Can Mexico Really Become Number Two in the World?
March 11th, 2010By Kirk Laughlin
Picture this: Over the next four years Mexico rises above China, the Philippines and Brazil to claim worldwide recognition as the second largest outsourcing hub in the world, behind India. Delivery centers in Guadalajara, Monterrey and Mexico City become service-focused powerhouses for thousands of American businesses. Enabled by the free-moving benefits of NAFTA, offshore provider professionals traverse back and forth between Mexico and the US, free of the visa burdens that might slow rivals in other Latin American countries and others from around the world. Could it really happen?
If you ask the top executives in the Mexico outsourcing industry, the answer is a confident – ‘yes, we can do it.’
Alfredo Pacheco, the CEO of MexicoIT
Alfredo Pacheco, the CEO of MexicoITThe Mexican government and private industry are clearly trying to stay coordinated and seize this important ranking. The tech sector in the country is growing at a pace of at least three-times faster than the annual gross domestic product, according to Alfredo Pacheco, the CEO of MexicoIT, a trade promotion group, who sat down with Nearshore Americas for an interview earlier this week in Mexico City.
Mexico can clearly boast about its “growth story.” The country exported about $2 million in IT services in the year 2000. This year, Mexico expects to export $3.5 billion, with 85% of that going to the US. Close to 25 Mexico IT firms have established on-shore offices or facilities in the US, many of them in Silicon Valley.
But what about that challenges?
Violent crime, as much as it may be isolated in the border areas and in “no go” sections of large cities, still remains a major perception issue for the country. “The government is committed to tackling this issue and be up front with it,” says Pacheco. “And I think the government is doing a pretty good job.”
Other challenges include English proficiency, overall costs vs. India and working with existing labor laws.
On the English question, the government continues to offer grants to providers who oversee training in English and other disciplines; on cost, Pacheco estimates that indeed Mexico is probably about 10% higher on average that India (note: our estimate is more like 15-25%); and in terms of labor, there is growing awareness through Mexican society of the rich benefits in the tech sector, especially at a time when Mexico’s manufacturing sector continues to decline.
Finally, Pacheco indicates MexicoIT and other government and private trade-promotion groups are driving more of their focus on creating service expertise in distinct vertical industries, specifically in finance, multimedia, healthcare and BPOs.
Despite Mexico’s rise, it’s important not to completely count out Brazil. The president of Brasscom, Antonio Gill, recently said that Brazil has a legitimate shot at second place. But with a vast domestic market, will Brazil be as inclined to promote its sourcing industries the way Mexico is?
By the time the World Cup 2014 arrives, we will all know the answer.
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