IT Industry Why Are Tech Companies Like IBM, Facebook and Amazon Succeeding In Mexico? by Carlos A. Vázquez

Mexico is becoming the center of operations for many renowned companies from the United States.

When it comes to operating in the Mexican market, IBM is a veteran. They’ve been in Mexico for over 85 years. The company has driven the development in the industry and expanded its presence in high growth regions. 

Dell, Facebook, Amazon, Oracle, Microsoft and many other companies that we’ve analyzed in our Tech Salaries in Mexico 2019 Report, have contributed to the development of a tech ecosystem that encourages the birth of hundreds of new startups. These innovative startup companies can be developed with the support of this infrastructure to form thriving companies that benefit the national economy long term but also international and technological development in general. 

It’s important to understand the reasons Mexico considers itself a serious player in technological development in Latin America. As many headlines in the news have asked:

Is Mexico the next Silicon Valley?

In the last five years, Mexico has been seen as one of the great burgeoning ecosystems of startups in Latin America. The country is growing as an attractive market that has already seen a series of success stories and has attracted the attention of foreign investors, global innovators, and mentors. 

All of this is in addition to characteristics embedded in Mexican DNA that include talent, originality, and resilience. 

A study by Finnovista reveals that Mexico City is the area with the highest number of tech companies: 71% of the companies identified are in this Mexican capital, while 11% in Monterrey and 10% in Guadalajara. 

There are many reasons that lead us to think of Mexico as a prominent player in the North America tech industry. These include talent abundance, competitive salaries, work/life balance, and the flexibility with old labor frameworks. 

Last year, the Washington Post highlighted some of the global companies such as IBM, Oracle, and Intel that had decided to settle in Guadalajara— also known as the “digital creative city” of the country.

Does the government help facilitate business in Mexico’s technology sector?

In 2004, the Ministry of Economy of Mexico and the Mexico-United States Foundation for Science (FUMEC) created the TechBA program, which aimed to “strengthen the entrepreneurial, technological and innovative capabilities of small and medium-sized companies based on technology to help new companies to scale their products and great ideas in foreign markets. “

Two years later, TechBA began to select Mexican startups to participate in an exchange program in Silicon Valley which would teach them to work in the cradle of global entrepreneurship and receive essential experience and organizational skills from the main companies that have emerged in California.

But it was in 2013 the creation of the National Institute of Entrepreneurship (INADEM), which most significantly influenced the exponential growth of new startups in Mexico. Only one year after its launch, INADEM had injected up to 658 million dollars into the local ecosystem, money that helped 620,000 entrepreneurs, micro, small, and medium enterprises. This investment capital resulted in the creation of 6,000 new companies and 73,000 new jobs.

The Mexican government has also developed legislation that facilitates the process of launching a business. In September 2016, the government made changes to ‘The General Law of Commercial Companies’ that allowed registering any company with an annual income of up to 5 million pesos (300,000 US dollars) at no cost and in 24 hours.

The economic and social context that, in the last century, facilitated the emergence of Silicon Valley as the largest center of creative talent in the world can now be identified in Mexico, where cities such as Monterrey, Guadalajara, or the Capital itself have become dynamic engines of creation and development.

Why are companies hiring more talent in Mexico than in the United States?

For employers in the competitive IT industry, Mexico offers an excellent opportunity to benefit from a largely untapped and highly-trained talent pool. 

As the growing demand for technical expertise continues to exceed the national supply in North America, smart organizations such as Cisco, LG, Siemens, HP, Intel, Amazon or Facebook will take advantage of multiple contracting options such as remote work, expansion of offices in cities outside the United States, or even the relocation of workers with the TN visa.

What is the future of Mexico’s technological ecosystem?

With these elements, the future of technology lies in the recruitment of foreign companies and the creation of local companies. 

And although some experts believe that Mexico will not be able to overmatch outsourcing in India, companies such as CodersLink are already betting on a new and more collaborative business model such as co-sourcing that combines the benefits of insourcing and outsourcing. 

Co-sourcing is essentially a commercial agreement where the work is carried out by internal staff and external workers. Co-sourcing is based on the development of a long-term relationship. It emphasizes the traditional values ​​of trust, excellent service, and quality that would normally be associated with the organization. This way, the company has more control over the operational process and assumes a shared responsibility to deliver the final product or service to the customer.

This means the future for the technological sector in Mexico is already likely to break the glass ceiling. 

If you want to know more about Mexico’s tech ecosystem, we encourage you to get our latest report Tech Salaries In Mexico.

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