Mexico is one of the top nearshoring destinations for companies seeking to outsource their software development projects. It’s the 3rd largest IT services exporter worldwide, accounting for $21 billion in exports. Many big companies like Amazon, Intel, and Facebook are expanding their operations in Mexico.
How can you benefit from outsourcing to Mexico? How to choose the right software development partner? And how to establish effective cooperation that ensures your sustained growth?
Let’s find out the answers.
We have collected information from WSAC, WIPO, Clutch, Trading Economics, Numbeo, and many more to provide you with a comprehensive guide to software outsourcing in Mexico.
Mexico stands out for several reasons, starting with its thriving tech sector and booming tech talent pool. According to the World Bank, its GDP is among the top 15 in the world and also the second largest in Latin America. The country’s IT market offers 300+ outsourcing vendors, and it shows great growth potential.
- 700K tech talents as of 2022
- Mexico ranks 3rd on the Global Innovation Index among Latin American countries
- More than 800 web development vendors and about 350 outsourcing companies operate in the country.
- 10% expected CAGR
Strong and diverse talent pool
The country’s strong focus on technology education ensures a steady supply of qualified specialists, resulting in over 700,000 IT professionals. Mexican software developers have experience working on international projects with a strong focus on DevOps, Java, C++, C#, Python, PHP, .NET, as well as JavaScript and other front-end technologies.
According to the Coursera Global Skills Report 2023, Mexican developers rank #2 in Latin America and the Caribbean and #4 in the world for technology skills.
High level of technical education and English proficiency
Mexico has prioritized education, specifically in science, technology, engineering, and mathematics (STEM) fields. As a result, they have a strong talent pool and are considered a leader in Latin America and globally recognized. According to the 2022 STEM Education Report, there has been a significant increase in student interest in STEM fields, from 25% to 35% between 2010 and 2021.
Mexico is home to numerous reputable technical universities and institutes. According to the 2023 QS Latin America University Rankings, the top-ranked universities in Mexico, as well as in Latin America, are Tecnológico de Monterrey and Universidad Nacional Autónoma de México (UNAM).
TechCrunch notes a surplus of highly trained tech professionals in Mexico, thanks to free and comprehensive higher education.
With an annual output of over 130,000 graduates, the country stands out when it comes to computer science. In the 2022 Pentalog report, Mexico secured the second position globally for developers’ qualifications, excelling in C/C++ and Python programming. It’s also listed alongside other tech-savvy nations in the Organization for Economic Co-operation and Development (OECD).
The dedication to STEM education extends to Mexican high schools, where initiatives like Code GDL Academy encourage early learning of CSS, Java, and other languages. Mexico is actively building a talent pipeline from early education, fostering a diverse and robust tech sector to meet the needs of technology partners, clients, and employers.
Cost savings of IT outsourcing to Mexico
Mexico generally offers lower labor costs compared to developed countries like the United States, Canada, and many European nations. We compared the average yearly salaries of several categories of IT specialists based on data given on Glassdoor:
Additionally, the cost of living in Mexico is almost 43% lower than in the US, according to Numbeo. And software development providers often operate with efficient cost structures, allowing them to provide competitive pricing. This efficiency may result from lower overhead costs, optimized processes, and a focus on delivering value for money.
Mexico’s key tech hubs
The biggest tech hubs in the country include Mexico City, Guadalajara, Aguascalientes, Queretaro, and the potential emergence of Merida in the future.
1. Guadalajara
Guadalajara is Mexico’s Silicon Valley, with over 1,000 tech companies and 63 startups. Its government supports businesses with a strong economy and legal system. This makes it easy for companies to start working with software development partners in Guadalajara without worrying about any political instability or regulatory issues.
Guadalajara offers exceptional software engineering talent, including full-stack developers, UX designers, front-end and back-end developers, and mobile engineers.
2. Monterrey
Monterrey is a convenient place to outsource software development because it’s close to the US border. It has over 100 innovation parks and 320 IT companies. As Mexico’s second-largest industrial center, it is home to major corporations like Banorte, Cemex, and Coca-Cola.
Monterrey’s elite universities, including Tec de Monterrey and the University of Monterrey, make it famous for EdTech startups and unicorns like Nowports. Its industrial prowess, technology focus, and well-educated workforce make it an attractive option for North American businesses seeking nearshore software development services.
3. Mexico City
Mexico City connects North and South America, making it a strategic location. The city is home to leading tech universities like the National Autonomous University of Mexico and the National Polytechnic Institute. Over half of the country’s IT professionals work here, making it a major tech hub.
The thriving FinTech startup ecosystem here has produced successful companies such as Bitso, Clip, Kavak, and Stori.
Great business infrastructure and cultural compatibility
The political climate in Mexico has been relatively stable for a long time. The country has an excellent infrastructure, including reliable transportation and telecommunications networks.
According to Trading Economics, Mexico ranks 60th out of 190 countries by ease of doing business. Mexico shares cultural similarities with the United States, which can contribute to smoother communication and understanding between teams. Shared cultural values can help in building strong working relationships.
While the local business shoulders most of the effort, the government also helps by providing a range of incentives, such as the National Digital Strategy for 2021–2024. Its focus is on expanding digitalization and leveraging technology.
High levels of data security
Mexico has comparable legislation for data protection to the European Union’s GDPR. Businesses that outsource data-related tasks must check for compliance with certain regulations to safeguard confidential data.
The country also put in place legislative systems that protect intellectual property rights. This provides peace of mind when it comes to any company’s sensitive data security.
Convenient time zone
Real-time collaboration is a crucial advantage when outsourcing software development due to Mexico’s geographical proximity to the United States. Being in the same time zone or close enough enhances communication, making it easier for businesses to collaborate seamlessly with their remote development teams. Mexico has over 100 major airports, including 15 international airports, facilitating business travel. The country spans multiple time zones, including GMT-5, GMT-6, and GMT-7.
Mexican software development companies and professionals are known for their exceptional standards in terms of quality. They commonly implement globally recognized methodologies such as Agile and Scrum to ensure effective project management and deliver top-tier solutions. Nevertheless, specific factors can aid in selecting the most suitable company for your project.
Top 6 criteria for choosing a reliable software development partner
- Established employer brand and efficient recruitment practices
Look for a tech provider that can attract and acquire the right talent swiftly and painlessly. Such a company can easily and quickly find and hire the best talent with diverse skills to create strong teams for specific projects.
- Focus on long-lasting results and strategic partnerships
A proven track record of cultivating long-term and strategic partnerships can come from examples of success stories. This indicates the company’s commitment to delivering good results every time. Long-term partnerships also indicate a provider’s ability to adapt to evolving project needs and ensure client satisfaction beyond initial engagements.
- Flexibility of cooperation models and tailoring services to your changing needs
A good company looks carefully at what you require and suggests the best way to work together, such as using a special place to work, adding more people to your team, or having someone else do the work for you. This tailored approach ensures that you receive the most effective and customized solutions for your unique business objectives.
- Investing in professional development, retention, culture, and diversity
A forward-thinking software development provider invests in the professional development and retention of its talent. This includes fostering a positive company culture and promoting diversity.
- Company and people rooting for your product’s success
Demonstrating a genuine commitment to the success of your project involves taking a proactive approach, asking questions, seeking to understand your short-term and long-term goals, and actively suggesting improvements. This collaborative mindset helps foster a strong partnership and contributes significantly to the overall success of the software development process.
- Transparent processes and communication
A good provider keeps in touch and tells you how things are going, what’s happening, and what’s important. Transparent processes let you see what’s happening during the development process, so you can make smart choices and address concerns quickly.
Choosing the right collaboration model
Choosing the right collaboration model is crucial for successful product development. Here are three distinct models tailored to specific needs:
- Offshore Development Center
This model is ideal if you seek smart, self-sufficient offshore teams to handle a portion of your product engineering. This model ensures full transparency, painless scalability, and flexibility.Focused on long-term cost-efficiency, we assist in swiftly building and seamlessly integrating tech teams into your delivery process.
- Team Extension
If you aim to augment your in-house team rapidly with skilled software engineers, the team extension model is the way to go. This approach facilitates easy scaling up and down, saving costs and time by eliminating recruitment, HR, and administrative overhead.
- Managed Delivery
Opt for managed delivery if you have a groundbreaking idea and wish to have a dedicated team committed to your product’s success. From concept to a fully developed solution, we guide you at every step, minimizing risks, reducing costs, and aiding in future-proof decision-making.
Legal aspects to consider
It is essential to consider specific legal aspects to mitigate risks, regardless of the chosen contract type. These include:
- defined deadlines for invoicing and payments;
- liability and warranty clauses for service quality;
- notice periods for project kick-off and team scaling;
- data protection rules;
- client ownership of code, and agreement on the governing law for international contracts.
Knowledge transfer management
Don’t underestimate the significance of knowledge transfer in IT outsourcing projects. Whether it involves transferring knowledge from a client to a vendor or between vendors, a well-structured knowledge transfer plan is indispensable. The process begins with a demonstration and investigation and concludes with setting up environments, taking over business as usual, and achieving the first successful release. Neglecting to follow this process can lead to unnecessary costs.
A successful outsourcing engagement requires a comprehensive knowledge transfer plan to ensure the vendor understands the product, its operations, and the individuals responsible for specific tasks, enabling a smooth and secure journey.
- ZoolaTech is a global software development company with offices in Turkey, Poland, Mexico, Ukraine, and the USA.
- Flexibility of cooperation models: ODC, Team Extension, Managed Delivery, or mixed
- 96% – client retention rate
- 60% – senior software engineers
- When starting cooperation, we provide you with a team of experts with 5+ years of experience
- Investment in diversity and inclusion – over 20 nations; 50% – female leadership.
- Trusted by industry leaders and Fortune 500 companies.
