Benefits of Nearshore Software Development in Mexico
Next door to the United States and a thriving technology sector, nearshore software development in Mexico offers a compelling proposition for companies looking to optimize their operations. We'll explore the current state of the Mexican nearshoring market, highlighting some critical aspects of nearshoring to this city.
We'll also share how you can partner with Framework Science to make your nearshore software development venture successful.
This Article Contains
- An Overview of Mexico's Software Development Market
- Top Compelling Reasons for Nearshore Software Development in Mexico
- Popular Nearshore Software Development Hubs in Mexico
- Nearshore Software Development Models in Mexico
- Possible Challenges of Nearshoring Software Development to Mexico
- The most cost-effective way to Nearshore Software Development in Mexico: Partner with Framework Science
Overview of Mexico's Software Development Market
Here are some statistics that support Mexico's promising future as a nearshoring haven:
- Mexico has 38 IT clusters, housing approximately 400 IT outsourcing companies offering various services such as software development, engineering, and high-tech manufacturing.
- The IT outsourcing segment experienced significant revenue growth from 2016 to 2020, with a 10.2% increase in the Compound Annual Growth Rate (CAGR).
- Mexico's IT services market is projected to generate USD 11.04 billion in 2023, with software outsourcing services making the most significant contribution (approximately USD 3.92 billion).
- Between 2023 and 2027, Mexico's IT service sector revenue is expected to grow at an annual growth rate (CAGR) of 6.23%, resulting in a market volume of US$14.06 billion by 2027.
- According to the Global Innovation Index 2022, Mexico ranked #58 among the "Top Digital Nations Worldwide" and was among the top three countries in Latin America.
The Mexican government has also helped create a tech-driven environment through various initiatives and reforms.
- Digital Agenda for Mexico: It's a comprehensive strategy to promote digital transformation across multiple sectors. This initiative focuses on expanding broadband connectivity, improving digital literacy, and enhancing e-government services.
- National Digital Strategy for 2021-2024: It seeks to leverage technology to drive economic growth and social development. It focuses on the digitalization of the public sector and increasing broadband access.
- Investment Incentives: The government offers tax benefits, grants, and financial support for research and development projects to attract foreign companies. It also encourages technology-related investments in Mexico.
- Startup Support: The government launched the Startup México program to support the growth of startups and entrepreneurship.
Major global IT companies like Google, Apple, and Microsoft have set up their R&D offices in Mexico and continue employing Mexican software professionals.
So, what factors have turned the nearshoring spotlight on Mexico?
TOP Compelling Reasons for Nearshore Software Development in Mexico
Here's why Mexico is a lucrative nearshore software outsourcing destination:
Large and Growing High-Quality Developer Talent Pool
With approximately 800,000 tech professionals, Mexico is the second-largest IT market in Latin America.
Mexico is also ranked #2 in the world for best developers, according to the 2022 Pentalog report.
Mexican developers excel in data analysis, machine learning, probability and statistics, data management, and statistical programming. The IT talent here has a 93% computer programming and 79% mobile app development proficiency level (Coursera Global Skills Report 2022).
The country also has the most significant IT vendors, with over 438 Mexican software development firms listed on Clutch.
That's not all!
Mexican software developers are considered the most educated among Latin American countries. The country also has the highest rate of engineering graduates in Latin America, and 25% of all tertiary degrees are in STEM.
Mexico also has six educational institutions ranked in the top 50 in Latin America.
Notable universities include the National Autonomous University of Mexico, Tecnologico de Monterrey, and Universidad Autonoma de Nuevo Leon (UANL).
High-Quality IT Infrastructure
Mexico has over 20 tech parks with modern facilities, including Guadalajara Software Center, Creative Digital City, Apodaca Technology Park, and Monterrey Technology Park.
These tech parks are located in major IT powerhouses like Guadalajara, Monterrey, and Mexico City, as well as emerging hubs like Tijuana and Merida.
The government also encourages IT companies in Mexico to build cutting-edge technologies, particularly AI-based solutions, to streamline software product development processes.
The Mexican government has allocated substantial funds to upgrade local tech infrastructure, including the 5G mobile network launch in 2021. It has enhanced internet connectivity and accelerated digital operations.
Various programs and initiatives also back the country's tech ecosystem:
- The 500 Startups LATAM program provides funding and mentorship to startups across multiple industries.
- The Fondo Nacional Emprendedor is a government-run grant program that supports entrepreneurs focusing on the tech industry.
- Mexico has also opened 120 tuition-free tech universities, incentivizing young people to pursue STEM fields.
Geographical Proximity and Overlapping Time Zones
Mexico's overlapping time zones with the United States provide a valuable strategic advantage. Specifically, San Francisco, the IT hub of America, is merely an hour behind Mexico City and Guadalajara, while there is no time difference between San Francisco and Tijuana.
It is an advantage of superior remote work collaboration through face-to-face meetings and real-time interactions.
Conversely, American companies outsourcing software development to offshore locations such as India face a significant time gap of 9+ hours. Moreover, owing to Mexico's location in North America, business trips to the country are quicker, more inexpensive, and more convenient.
Ease of Doing Business
In addition to the above benefits, many US companies prefer Mexico for nearshore software outsourcing due to its Ease of Doing Business rank (60th place out of 190 global economies).
Here are some factors that contribute to this:
- USMCA agreement: The United States-Mexico-Canada Agreement (USMCA) promotes free trade and facilitates foreign investment between the three countries. It also protects intellectual property rights, making nearshoring to Mexico safe and cost-effective.
- Membership of international organizations: Mexico is a member of the G20, the Pacific Alliance, and the Organisation for Economic Cooperation and Development (OECD), which adds to its economic stability and reputation. These memberships signify Mexico's commitment to international cooperation and contribute to its overall business environment.
- Attractive incentives: Mexico offers various incentives to global companies, such as exemption from local or state income taxes on corporate earnings and special grants from organizations like the National Council of Science and Technology (CONACYT).
Since Mexico borders the United States, Mexican developers are typically aware of US workplace ethics, deadline expectations, and quality standards.
It helps them build strong relationships with the US onshore product development team and minimize cultural clashes or misunderstandings.
Moreover, a nearshore software development vendor may share the same national holidays, making it easier for companies to streamline workflows and deadlines.
Even though Mexico and the United States have different official languages, many Mexican developers are fluent in English and Spanish.
English is also widely spoken amongst college-educated computer science and engineering graduates.
It makes it easier for Mexican remote workers to communicate with international clients. It also significantly reduces the chances of mistakes resulting from language barriers.
Their fluency in Spanish can also be an advantage when an American company wants to provide regional customer support.
Cost-Effective Tech Talent
Mexico has gained popularity due to its affordable tech talent compared to the US or Western Europe.
For example, the average salary of a software developer in the United States is around USD 7650/month, and USD 7039.66 (5,530 GBP) in the United Kingdom.
Yet, in Mexico, it's only about USD 1790.65/month!
Note: Actual salaries may vary based on the developer's experience, qualifications, and location.
By nearshoring software development to Mexico, businesses can save over 50% on labor expenses.
Moreover, the average cost of living in Mexico ($786) is 64% less expensive than in the United States ($2213). US companies can now provide competitive salaries to remote workers in Mexico while staying within their outsourcing budget.
Proven Outsourcing Track Record
Mexico has emerged as a prominent destination for nearshore software development outsourcing in Latin America, with a thriving ecosystem of over 350 outsourcing companies. Notably, several global IT firms, including Google, Apple, Intel, and Oracle, have made significant investments in Mexico, signaling their trust in the country's outsourcing capabilities. Mexico's extensive experience in offshore outsourcing, particularly in the manufacturing sector, has endowed it with a strong foundation and expertise in managing outsourced projects. In the subsequent section, we will delve into the top Mexican hotspots for software development outsourcing.
Popular Nearshore Software Development Hubs in Mexico
According to CBRE's 2022 annual report, Mexico City, Monterrey, and Guadalajara stand out among the ten Latin American markets with the best tech talent.
Let's take a closer look at these cities.
As per CBRE's annual report, Mexico City had the second-highest tech talent employment in Latin America in 2021.
Mexico City also topped the list of best cities for startups in Mexico in 2023. It's even home to unicorns like Kavak, Clip, and Konfio.
The developers here excel in:
- Full-stack development
- Back-end development
- Mobile app development
- Web development
Guadalajara, hailed as "Mexico's Silicon Valley," has established itself as a hub of technological advancement. Its burgeoning reputation for producing top-tier tech talent has attracted IT recruiters from renowned firms such as Facebook, Google, Apple, and Netflix.
Guadalajara, located in Western Mexico, is renowned for being a significant hub for education, particularly in the tech industry. The city can produce 9,000 highly skilled software engineers annually, translating to Mexico's second-largest talent pool in the tech sector. 44 startups.
The city's tech skills include:
- Full-stack development
- Front and back-end development
- UX/UX design
- Mobile app development
Monterrey is near the United States border, making it an easily accessible nearshore location for North America.
According to the Global Startup Ecosystem Index 2023, Monterrey has Mexico's second-best startup ecosystem, with 47 startups.
The city has a high concentration of tech talent for:
- Quality assurance
- Fullstack and back-end development
- Mobile app development
Now, if you plan to nearshore your software project development to Mexico, there are a couple of models to choose from.
Nearshore Software Development Models in Mexico
Here are four ways to nearshore software development in Mexico:
Short-term Project-Based Requirement
For small businesses needing short-term software development services, such as mobile app prototyping, it is worth considering hiring freelancers from Mexico. These experienced professionals can assist in creating interactive prototypes using industry-standard tools like Adobe XD or InVision. The best part is that the recruitment process is streamlined, and lengthy contracts are not required since freelancers work as independent entrepreneurs. It helps to ensure that you can focus on your business goals without any distractions.
Integrated team's software outsourcing models provide a viable solution for companies seeking to bridge an in-house expertise gap. Under this model, a nearshore outsourcing company offers you a proficient software developer with the necessary skill sets tailored to your needs.
This approach enables you to promptly scale up or down your nearshore development team, depending on your project requirements.
Under this software outsourcing model, you can hire a dedicated development team from Mexico to work exclusively on your project. For instance, a technology company based in the United States can collaborate with a nearshore development team that includes:
- Software developers who design, develop, and maintain your solution.
- Quality assurance engineers who perform various types of software testing.
- Software engineers who take care of DevOps.
- Project managers who oversee the entire software development process.
By partnering with a dedicated team, you can ensure your project is completed on time, within budget, and to your specifications.
End-to-End Custom Software Development
You're a US startup with an innovative software idea but need more in-house technical resources.
You can nearshore the entire development process to a software development company in Mexico.
They'll handle complete custom software delivery — from initial planning and design to development, testing, deployment, and ongoing maintenance and support.
However, like all outsourcing approaches, nearshoring software development services to Mexico has some challenges.
Possible Challenges of Nearshoring Software Development to Mexico
There are two nearshore development challenges you should be aware of:
Bureaucracy and Complex Legal Frameworks
Although the Mexican government has taken strategic steps towards digital transformation and ease of business, you still need to complete paperwork.
It can significantly delay your development process.
You must also comply with several local rules and regulations to conduct business in Mexico. These include:
- Data protection laws: You must adhere to Mexico's Federal Law on the Protection of Personal Data Held by Private Parties (FLPPDHPP). It provides guidelines for collecting and processing personal data and is comparable to GDPR in Western Europe and Eastern Europe.
- Intellectual Property rights: Be mindful of agreements, such as the TRIPS (Trade-Related Aspects of Intellectual Property Rights), to protect your IP rights.
- Labor laws: Comply with regulations concerning working hours, overtime pay, benefits, and termination of employment.
- USMCA regulations: Ensure your digital trade activities align with the United States-Mexico-Canada Agreement (USMCA).
- Tax obligations: A US company may have tax implications for outsourcing to Mexico.
- Contractual agreements: You must have detailed outsourcing agreements covering the scope of work, terms and conditions, payment terms, dispute resolution, and termination.
Delays Due to Longer Hiring and Ramp-Up Times
Any nearshore or offshore outsourcing process can be time-consuming. It involves recruitment, onboarding, training, and team integration.
All this can delay the ramp-up times, negatively affecting development projects, especially time-sensitive ones.
So what should you do?
Given the complexity of the legal landscape and hiring process, you should engage with a nearshore software development company with proprietary systems to expedite the process, like Framework Science's TeamStation IT Workforce Management Platform.
The Best Way to Nearshore Software Development in Mexico: Partner with Framework Science
Framework Science is a highly acclaimed nearshore software development company that offers flexible and cost-effective nearshoring options for all your software development needs.
Our cross-functional professionals provide the required engineering firepower through:
- Staff Augmentation
- Dedicated team
- Full-cycle, end-to-end custom software development
How do we hire our top tech talent?
Let's break it down.
- Targeted talent attraction: We are looking for candidates who possess technical skills that are in high demand.
- Technical skill verification: As part of our hiring process, we administer online tests to verify the skills of each candidate. It is an effective way to ensure the quality of our hires.
- Behavioral assessment: Our HR interviews aim to ensure that our selected candidates are culturally fit with our organization. We carefully evaluate their skills and determine if they align with our values and goals.
- Technical review: Candidates undergo a live 1:1 coding interview with Framework Science AI and technical leads.
- Project match: We carefully choose candidates who are the best fit for your project. I have corrected the spelling, grammar, and punctuation errors.
- Client interview: You can directly interview candidates to ensure a perfect fit for your project.
Once you approve your team, they can start your software development project ASAP!
Here's how we ensure 100% delivery every time:
- The team hired by top-tier technical talent: You get the same skill sets you would get locally.
- Customized cross-functional teams: We offer a range of skilled professionals to assist in various aspects of technology and project management. Our team specializes in providing expertise for DevOps and cloud technology, UX/UI design, and quality assurance. Our project management services are designed to ensure that your project is delivered on time, within budget, and to the highest standards. Our professionals have years of experience and are dedicated to providing the best possible results. Contact us to learn more about how we can help you achieve your goals.
- AI-Driven Customize Service Delivery: Our organization has demonstrated a consistent ability to deliver value promptly, demonstrating our commitment to efficiency and quality. This focus on timely delivery has allowed us to distinguish ourselves in our field, and we remain committed to maintaining this level of excellence.
- Unmatched Scalability and flexibility: The appropriate size of the team, possession of the necessary skills, and being in the right place at the right time are significant factors contributing to success.
Tap into Mexico's Software Development Potential with Framework Science
Mexico is an ideal nearshore destination for software development, boasting a large talent pool, robust tech education system, proximity to the US, and ease of business.
If you need a trusted partner to make nearshoring a smooth ride, contact Framework Science. We can help you unlock the potential for success in your software development project.