IT Outsourcing: Is Mexico the new India?
Over the last decade, with the explosive growth in outsourcing to India, many daunting new challenges have arisen. Not only is India no longer the least expensive option, but also the talent pool there is rapidly diminishing, rates of attrition are spiking dramatically, and the time zone difference once considered an asset, is now widely seen as a liability in today’s Agile development environments.
These challenges have created a shift in the demand of IT services to “near shoring” - to the countries of Central and South America; services that India became famous for: software development, engineering, maintenance, tech support, quality assessment, bug fixes, and so on.
While companies have focused on Costa Rica, Argentina & even Chile in the past, they are rapidly discovering the closest, most obvious choice: outsourcing to Mexico. The IT sector in Mexico is mature and globally competitive. Because of its proximity to the US, same time zone, and ease of travel (over 300 flights go from the US to Mexico every day) American companies can more easily work with their IT teams in Mexico. NAFTA membership provides an added advantage, in that intellectual property rights are protected along with a free flow of goods and services. Additionally, there are no travel restrictions between the USA and Mexico, as there are with India (foreigners can only make one trip every 60 days).
Mexico has positioned itself as a highly competitive destination to outsource IT development, and the Government is motivated to increase their share of the tech industry. In 2002, they launched a program to promote Mexico's technology industry and the goal was to increase it to over $15B annually by 2013. Since that time, they’ve built three technology parks: Monterrey Technology Park for multinational companies; Apodaca Technology Park, and Guadalajara Software Center, which is located in the center of Mexico’s “Silicon Valley.” This move has already paid dividends, as evidenced by several new companies that have formed, focusing on everything from Game development and Animation to Enterprise Software, Cloud Computing, and IT Services.
Unfortunately, the constant news of drug violence that permeates our media has negatively impacted our perception. The fact is that the violence is localized to mainly border areas, while the IT outsourcing hubs have not experienced anywhere near the level of violence that plagues the border cities (Juarez, Nuevo Laredo, Nogales, etc.). In fact, only Juarez made the top 25 most dangerous cities for off shoring according to CIO Magazine (and note that two cities in India are in the top 10).
Our company (ITexico), with headquarters in Austin has a software delivery center in Guadalajara and recently a New Delivery Center in Aguascalientes--a refreshing trip as opposed to India--trust me. With outsourcing companies growing tech talent and untapped potential, the outsourcing development services to Mexico is a viable option and is worth further consideration.
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About Anurag Kumar
Anurag Kumar is the CEO of ITexico. He is a serial entrepreneur, angel investor, and business coach. Over the least 29 years he has founded 4 technology companies in US, raised venture capital and has been the CEO of two IT services companies based in India. In addition, he has held management positions at IBM, Dell and KPMG He lives and works in Austin, TX. He can be reached at email@example.com
This article was originally written by Anurag Kumar CEO of iTexico and updated to keep it relevant and fresh to the audience.