There’s still a lot to learn when it comes to leveraging the power of remote work and remote teams. Today, teams are commonly spread out among geographical areas and there’s still a lot to be said about the advantages and possible challenges of this particular model. Whether hiring a remote development team or a lead software developer, today’s companies are on the frontiers of a new way of working.
So, with a lot of talk about tech layoffs and the shortage of qualified talent, many companies are asking themselves just how viable it is to reach across borders and hire talent from new markets. Companies ask: does this labor market have the training and education I need? How do I know I will find cultural alignment when bringing on talent from a different country?
In this post, we crack open some of the misconceptions of hiring remote teams and/or developers in Mexico.
Misconception #1: It’s All About a Cheaper Alternative
When it comes to the tech sector, this is a relatively archaic way of thinking about outsourcing or nearshoring for that matter. Seeking a more inexpensive form of labor is no longer the only driving force behind companies’ looking elsewhere for their tech talent. Today, the market is driven by the insatiable need for talent, complex new technologies that require experienced engineers, the fast pace of the market, the desire to build diverse teams, expansion of infrastructure to other countries—you name it.
The cost-effectiveness factor has not gone away, of course. Differences in standards of living between common outsourcing destinations like Mexico and the U.S. will still translate into a lower salary expectation when compared to a U.S. counterpart. For example, the average salary in Mexico for a senior tech professional is about $4,285. According to Glassdoor, an average software developer’s salary in the U.S. is about $120,730, according to U.S. News.
That salary gap, however, has seen some reduction in the past two years, given the unprecedented demand for some tech positions and the tech talent shortage in the United States. This is especially true for more specialized tech positions.
Let’s break this idea of cost-effectiveness down even further.
- While LATAM is often talked about as one entity, the region is vastly diverse. Companies looking towards Latin America for their talent should consider the unique idiosyncrasies of each country and work with a hiring partner or team that knows the local market. For example, according to our internal research on the Mexican IT industry (linked above), Mexico has a diverse talent pool of IT professionals with a higher percentage of full stack developers, back end developers, software engineers, and project managers. Brazil, for example, seems to be churning out back end developers at a higher rate than other LATAM countries, but these workers’ salaries have risen considerably.
- Covid, its aftermath, and the rapid move towards digitization across all industries affected tech salaries across the board. These changes meant that salaries in Mexico, along with other Latin American countries, have gone up. The uptick in demand raised salaries throughout the region, particularly with senior and high-end developers or engineers. The rise in salary did not just happen throughout Latin America, other commonly outsourced regions like India have also seen increase in salaries. This is simply an economic reality. And while, in general, Mexico is still lower than countries like India and Brazil, there are other advantages to working with LATAM than going across the globe.
- Several Latin American countries have had a presence of foreign companies there for some time. Many developers and engineers in countries like Mexico and Brazil have thus worked for international countries from the U.S. or Europe and are used to earning salaries in American dollars or Euros. So, despite the difference in standard of living, many experienced developers have higher salary expectations because of the tight market and their experience in working with foreign companies.
Misconception #2 LATAM is Just Another Outsourcing Destination
In the past, outsourcing to countries like India and China was the go-to option for companies looking to cut costs and establish teams. This trend has changed. There are several reasons for this:
- The talent pool was injected with a good dose of education and training. Many countries in LATAM embraced technology and tech education in an unexpected way. Mexico, for example, made investments in infrastructure and STEM education to encourage the growth of a tech ecosystem. Several of the top universities in Latin America are in Mexico, including The National Autonomous University of Mexico, Tecnologico de Monterrey, and The National Polytechnic Institute.
- Hassles and challenges of working with teams across the globe emerged. For smaller companies and startups that need efficient remote development teams to advance projects at a rapid pace, for example, having teams in distant time zones presents obvious problems in productivity and workflow. The big time differences can affect the way that teams communicate and manage problem-solving, glitches, or other issues. This is not to mention cultural differences and varying views on IP that can complicate other matters of remote team innovation.
In addition to the above, there have been several other reasons why countries like India have fallen out of favor. We detail some of these reasons in our post about Mexico vs. India as destinations to hire remote developers.
Misconception #3 The Talent is of Lower Quality
The tech talent in Latin America has the attention of growing companies in the United States. LATAM is its own market. It’s a vast region with a diverse political, social, and cultural history. So, it is inevitable that a U.S. company working with a different market will run across some differences in the way things operate. In terms of technical skills, soft skills, and experience, however, the Latin American tech ecosystem has built a solid reputation.
Let’s take a closer look.
- As mentioned above, countries like Mexico have invested in STEM education and technical training for students. Thanks to the opening of several technical institutes and fostering programs, Mexico graduates about 130,000 software engineers every year.
- In addition, several initiatives to form partnerships between U.S. and Mexican institutions of higher learning for cross-border collaboration in tech innovation and STEM fields have increased the back and forth between the two regions. This includes such initiatives from the University of Arizona, Texas A&M, UT Austin partnering with Monterrey Tech in efforts to expand technology, energy, and other STEM-related educational pursuits. That is only one small part of the bigger picture. All of this, including the geographical proximity and social and economic ties, has made places like Mexico a much more accessible country to build nearshore teams with.
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