Over the past few years, tech salaries in Mexico have been increasing, especially for in-demand roles like mobile developers, Ruby on Rails engineers, and Python experts. As more companies in the U.S. turn to nearshoring, Mexico’s IT professionals are experiencing an unprecedented surge in wages. But what’s driving this salary growth, and how does it affect the broader tech ecosystem? For detailed insights, dive into our 2024 Mexico Tech Salaries Report, which explores salary trends across the nation’s tech industry and provides a comprehensive overview of what’s ahead.
1. The Legal Landscape: Shifting the Playing Field
The first key factor influencing salary growth is Mexico’s 2021 labor and tax reforms. These laws banned the subcontracting of personnel, a change that fundamentally altered how companies hire tech professionals. For years, outsourcing through an Employer of Record (EOR) was the preferred method for hiring remote talent in Mexico, allowing companies to bypass the complexities of setting up a legal entity in the country.
But with these new laws, the outsourcing model became more difficult, forcing U.S. companies to establish legal entities in Mexico to hire directly. While this initially seemed like a hurdle, many companies soon realized that eliminating the middleman actually allowed them to invest more directly in their development teams by offering higher salaries to attract top talent.
Companies like Twitter and Pinterest adapted quickly, setting up shop in Mexico and offering competitive salaries, making the country an even more attractive nearshoring destination. As more companies follow this model, salaries continue to climb, benefiting both senior and junior developers alike.
2. A Growing Tech Ecosystem: The Power of Supply and Demand
Another driving factor behind rising salaries is the imbalance of supply and demand in Mexico’s tech sector. The demand for developers proficient in technologies like React, Ruby on Rails, and Python has surged, particularly as companies shift toward digital transformation.
However, the number of developers trained in these highly specialized languages is still relatively small compared to demand. This shortage has pushed companies to offer higher salaries to attract and retain the limited talent pool available. According to our 2023 survey, senior developers with expertise in these languages have seen their salaries increase by as much as 50% in the past year.
As the gap between supply and demand widens, U.S. companies looking for cost-effective solutions are increasingly turning to nearshoring in Mexico, further driving up salaries.
3. The U.S. Tech Talent Shortage: Mexico’s Big Opportunity
The U.S. has long struggled with a tech talent shortage, which has only worsened in recent years. With only 65,000 computer science graduates produced each year and nearly 900,000 unfilled IT roles, companies in the U.S. are looking beyond their borders to find the skills they need.
This is where Mexico has stepped in. Producing over 110,000 engineering graduates annually—20% of all college graduates in the country—Mexico is emerging as a prime location for U.S. companies seeking qualified tech talent. Mexican developers are proficient in the same languages and frameworks used by their U.S. counterparts, making the transition to remote or hybrid teams seamless. This talent influx from Mexico has contributed to the overall increase in salaries, as developers become more sought after by both domestic and international employers.
Companies looking to scale quickly without facing the exorbitant salaries of U.S.-based developers are finding a wealth of talent in Mexico. For a closer look at these trends, explore our 2024 Mexico Tech Salaries Report.
4. The Nearshoring Advantage: Why Mexico Stands Out
Mexico’s proximity to the U.S. gives it a unique advantage in the nearshoring space. Not only are time zones aligned, but cultural similarities and language proficiency (with many developers fluent in English) make Mexico an ideal choice for U.S. companies seeking to outsource or hire remote teams.
Beyond just geographical convenience, the cost of living in Mexico remains significantly lower than in the U.S., allowing companies to offer competitive salaries while still saving on overall costs. According to our 2024 Mexico Tech Salaries Report, the average monthly salary for an IT professional in Mexico is $3,165 USD, compared to the U.S. average of $10,154 USD. This equates to Mexican salaries being 67% lower than their U.S. counterparts, a significant draw for companies looking to cut costs without sacrificing quality.
The nearshoring boom has contributed to a growing tech ecosystem, with cities like Mexico City, Guadalajara, Monterrey, and Queretaro emerging as major tech hubs. These cities boast strong educational institutions and government-backed initiatives to support tech talent, further fueling the rise in salaries.
5. Education and Innovation: The Role of Mexican Universities
Mexico’s educational system has played a pivotal role in the country’s IT boom. With more than 130,000 tech graduates entering the workforce each year, Mexico is ensuring its future as a competitive player in the global tech market. Universities are focusing on STEM education, offering specialized training in high-demand areas such as artificial intelligence (AI), machine learning (ML), and software development.
This focus on education is creating a pipeline of junior developers eager to enter the workforce and contribute to Mexico’s tech transformation. However, as demand for more senior-level developers continues to grow, companies are offering higher salaries to attract experienced professionals, further driving up overall wage levels.
Mexico’s tech ecosystem is also supported by a surge of startups and venture capital investment, particularly in sectors like Fintech, where innovation is pushing the boundaries of what tech professionals can achieve. This growth creates additional pressure on companies to offer competitive salaries to secure the best talent.
6. Cultural and Diplomatic Ties: The Bigger Picture
The relationship between the U.S. and Mexico goes beyond just economics. With more than 56.5 million people of Latin American heritage living in the U.S., there are deep cultural and familial ties across the border. These ties help facilitate stronger collaboration between U.S. and Mexican companies, making Mexico a natural choice for nearshoring.
As the Guadalajara tech scene continues to flourish, with startups like the $4 billion unicorn Kavak, Mexico is positioning itself as a tech hub similar to Silicon Valley. This trend is drawing attention from international investors, further boosting the demand for Mexican developers.
With companies investing in long-term relationships with Mexican developers, the future looks bright for U.S.-Mexico tech collaboration. By embracing nearshoring opportunities, companies can access top-tier talent while navigating the challenges of the global tech talent shortage.
Looking Forward: Building Stronger Teams Across Borders
As Mexican tech salaries rise, the benefits of hiring from this growing talent pool far outweigh the challenges. U.S. companies are increasingly recognizing Mexico as a valuable partner in their quest to build, grow, and scale their tech teams. By offering competitive salaries, leveraging nearshoring advantages, and tapping into Mexico’s well-educated workforce, companies can stay ahead in the race for tech talent.
With the cost of U.S. developers continuing to soar, the 67% savings on salaries by hiring in Mexico provides companies with a significant opportunity to expand while remaining cost-efficient. The 2024 Mexico Tech Salaries Report offers deeper insights into these trends, providing the data needed to make informed decisions about building remote tech teams.
As we continue to bridge the gap between U.S. and Mexican tech talent, the future of collaboration between these two nations has never been more promising. Want to start building your remote team? Explore the 2024 Mexico Tech Salaries Report or reach out to us today to discover how we can help you scale with ease.
