Nearshore software development in Mexico is booming.
There are many incredible reasons for this.
Nearshoring has gained traction as a growth strategy because it helps companies grow without too much overhead cost or risk. Mexico has also adopted remote work, which makes hiring remote talent easier.
A Short History of Nearshoring to Mexico
Nearshoring is a subcategory of offshoring. The main difference is the geographic distance, location, and other factors like culture and language. In the past, offshoring was attributed to companies setting up some or part of their operations overseas in places like China and India. Nearshoring emphasizes geographical distance as an advantage and refers to companies outsourcing to nearby countries for cost or other reasons.
Nearshoring to Mexico increased about 30 years ago when the three North American countries signed the original NAFTA agreement. Mexico became a preferred location for global companies to install factories and manufacturing centers. And while nearshoring is often associated with the manufacturing and automotive industries, it has—in recent years— become the go-to destination for tech companies looking to expand their global and remote teams in the LATAM region.
Because of its unique geographical and cultural positioning, Mexico serves as the gateway to the rest of Latin America, which in recent years has caught the eyes of investors and companies that see the growth potential fomenting in the region. Mexico offers U.S. companies, for example, distinct advantages such as reduced cultural barriers, similar time zones, and linguistic similarities (many Mexican professionals speak fluent English).
What is Nearshore Software Development?
When it comes to the tech industry, Mexico has a lot to offer. Nearshore software development refers to companies that hire talent in nearshore destinations like Mexico to help, enhance, or lead their software development efforts.
Why choose Mexico for nearshoring?
What are the advantages of choosing Mexico as a nearshoring destination?
The main component of nearshoring is geographic distance. By that measure alone, Mexico is a top destination for U.S. companies because of its proximity, which translates into shared time zones, easy access and travel via land and airplane, and cultural similarities and cultural ties between the two countries.
High Rates of Education
When nearshoring software development, education is a significant consideration for many companies. Mexico's government has encouraged tech education throughout the country through various programs, universities, and apprenticeship programs. According to Framework Science AI platform surveys and research, most of Mexico's tech professionals have at least a Bachelor's Degree in Engineering.
High Rates of English Proficiency
In recent years, Mexico has put much emphasis on its English education. Most students pursuing a university degree will have some level of English education.
According to Framework Science's own Technical Interview data from 2023, the English proficiency rate among tech professionals is as follows:
English proficiency levels of IT talent in Mexico: Data Sample 288,890 IT Profiles
Written / Verbal spectrum
- Advanced: 40-50%
- Intermediate: 30-40%
- Primary: 20-30%
Our survey showed that almost half (49.4%) of working tech professionals will have an advanced or higher English level.
Simplified U.S.-Mexico Collaboration
Collaboration between the U.S. and Mexico is expected, thanks to several factors.
- Trade Agreements: Friendly relations and trade agreements facilitate business between the two nations. Contracts like the USMCA provide added protections and freedoms for companies operating across borders.
- Cultural Similarities: At the same time, cultural similarities make collaboration between the two nations easier than when dealing with a distant and different culture like China or India.
The workplace culture in Mexico is characterized by several key elements, including a strong work ethic, a preference for personal relationships, and a hierarchical decision-making process. According to the OECD, Mexico has the longest average working weeks at 41.2 hours, demonstrating a strong work ethic among its workforce. 3
Personal relationships are significant in Mexican business culture, with family networks often crucial to business success. Mexicans prefer working with those they know and trust, and face-to-face meetings are preferred whenever possible. 3
Hierarchy is also a notable aspect of Mexican workplace culture. Bringing comparable seniority to match their executives at business meetings is crucial. Lower-level workers are not expected to have the authority or vested interest to make promises or input above their pay grade. 2
Mexican decision-making procedures are hierarchical, and representatives of lower status may be unable to make significant promises on the spot. 3
The Mexican business culture is also heavily influenced by family dynamics and relationships and is relatively conservative. 6
Indigenous Mexican culture tends towards the hierarchy in personal interactivity and how business is structured. Western businesspeople may expect that the Mexican firm will have a relatively centralized decision-making approach, with all crucial decisions being made by a few key individuals at the top of the company. 6
Regarding workplace culture priorities in 2024, companies are advised to double down on care for workers, reimagine the in-person work experience, and more. Workplace culture leaders should prioritize creating and maintaining a culture that will retain and attract employees. Companies that can engage and develop talent are the ones that will see continued success in the months ahead. 4
- Shared Time Zones: The overlapping time zones are part of what makes nearshoring so popular. International tech teams now recognize the advantages of sharing time zones when it comes to collaborative software development. Overlapping time zones also make agile development easier. For companies that use the Agile process for product and project development, the real-time collaboration possible with Mexican developers is a competitive advantage.
Advanced Tech Ecosystem
Its exponential growth, innovative solutions, and cutting-edge advancements characterize the technology ecosystem. Many factors, including research and development, collaboration, and investment, drive this dynamic and ever-evolving domain. The proliferation of technology startups, incubators, and accelerators has contributed significantly to the growth and sustainability of this ecosystem. Furthermore, a skilled workforce, robust infrastructure, and supportive policies have created an environment that fosters innovation and entrepreneurship. As a result, the technology ecosystem has become a key player in driving economic growth and development, creating jobs, and enhancing global competitiveness.
During the past few years, Mexico has witnessed the emergence of several startups that have achieved significant growth and even attained unicorn status.
Among the top companies in Mexico are Bitso, Clara, Clip, Kavak, Konfio, and Merama.
The contribution of technology parks in promoting the tech ecosystem must be considered, as it is evident that research conducted in such parks, coupled with the innovative solutions provided by startups and small businesses, play a significant role in the advancement of technology. Over 37 technology parks in Mexico encompass major universities and technology excellence centers.
They include:
1. Creative Digital City (Ciudad Creativa Digital): Located in Guadalajara, the Creative Digital City (CCD) is designed to be a hub for the digital media industry within Mexico. The project aims to attract a mix of enterprises, institutions, and creative talent using the proposed digital infrastructure and value-added services. The CCD is a strategy led by Mexico's Federal Government and supported by Jalisco and Guadalajara State and Municipal governments, regional high-tech clusters, and universities. The development is located around the Parque Morelos, which is preserved and revitalized as the centerpiece of the project in the heart of downtown Guadalajara[1][8][11][14].
2. Scientific and Technology Park in Zapopan, Jalisco: The Guadalajara Technology Park, located in Zapopan, Jalisco, is a significant tech hub that operates 24 hours a day. It is home to several tech companies, including Fresenius Kabi México, a company in the healthcare industry, and Jabil Advanced Mechanical Solutions, a leading manufacturing services company[2][6][12].
3. Apodaca Technology Park: Located in Apodaca, Nuevo León, Apodaca Technology Park is a leader in Industrial Real Estate Developments. It is home to several companies, including DSV Logistics, a global transport and logistics company[3][7][10][13].
4. Monterrey Technology Park: The Monterrey Technology Park is another significant tech hub in Mexico.
5. Guadalajara Software Center: The Guadalajara Software Center is part of the Guadalajara Technology Park. It is a hub for software development and related services. Companies like Plexus Corp., a global leader in complex product design, manufacturing, supply chain, and aftermarket services, have a presence in this center[9].
Additional Technology Centers:
6. Sandia Science & Technology Park: Although not located in Mexico, the Sandia Science & Technology Park is a noteworthy mention. It is a 340-acre, master-planned technology community responsible for significant economic activity[15].
Citations:
[1] https://tekumafrenchman.com/portfolio/guadalajara-creative-city/
[2] https://guadalajaratechnologypark.business.site
[3] http://www.cpamericas.com
[4] https://www.evalta.com.mx/?utm_campaign=16971418699277983731&utm_medium=wix_google_business_profile&utm_source=google
[5] https://en.unesco.org/creative-cities/guadalajara-0
[6] https://www.dnb.com/business-directory/company-profiles.fresenius_kabi_m%C3%A9xico_sa_de_cv.c5773e866cf5654a4145ef6e55120057.html
[7] https://www.waze.com/live-map/directions/apodaca-technology-park?to=place.w.170262786.1702890003.563427
[8] https://www.arup.com/projects/ciudad-creativa-digital-masterplan
[9] https://www.plexus.com/en-us/about/locations
[10] https://www.invest.mexicoindustry.com/parks/en/mexico/nuevo-leon/apodaca/apodaca-technology-park-1
[11] https://urbanmattersjournal.com/the-smart-meets-the-creative-the-disappointing-parable-of-the-first-digital-creative-city-in-mexico/
[12] https://panjiva.com/Jabil-Advanced-Mechanical-Solutions-De-Mexico-S-De-R-L-De-C-V/32859068
[13] https://www.dsv.com/en/countries/americas/mexico/apodaca/dsv-logistics-mxapd001
[14] https://www.fmetropoli.org/en/cities-lab/urban-landscapes/guadalajara-creative-digital-city/
[15] https://sstp.org
[16] https://investinmx.com/parks/en/mexico/nuevo-leon/apodaca/apodaca-technology-park-1
[17] https://www.idom.com/en/project/digital-creative-city-project/
[18] https://panjiva.com/Cisco-International-Ltd/44575213
[19] https://foursquare.com/v/apodaca-technology-park/4dc84586d4c08c32f16e976f
[20] https://carloratti.com/project/ciudad-creativa-digital/
[21] https://www.waze.com/live-map/directions/guadalajara-technology-park-mex-15-guadalajara-tepic-zapopan?to=place.w.168100047.1681066008.8607085
[22] https://siilaspot.com.mx/spot-property/detail/promoted/alquiler/industrial/apodaca-technology-park-atp-b019/siila/61999
[23] https://en.wikipedia.org/wiki/List_of_research_parks
[24] https://grupoavante.com.mx/en/project/avante-apodaca-industrial-park/
[25] https://mexico-now.com/escala-invests-in-new-hubs-park-apodaca-in-nuevo-leon/
Large Ecosystem of STEM Universities
Tech education has played an essential role in expanding and enhancing the Mexico tech ecosystem. Some of the most well-known universities and tech education institutions include:
At the federal and state levels, the Mexican government has initiated efforts to encourage and help entrepreneurs and small businesses through initiatives like the National Entrepreneur Fund.
There has also been some substantial VC investment in Mexico in recent years. Many investors saw Latin America as a growing region whole of potential and focused on some of the exciting growth post covid. In 2022, Latin America became the fastest-growing region for VC investment. As outlined by Crunchbase, that trend has held steady to some degree in Mexico.
Article Source: Crunchbase
Top 30 STEM Universities in Mexico
https://nearshore.fwscience.us/top-30-stem-focused-universities-in-mexico
Top Degree Focus areas
Immense Software Engineering and Developer Pool
Several tech companies have established a significant presence in Mexico, leveraging the country's growing tech ecosystem, abundant talent pool, and strategic location.
Major tech giants like Google, Microsoft, and Intel have set up offices in Mexico. Google and Microsoft, for instance, have sizable offices in Mexico City, with Microsoft investing heavily in Mexico's digital transformation. Intel, a company known for designing, manufacturing, and selling integrated digital technology platforms worldwide, also has a presence in Mexico. 1
Lyft and Stripe, two prominent companies in the ride-sharing and financial services sectors, respectively, have also established operations in Mexico. Additionally, startups such as Paystand, Skycatch, Particle, and Scale AI have been set up in Mexico, further contributing to the country's vibrant tech scene. 1
HCLTech, a leading global IT services company, established its presence in Mexico in 2008. It now employs a diverse group of over 2,400 people working across Guadalajara, Mexico City, and Monterrey. 3
Guadalajara, often called Mexico's Silicon Valley, is home to several tech companies. Big tech names like IBM, Amazon, HP, Dell, Oracle, Intel, and Tata have a presence in this city. 4
Mexico's startup scene is also thriving, with companies like Bitso and Clara making significant strides in the tech industry. 5
The massive growth is driven by factors such as Mexico's abundant talent pool, strategic location, supportive government policies, and the primary reason Framework Science built its advanced nearshore IT recruiting excellence center across the country and LATAM.
Entrepreneur Magazine Focus on Mexico
Mexico's tech industry is blossoming.
Mexico is also home to several growing tech hubs. Cities like Mexico City, Guadalajara, Merida, and Monterrey are regional hubs from which much of the tech ecosystem stems. While the cities have a higher concentration of talent, the country has moved to a remote-first model, where many developers prefer or choose to work from home.
Having a thriving software industry is paramount.
The numbers also show that Mexico has a strong software industry. According to Statista, the revenue for the software industry in the country is steadily increasing and has an impressive value of 2.2 million U.S. dollars in Enterprise Software.
Access highly qualified Tech Talent and Nearshore Software Development in Mexico.
In today's remote-first world, companies find that building remote tech teams opens up possibilities. Not only does it offer lower-cost options for hiring specialized tech positions, but it allows for diverse groups and unique perspectives. The best way to reap the full potential of a talent market is by working with a trusted partner who knows the region in various capacities.
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