IT Nearshore Outsourcing to Mexico: Top 5 Reasons to Say Yes

IT Nearshore Outsourcing to Mexico: Top 5 Reasons to Say Yes

By: TEAM International | April 1, 2024 | 15 min

This LATAM country is more than well placed to benefit companies looking to nearshore or relocate their operations in response to the Russia-Ukraine war and China-related instability. The authorities have been expanding and diversifying the local economy for decades, so nearshore software development in Mexico holds enormous potential for your business

Let's explore the Mexican IT industry opportunities and its tech community's software outsourcing capabilities.

Quick Mexico profile:

  • Time zone: GMT-6

  • Average senior developer's salary: $66,000 — $90,000

  • Tech talent pool: 700,000+

  • Foreign Direct Investment (2022): $35.3B

  • Ease of doing business: 72.4

  • Topcoder country rank: 23

  • 3rd largest IT exporter globally

Why is nearshore outsourcing to Mexico a wise choice right now?

Mexico's technology marketplace and its ability to provide software development services internationally are rapidly maturing. As a national priority, growing skilled IT professionals help the country attract new revenue streams to its economy. Following its attempts to boost the tech sector, by 2023, the Mexican government has launched 38 IT clusters with modern technology to facilitate remote IT work. As a result, Mexico's IT services market revenue is projected to reach $13.81 billion in 2024.

The country is positioning itself as a more mature offering for more complex software development and engineering services to provide more excellent value to nearshore customers. The local IT market is current with all the latest trends, including AI, ML, cloud infrastructure, blockchain, IoT, web, and app development.

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The demand for IT services will keep skyrocketing in 2024, and telecommuting in distributed teams has become the new normal post-COVID. As business owners realize the benefits and challenges of outsourcing, the nearshore software development industry will thrive in its ambition to be the top IT outsourcing destination in Mexico.

Reasons to consider nearshoring to Mexico

1. Developed infrastructure of the IT sector and investments

The Mexican government is proactively advancing the country's transformation into the innovative digital center of LATAM. The authorities and private companies have invested heavily in the IT industry's infrastructure and technology parks. Consequently, in 2021, Mexico became the top 1 digital nation in LATAM and 13th worldwide.

Also, hosting over 400 startups , this country has one of the largest markets in Latin America and is ranked 37th worldwide. In addition, Mexico has achieved nine unicorn companies recently. This opened the doors to a greater flow of foreign investments, which will continue developing thanks to the USMCA trading agreements. It means that global companies acknowledge the value of nearshore outsourcing to Mexico.

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2. Governmental support

The government's prioritization of the tech industry contributed to the rapid progress in Mexican outsourcing . The leadership has developed numerous initiatives to foster technical education, facilitate investment, and establish better ties with North America.

Some top programs and institutions that assist IT and tech businesses by providing financing and resources include:

  • National Entrepreneurial Fund. A government grant program supports business projects and encourages entrepreneurs by offering training and financial assistance.

  • Mexico launched around 120 tuition-free tech universities to motivate the younger generation in STEM fields, producing more qualified engineers.

  • Tech talent pool: 700,000+

  • PROSOFT. This initiative's main objectives are to expand the number of IT jobs, tackle the skills deficit, and connect Mexican companies with international enterprises. Moreover, it helps find financial support for developing software and IT projects.

  • MEXICOFIRST. This program focuses on increasing the number and quality of skilled IT workers through training grants for technical, English, and managerial courses. Also, MexicoFIRST provides seminars and workshops for students and tech professionals and recruitment outreach for the IT industry.

  • Topcoder country rank: 23

  • CONACYT. Mexico's Science and Technology Council encourages research and technological development and supports R&D, infrastructure investments, and IT innovation projects.

Extensive benefits of government policy for the tech industry and unconditional support of science advancements help promote growth in innovation and entrepreneurship nationwide. And it will strengthen the country's digital capabilities in 2024 and further boost the nearshore outsourcing trend in Mexico.

3. IP rights protection

The country enhances its outsourcing practices, introducing more transparency and security to its digital solutions and cooperation with foreign businesses. The steps in this direction involve implementing a code of ethics and improved measures for IP protection in Mexico.

Mexico's free trade agreement with Canada and the US mainly highlights IP protection as a key chapter and will boost innovation in all three countries. It secures software from illegal use and guarantees legal remedies for breaking the rules. Considering the increased IT outsourcing risks , the relevant data protection regulations make the country a more attractive destination for digital solution development.

So, if you nearshore your software development to Mexico, you can share essential project information with a local remote team without worrying about having it stolen from you. You're better covered when developing nearshore digital products in Mexico than in many other countries.

4. Mexico's treasure: high software engineer availability

Mexico's vast talent pool can effectively bridge the IT talent shortage in the US . The number of tech professionals has significantly risen thanks to the government's intention to foster the IT industry.

Moreover, when it comes to nearshore, Mexico can back you up with top-notch talents with the most demanded skills. Mexican technical universities provide an abundance of graduates, specifically 110,000 each year, surpassing the US, which produces 65,000 tech graduates. The country makes a considerable effort to build a talent pipeline from university onwards that can sustain a diverse tech sector, effectively address the IT talent shortage in North America, and meet the needs of US clients and employers.

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On top of that, Mexico's availability of IT specialists is the second-highest in LATAM. Mexico City is currently the second metropolis in the region, with 187,074 economically active workers in the ICT sector.

So, outsourcing to Mexico means access to a more extensive candidate base and a better chance of finding tech professionals to meet your needs. There are enough well-equipped specialists to complement your team and build software of various complexity and scale.

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5. Higher staff retention in Mexican companies

The fierce competition for talent in the global outsourcing market intensified employee retention difficulties. However, as LATAM has recently become a popular outsourcing destination, it has higher employee retention and staffing rates. Compared to the US job market, hiring in Mexico is quicker since there are more job candidates per open job role than in the US.

Turnover is also much lower. In Mexico, you're 62 percent more likely to hire and retain IT specialists than in San Francisco. Furthermore, the average employee turnover in the US is around 20 percent , while Mexico's rate is about 15 percent .

These are critical factors you should consider. Staff retention is imperative when working under tight deadlines and with a considerable project scope. You can't afford delays or spending time looking for new employees, onboarding them, and adjusting the rest of the team. Plus, you lose a lot more than the outputs of leaving professionals.

So, if you're considering exploring nearshore software development, Mexico would be one of the best places to give it a first try. For instance, nearshoring to TEAM Mexico as your trusted tech partner means you can complete entire projects with the same team, avoid disruptions to the team's flow, and meet deadlines.

Essentials to choosing a nearshore outsourcing company

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Comprehensive planning and the following steps are crucial to ensure your digital product development outsourcing experience is smooth

  • Analyze your company's activities to understand the core operations and decide what you will and will not outsource based on your in-house resources.

  • Set a clear goal about why you want to outsource and what you want to accomplish through it. Be specific and transparent about your project milestones, objectives, expectations, budget, and other special requirements.

  • Tech talent pool: 700,000+

  • Choose a trustworthy vendor. Check the provider's portfolio, references, and technical expertise. However, you should also pay attention to how the company is doing business, its values, culture fit, and vision of the process.

  • Sign a contract and approve SLAs. You should prepare a detailed service agreement with an IT provider to secure the crucial aspects of the cooperation: project scope, time frame, non-disclosure, IP rights, terms, payment methods, and termination.

  • Topcoder country rank: 23

  • Establish ownership of work. Be sure your contract indicates the owner of the software created, and you have an unrestricted license to use and modify work a team had done for you whether you continue to use the vendor or not.

Our strategic advice before you go

Mexico is a rapidly growing, top-quality IT outsourcing destination, gaining the lead and becoming popular worldwide. The nearshoring industry in the country is on the rise, and this trend will continue in the coming years. Moreover, the Mexican tech industry and government work hand in hand, so it's a perfect combination if you want stability and support from the local authorities.

Overall, there are pros and cons, but outsourcing software solutions to Mexico is an option worth examining. This country might become the dream destination you've been waiting for. If you want to know the best way to expand your business operations and find qualified tech professionals from Mexico who fit your IT needs, it's about time you contact TEAM International .

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