For decades, countries around the world have relied on offshoring IT services to India. Yet, for countries in America, there is a closer alternative. Instead of offshoring, businesses can instead nearshore their IT needs to the IT industry in Mexico.
In a speedy development, the technology sector in Mexico underwent an average annual growth rate of 10.5% from 2002 to 2018. Going hand-in-hand with this growth is the upsurge of exports to partner countries like the US.
As such, businesses cannot afford to neglect the IT industry in Mexico anymore. With its rapid growth, the industry has become an alternative destination for outsourcing IT-related projects.
Mexico as a major global IT sector hub
Compared to offshoring, nearshoring means outsourcing business processes to nearer countries.
In contrast to outsourcing to places like China and India, nearshoring is cheaper and less complex. When did nearshoring to Mexico become popular?
It all started when the United States, Mexico, and Canada signed the original NAFTA agreement. With this trade agreement, economic relationships between the three countries flourished. In 2023, Canada and Mexico continue to be the US’ largest trading partners, relegating China to fourth place.
Located as the northernmost Latin American country, Mexico functions as the doorway to the region. As the US continues to be a global hub for IT development, Latin American countries are looking for a gateway to access the US market.
Mexico benefits greatly not only because of its geographic location. Decrease in the cultural barrier, matching time zones, the salary gap between US and Mexican developers, and IT talent shortage in the US give a chance for Mexican IT talents to accrue benefits from these factors.
The breadth of Mexico’s IT industry
Tech ecosystems necessary for developing the IT industry in Mexico are available in several places. Guadalajara, for starters, is known as Mexico’s Silicon Valley since major IT companies such as Microsoft, IBM, Dell, and Intel opened their main offices there.
Mexico City holds the majority value of venture capital and high-value startups vital to developing IT businesses.
Research and development (R&D) clusters also emerged in many of Mexico’s regions. Places such as Tijuana, Mexicali, Ciudad Juárez, Chihuahua, Monterrey, and Merida house some of the most advanced R&D clusters in Mexico.
The diverse specialties of these R&D clusters range from aerospace and biotechnology to software engineering and business process outsourcing (BPO). Many of them have attracted the attention of global IT companies such as Foxconn, Bosch, HCL, and AstraZeneca to open a business there.
Querétaro is also important for the development of the IT industry in Mexico. With over 25 data centers, Querétaro is essential for storing data much needed by the industry in Mexico.
The federal entity benefits from the power supply from Comisión Federal de Electricidad (CFE), its closeness to major economic centers, and the relative lack of potential for natural disasters. With these helpful factors, multi-tenant data centers like Equinix, Ascenty, and CloudHQ can safely build their data centers in the state away from most risks.
Adding to the robust growth in the development of the IT industry in Mexico is telecommunications. Because telecommunications is important for sustaining other industries, such as commerce and tourism, Mexicans pay special attention to developing telecom infrastructure in the country.
By 2025, Ericsson estimated that about half of Mexicans will be able to use 5G telecom networks in that year. In a similar report in Ericsson’s Mobility Report 2020, Mexico will become one of the first Latin American countries to use a 5G network on a national scale.
As proof of rapid development in telecom infrastructure, foreign tourists do not have to worry about internet coverage any more thanks to reliable Mexico eSIM services in the country.
Considering the richness of Mexico’s national tourism industry, the industry is obliged to provide the best telecom services to anyone. In turn, foreign tourists will become more enticed to visit the country.
The explosive growth of the Mexican IT industry would have been impossible without government intervention.
Despite many actors in the industry coming from the private sector, the Mexican government has realized how much the IT industry can benefit the country. As such, the government has implemented several programs to assist the IT industry.
Previously, programs such as Red Compartida and Digital Agenda for Mexico were renowned for introducing governmental support for the IT industry on a national scale.
Miscellaneous startup, entrepreneurship, and digital skills development programs are currently available en-masse in Mexico to nurture young talents.
From all these benefits, businesses need to start looking for the IT industry in Mexico as their long-term partners. With surprising levels of reliability and technical experience such as e-sim, the industry can sustain IT industry development on both Latin American and global scales.
