There are a number of reasons why Mexico has become a popular destination for U.S. companies to outsource to, especially in the tech field. The country has focused heavily on developing tech talent, and its close proximity as a direct neighbor of America make a popular destination. If you’re considering doing business in Mexico, it’s important to understand human capital trends in the country. Here’s everything you need to know.
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HR and workforce
Mexico has focused heavily on educating and training their workforce. In fact, in recent years, the country has taken the lead in developing a generation of graduates in the field of STEM—science, technology, engineering and mathematics.
- Tech Graduates. The number of tech graduates in Mexico increased by almost 6% between 2005 and 2012. Mexico has more than 13,000 computer science graduates each year, ranking them sixth overall in the world. There are 120 universities in the country, and 65,000 students graduate with an IT degree every year.
- Major Campuses. The country’s Instituto Tecnologico y de Estudios Superiores de Monterrey has 30 campuses split across 25 cities, which consistently produce top talent.
- World-Leading Digital Nation. The publication “Tholons” ranked Mexico as 8th in the world for the Top 50 Digital Nations in 2019 list.
Key Sectors for Local Activity
Mexico has the world’s ninth-largest economy, and it’s quite diverse too. Here’s an overview of the country’s main business sectors:
- Petroleum. Mexico produces roughly 3.5 million barrels of oil each day. It’s the 8th largest exporter of oil in the world.
- Agriculture. The agricultural industry is huge in Mexico, with almost 20% of the workforce working in the sector. Agriculture also accounts for nearly 5% of the country’s GDP.
- Industry. This sector represents more than a quarter of Mexico’s GDP.
- IT, Tech & Other Services. In total, the services sector accounts for 69% of Mexico’s GDP. This includes IT and tech services.
Outsourcing in Mexico
While Mexico is becoming a hub for outsourcing in the tech and IT sectors, there are plenty of other sectors that thrive here, too.
Manufacturing is thriving in Mexico, and many companies are choosing to locate their manufacturing services here. The auto industry in particular is looking to Mexico as a place where they can outsource their manufacturing.
The wage gap of workers is a huge reason for this, as is the familiarity with the language and the culture. Mexico’s close proximity to the U.S. is also a major reason that is seen as an excellent option for outsourcing manufacturing.
So many aspects of life in Mexico are connected to the United States, since they are so close to each other. As such, many people in the country speak English very well. It is taught as the second language in most schools throughout the country from a young age.
Beyond school learning, many Mexicans are in tune with the culture and colloquialisms of the United States. This means that Mexican workers understand the nuances and less formal aspects of English, which can help U.S. consumers feel less “foreign” when they’re interacting with Mexican workers.
The lower average wages in Mexico provide a huge cost savings for U.S. companies. Per-hour wages in the IT field can range from $21 to $50 in Mexico. In America, these rates range from $33 to $62—providing companies with an average savings of anywhere from 16% to 50%, depending on the particular position.
While some of these per-hour salaries are higher than other Latin American countries, they still provide a significant savings over U.S. salaries. Some U.S. companies are happy with paying these higher per-hour wages for the convenience of having the outsourcing located in the country next door.
Prominent Cities for Business
Some top cities for business in Mexico include:
- Guadalajara. In terms of IT, Guadalajara has come to be known as The Silicon Valley of Mexico. That’s because it is now the central hub for engineering and IT companies. The city is home to almost half (40%) of the IT industry in all of Mexico, and the people there are well-educated.
- Monterrey is where the Monterrey Institute of Technology and Higher Studies is located
- Tijuana is a short drive from Southern California and is home to the Bit Center, a tech hub that houses 65 businesses
- Yucatan is an up-and-coming outsourcing center that offers tax incentives for foreign businesses
- Mexico City is the country’s capital city and one of the most important centers for finance and culture in the entire world
The average turnover rate in Mexico sits around 15%. This is about on par with other countries in Latin America.
Is Mexico Right for Your Business?
SERVIAP is a leading Professional Employer Organization (PEO) ready to help your business expand operations throughout the Western Hemisphere. PEO is a model of co-employment, where we assume total responsibility for your talent, allowing you to focus on the strategic activities of your organization. Contact us today to learn more about how you can expand your business in Mexico.