Amazon Web Services Mexico (AWS) Amazon.com IncAZN) announced on Monday that it will invest more than $5 billion to open a data center cluster in Mexico as more businesses adopt new technologies and demand for cloud services grows.

Ruben Mugartegui, head of Amazon Web Services Mexico, told Reuters that the data center cluster will be built in the Mexican state of Queretaro.

Mugartegui said the company has been working on the project for more than five years.

AWS currently serves customers including Mexican theater operator Cinepolis, stock exchange BIVA, Aeromexico, and local governments.

Cloud computing helps businesses access technical services such as storage and databases over the Internet, eliminating the need to own and maintain physical data centers and servers. Citing a research report, Mugatheji said that enterprises can reduce technology costs by about 20% by using AWS.

Amazon has invested more than 52 billion pesos ($3.04 billion) in Mexico since entering the country in 2015.

The new investment follows so-called "nearshoring" (link), a trend of companies moving operations from Asia to the United States after supply chain disruptions caused by the COVID-19 pandemic.

The Mexican government aims to attract companies to invest in the country, issuing a decree last year that provides tax incentives to companies looking to move operations to Mexico (link).

Mugategui declined to say whether Amazon received any financial incentives, but he noted that the company works closely and efficiently with the government and that companies moving to Mexico are among the candidates to become new customers.

Automaker Tesla announced last year that it would build a factory in Mexico. The local government approved $153 million in incentives for Tesla (link) and said its investment would exceed $5 billion.

(1 USD = 17.1265 Mexican Peso)