Share

Mexico: A Nearshoring Opportunity

By Rachel Greenwald

Panelists highlighted the country’s growing software and technology capabilities, its geographic and regulatory advantages, and successful cases of U.S. and global corporations that have invested in Mexico’s IT service sector.

Speakers:

  • Frances Karamouzis, Vice-President Research, Gartner Inc (Keynote Speaker)
  • Ricardo Álvarez, Executive Director International Promotion, ProMéxico (view presentation)
  • Alfredo Pacheco, National Operations Director, CANIETI-Mexico IT (view presentation)
  • Calvin Coffer, Director, Sourcing Programs, NBC Universal Inc.

Summary

Co-hosted by ProMéxico and AS/COA, this program looked at developments in Mexico’s Information Technology (IT) sector and the country’s advantages as a destination for nearshoring of IT services. Panelists highlighted the country’s growing software and technology capabilities, its geographic and regulatory advantages, and successful cases of U.S. and global corporations that have invested in Mexico’s IT service sector.

Opportunities for Mexico IT

Gartner’s Frances Karamouzis forecasted that, by 2012, India will see its dominance as the leading destination for IT outsourcing diminished. By that same year, an estimated 30 percent of the Fortune 500 labor needs will be distributed overseas. Meanwhile, Mexico’s IT industry appears strong; with approximately 2,095 IT companies currently operating there, the industry is slated to grow 9.5 percent in 2008.

All panelists agreed that these factors add up to a clear opportunity for Mexico to position itself as a leader in the sector and capture a larger share of this important market. They pointed to Mexico’s qualified labor pool, proximity to the United States, regulatory support, and North American Free Trade Agreement (NAFTA) benefits as essential to the country’s growing status as a destination for IT services. While India remains the leader for IT outsourcing, Karamouzis noted that 32 percent of her clients—companies looking to outsource their IT service needs in cheaper labor markets—would choose Mexico first, with the Philippines ranking second at 24 percent.

Mexico’s Comparative Advantages

Regulatory incentives and NAFTA membership contribute to the country’s growing competitiveness in the field. Government funding for research and development provides strong support for Mexico’s burgeoning technology sector. Moreover, regulatory incentives range from reduced income tax to trade facilitation programs for export-oriented companies. As a BAFTA member, Mexico offers strong intellectual property protection, no need for H1-B visas, and reduced time and costs associated with legal processes.

Panelists agreed that Mexico offers a relatively large, qualified labor pool. As CANIETI-Mexico IT’s Alfredo Pacheco noted in his presentation, Mexico currently has 550,000 trained IT professionals, with an additional 64,000 graduating annually year from 121 technology-focused universities. With a well-trained labor force, new IT employees in Mexico require minimal training.

The speakers made reference to Mexico’s advantage in its proximity to the United States, both in terms of time zone concurrency and the relatively low travel and logistical costs in comparison with other offshore service destinations. NBC Universal’s Calvin Coffer commented that for his company, Mexico’s geographic position as a nearshore destination made it most attractive to the media company. The proximity has translated into easy day-to-day communication and resulted in lower costs than in the cases of other offshore alternatives, he said.

Related

Explore