Doing business in Mexico presents a unique opportunity for service companies providing software development or IT services. The country's growing economy, coupled with a rising demand for technology solutions, has created a favorable environment for these businesses. However, successfully navigating the Mexican market requires a deep understanding of the local business landscape, including the specific requirements for skilled talent in the IT sector.
The nearshoring boom in Mexico presents a major opportunity for U.S. service providers, particularly those looking to increase their ability to market and promote their services close to home. Companies can take advantage of the proximity of the two countries by providing services like logistics, maintenance/repair, testing, inspections, research, automation, engineering, training, coatings application, software, installation, etc.
Mexico boasts a young population with about 2 million young people entering the workforce annually over the next five years (Secretariat of Economy, 2023). Many of these young people are trained in areas of future growth. In fact, in the 2021-2022 scholastic year, more than 169,000 students graduated from Science, Technology, Engineering, Math (STEM) fields. In 2021, more than 83,000 engineers graduated with a focus on electronics, industrial, mechanical, construction and chemical processes.
Mexico is often hailed as a hub for manufacturing. However, it has emerged as a significant player in the global software development landscape in recent years. With its strategic location, burgeoning tech ecosystem, and talented workforce, Mexico produces software for domestic consumption and exports world-class software solutions to global markets.
The ICT (Information and Communication Technology) market in Mexico creates roughly US$60 billion in economic value annually (Mordor Intelligence) through business process management, e-commerce, domestic electronics manufacturing, digital payments, digital communication services, and other ICT-related industries.
The increasing collaboration in North America through nearshoring, coupled with the millions of Spanish-speakers in the U.S. has highlighted Mexico as a top destination for the ICT service sector.
Prowess in the software development industry in Mexico is diverse, ranging from enterprise solutions to cutting-edge innovations in areas like artificial intelligence, cybersecurity, and fintech.
Artificial intelligence is taking the world by storm across several industries, increasing productivity, reducing human error, and improving the customer experience, all while reducing operating costs. Additionally, AI is allowing more and more workers to be valuable in the software development sector.
No-code or low-code development allows software developers to create applications with minimal coding. Mexico boasts several A.I. research centers, particularly in academic institutions, that focus on areas like machine learning, robotics, and natural language processing. Products developed in this sector include AI-driven analytics tools, automation solutions, and predictive modeling platforms.
Download the e-book to review the top institutions researching Artificial Intelligence.
With the increasing threats in the digital realm, Mexico has invested heavily in cybersecurity research. Local firms have developed advanced threat detection systems, encryption technologies, and secure communication platforms catering to domestic and international markets.
Mexico's cybersecurity market is increasing, with numerous companies offering various services to protect businesses and individuals from online threats.
Download the e-book to view top cybersecurity companies in Mexico.
Mexico's fintech sector is thriving, with solutions ranging from mobile banking platforms to blockchain-based payment systems. The country's unique challenges, such as financial inclusion and remittance management, have driven innovations that are now being exported to other emerging markets.
Today, the increasing connectivity of Mexican citizens is warranting a second boom in the tech industry. Notably, citizens in rural areas are embracing mobile banking and e-commerce, even bypassing traditional banking services altogether. Mexico boasts an important financial technology startup sector, arguably the hottest in Latin America.
Download the e-book to see the top fintech startups coming out of Mexico.
The IT talent in Mexico has grown at a 30% annual rate since 2004 (Csoft Cluster Monterrey). Several factors contribute to Mexico's ability to produce world-class software:
Candidates in this sector are accustomed to working remotely and flexibly. Many work on projects both in Mexico and internationally, so availability is often part of the compensation equation. When onsite work or team collaboration is required, it is often more challenging to find candidates willing to hold regular office hours. Flexibility or hybrid schedules are more dominant in this sector.
Prodensa has hired over 400 ITC-related roles for clients doing business in Mexico since 2022.
Download the ebook to see 12 example candidates in the software development industry, as well as a breakdown of the compensation structure.
Mexico’s tech hubs offer the best opportunities for maximizing innovations, creating collaborative environments, and setting up startups. In the context of IT outsourcing to Mexico, these cities are often where tech firms set up their R&D centers and offices.
Several multinational corporations have established software development centers in Mexico, leveraging the company's talent pool and favorable business environment to become significant players in the software development industry in Mexico, including IBM and Oracle.
Read more about the Tech Boom in Mexico including the mapped R&D clusters in our blog post.
The software development industry in Mexico has been steadily growing, focusing on serving markets in North America, Europe, and Latin America. The country's proximity to major markets and trade agreements position it as an ideal location for exporting software products and services.
The software development industry in Mexico is a testament to the country's evolving technological landscape, driven by a talented workforce, robust educational infrastructure, and a business-friendly environment. As the global demand for software solutions continues to grow, Mexico is well-positioned to solidify its role as a key player in the software development arena, offering value-driven, high-quality solutions to clients worldwide.
The USMCA (United States-Mexico-Canada Agreement) includes a robust digital trade chapter that lays the groundwork for significant growth in this sector across North America. This chapter is particularly relevant for the software engineering industry in Mexico.
Key takeaways:
Overall, the USMCA's digital trade chapter presents a significant opportunity for the software engineering sector in Mexico. By working together to address remaining challenges and fostering a more integrated digital marketplace, North America can become a global leader in the digital economy.
International corporations continually invest in Mexico due to its many benefits in talent, creating increased international experience among its 55 million employed professionals. Many professionals have international certifications and compliance standards knowledge as well as diverse systems and software experience.
Global operations depend on Mexico to provide key talent and business continuity. Mexico is a natural destination to provide manufacturing and administrative talent.
A software development company specializing in financial services solutions sought to expand its talent pool to Europe. After considering various options, they decided to explore Mexico's potential as a hub for software development talent. However, they faced challenges due to their limited budget, lack of local presence, and unfamiliarity with the Mexican market.
Prodensa, a consulting firm, stepped in to assist the company. They conducted a market feasibility study, developed a talent strategy, established a worksite in Mexico using their Employer of Record service, and provided operational support.
Through this partnership, the software company successfully created a robust software development team in Mexico, attracting top talent and fostering a positive company culture. The use of Prodensa's Employer of Record service allowed the company to establish a presence in Mexico without the immediate need for a subsidiary. This strategic approach has enabled the company to grow and expand its operations in the Mexican market.
Review the entire case study here.
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