The cat is out of the bag. And while it may sound controversial, we need to address what’s happening in early 2025 and its impact on international collaboration—especially in the world of services.
The new U.S. government’s focus on domestic job creation and reshaping geopolitical alliances has left many companies uncertain about their next steps. Decision-makers hesitate to commit to long-term partnerships, fearing potential tariffs that could affect cost structures or new regulations that might disrupt established relationships with foreign vendors and talent. According to a report by the World Economic Forum (2024), global trade restrictions increased by 23% in the past year alone, further fueling concerns over outsourcing.
In response to this uncertainty, a relatively new but increasingly relevant concept is gaining traction: friendshoring.
What is Friendshoring?
We’ve discussed outsourcing under many names before—outstaffing, smartshoring—but friendshoring takes a fundamentally different approach. Instead of prioritizing cost-cutting, businesses strategically collaborate with partners based on diplomatic stability, cultural compatibility, and economic alliance.
The term "friendshoring" gained prominence when U.S. Treasury Secretary Janet Yellen first introduced it in 2022, highlighting the importance of securing supply chains through partnerships with allied nations. In 2024, the International Trade Administration reported that over 60% of U.S. firms were considering or had already implemented friendshoring strategies to mitigate geopolitical risks.
How Does Friendshoring Work?
Companies looking to outsource operations or expand teams now focus on partners in politically stable nations with low-risk diplomatic ties to their home country. This means selecting vendors in regions where collaboration is not just economically viable but also politically secure and culturally seamless. Countries with strong economic ties to Western markets have emerged as preferred friendshoring destinations.
The Criticism of Friendshoring
Naturally, friendshoring has its critics—especially from countries facing geopolitical tensions. The argument is that this approach may exclude regions with lower labor costs in favor of politically aligned nations. The United Nations Conference on Trade and Development (UNCTAD) warned in a 2024 report that this shift could widen the economic gap between developed and developing nations.
That said, a middle ground exists. The most resilient outsourcing partners today offer regional adaptability, establishing local headquarters and strong footprints across multiple markets. This flexibility allows businesses to pivot between different talent pools while remaining insulated from political volatility.
Why It Matters Now
Friendshoring is no longer just a theoretical strategy—it’s a necessary response to an evolving global landscape. For companies concerned about stability, compliance, and operational continuity, choosing the right partners isn’t just about savings; it’s about securing the future.
The world is changing. How businesses choose to collaborate must change with it. As regulatory frameworks shift and economic pressures mount, organizations that embrace friendshoring will be better positioned to navigate uncertainty and sustain long-term growth.
