the United States lacks. Even if you can get it cheaply, how can you produce it if it is unavailable?”

This abundance of capable labor makes Mexico an increasingly attractive base for Dutch companies looking to optimize cost and efficiency in their global operations.

Nearshoring Trend Continues to Gain Momentum

The global trend of nearshoring—relocating supply chains closer to consumer markets—continues to benefit Mexico. Dutch firms are taking advantage of Mexico’s proximity to the United States, its network of trade agreements, and its expanding logistics infrastructure.

A recent example is the February 2024 opening of Trouw Nutrition’s facility in Colón, Querétaro. The Dutch company invested 1 billion pesos to produce animal feed in the region. This move illustrates how Dutch investment in Mexico supports the region’s industrial development and food security.

Nuevo León: The Leading Destination for Dutch Capital

Nuevo León is the primary recipient of Dutch investment in Mexico, attracting over USD 5.13 billion between 2006 and 2024. This figure represents 32.2% of Dutch capital inflow into the country. The state’s strong industrial base, skilled workforce, and developed infrastructure make it a preferred destination for international investors.

Following Nuevo León, Quintana Roo ranks second with 11.3% of Dutch investment, followed by Veracruz (9%), the State of Mexico (8.7%), and Mexico City (8.3%). These statistics, provided by Mexico’s Ministry of Economy, underscore the geographical diversity and scale of Dutch investment in Mexico, totaling approximately USD 15.95 billion over the 18-year years.

Ecuador has taken a significant step in its economic development strategy by creating two new free trade zones. These zones, located in Posorja and Pascuales within the coastal province of Guayas, represent a significant policy shift that aims to attract investment, boost employment, and strengthen Ecuador’s role in regional and global trade networks. These developments are part of a broader legislative and regulatory modernization effort intended to make the country more competitive and responsive to the demands of international commerce.

The first of the two free trade zones is managed by ZOFRAPORT S.A., which successfully transitioned from the previous ZEDE (Special Economic Development Zones) regime. The second zone is managed by PASEO TABLADO ZONA FRANCA PTZF S.A., a new player in the field that is taking advantage of the updated framework. These two investments account for a combined private capital injection of USD 10,532,002.71, representing investor confidence in the country’s revised trade and investment policy.

Strategic Importance of Location and Scale

The Posorja and Pascuales free trade zones span over 117 hectares of industrially strategic land in Guayas. The location is critical, especially considering Posorja’s proximity to the DP World Port, which enhances its logistical advantage for exports and imports. These zones are poised to become industrial and commercial hubs with the potential to impact local and national economies.

According to official data, the development of these zones is expected to generate 414 direct jobs in their initial phases. These employment opportunities are significant in the context of Guayas, a province that, despite being the country’s economic engine, faces challenges in employment generation and poverty reduction in its peri-urban and rural zones. The creation of jobs tied to industrial and logistical infrastructure can be a catalyst for more inclusive and sustained growth.

This progress is rooted in the Organic Law on Economic Efficiency and Job Creation, passed in 2023. The law replaced the outdated ZEDE model with a more dynamic, business-friendly free trade zone regime. The new rules, officially published in February 2024 in Official Register No. 496, outline the conditions under which public and private sector actors can establish or transition into free trade zones. The simplified regulatory framework is designed to lower entry barriers for investors and encourage broader participation in economic zones.

Investment Commitments

According to data from the Ministry of Production, ZOFRAPORT committed USD 563,472.71 for its transition to the new framework. Meanwhile, the newly created Paseo Tablado free trade zone in Pascuales has pledged USD 9,968,530 in capital investment. These figures represent the beginning of physical development and a larger vision for positioning free trade zones in Ecuador as magnets for innovation, manufacturing, and logistics.

These zones attract investors because of their special customs and tax regimes. In contrast to other jurisdictions in Latin America, free trade zones in Ecuador do not impose minimum investment thresholds or specific land extension requirements, which means that even medium-sized firms and startups can participate. This flexible approach enhances Ecuador’s competitiveness and makes the zones more accessible to a broader range of domestic and international investors.

Tax Benefits of Free Trade Zones

One of the most compelling advantages of the free trade zones in Ecuador lies in the generous tax incentives provided under the new law. Companies operating within these zones are granted a five-year exemption from income tax, a significant financial benefit during the critical early years of a business’s operation. Following the exemption period, a reduced 15% income tax rate applies for the remaining duration of their license within the zone.

Furthermore, tariffs on imported raw materials, supplies, and capital goods are eliminated. This measure drastically reduces upfront costs and encourages installing high-tech or capital-intensive operations. In addition to these benefits, companies are exempt from the Foreign Currency Exit Tax (ISD), a longstanding concern for multinational firms that must repatriate earnings or move funds across borders.

Other key incentives include VAT refunds on domestic purchases and eliminating income tax on dividends for shareholders. These financial tools collectively lower operational costs and enhance the profitability of businesses within the zones. These conditions are expected to attract new and existing international firms looking for stable, pro-business environments in the region.

Employment and Local Economic Development

The Posorja and Pascuales free trade zones are expected to play a vital role in Ecuador’s broader employment and economic inclusion strategies. The initial estimate of 414 direct job openings is only the beginning. As infrastructure develops and companies begin full operations, the number of indirect jobs created across supply chains, logistics, and supporting services is projected to grow significantly.

These zones also create meaningful opportunities for micro, small, and medium-sized enterprises (MSMEs) to plug into global supply chains. A critical aspect of this is nearshoring, a practice where businesses relocate manufacturing or services closer to target markets. By doing so within free trade zones in Ecuador, MiSMEs can benefit from shared infrastructure, lower logistics costs, and a reduced regulatory burden. This opens up access to international markets that would otherwise be difficult for smaller enterprises to enter.

The zones promote employment and export diversification, especially in high-value sectors. With the proper support, Ecuadorian firms can move up the value chain, offering manufactured goods and specialized services to global buyers. Such diversification is key to shielding the country from fluctuations in commodity markets and ensuring more stable long-term growth.

Legal Framework and Institutional Support

The creation of these zones is grounded in Ecuador’s broader legislative efforts to modernize its economic development framework. The Organic Law on Economic Efficiency, published in Official Register No. 461, is central to this shift. It repeals the older ZEDE model and provides a flexible and transparent structure for establishing and operating free trade zones.

The law’s implementation guidelines, published in early 2024, simplify bureaucratic procedures, especially land designation and investment requirements. This facilitates quicker project implementation and increases investor confidence in the regulatory environment.

The new framework aligns with global best practices by removing outdated constraints and focusing on results-driven incentives. By doing so, Ecuador is signaling to international investors that it is open for business and capable of adapting to a fast-changing global economy.

Internationalization and Global Market Access

Ecuador’s new free trade zones serve a dual purpose: they attract foreign direct investment (FDI) while enabling Ecuadorian companies to access international markets more easily. These zones are vital for advancing the government’s internationalization agenda, which seeks to improve the country’s export profile and reduce dependency on raw commodities.

As mentioned earlier, nearshoring is a critical aspect of this strategy. With global firms looking to shift production closer to key markets like the U.S. and Latin America, free trade zones in Ecuador offer a viable and cost-effective alternative to Asia-based manufacturing. Ecuador’s strategic location on the Pacific coast and its free trade agreements with countries in the Americas make it a logical destination for such operations.

The zones enhance Ecuador’s competitive edge by lowering logistical costs and simplifying cross-border procedures. In doing so, they create a more dynamic and resilient economy capable of weathering external shocks and benefiting from global trade flows.

Conclusion: A Path Toward Sustainable Growth

In summary, Ecuador’s creation of the Posorja and Pascuales free trade zones is a bold and forward-looking move. These zones prove the country’s commitment to fostering a more efficient, diversified, and inclusive economy. Through innovative policy reforms, strategic location choices, and a supportive legal framework, free trade zones in Ecuador are poised to become powerful engines of national development.

As these zones attract new investment, generate employment, and promote the internationalization of local industries, their impact will extend well beyond the borders of Guayas. Ultimately, the evolution of free trade zones in Ecuador reflects a broader vision of sustainable, globally connected growth—one that balances economic efficiency with social inclusion and long-term prosperity.