The average back-end developer in Mexico City makes just under $25,000 a year, according to research performed by Nearshore Americas. This is slightly higher than in markets like Guatemala, but otherwise the salary level highlights a major advantage of the Mexican capital when it comes to software development.
Behind the Data
Two features accentuate Mexico City’s advantage over nearby markets. First, the labor market in Mexico City is one where fewer and smaller bonuses prevail as compared to the other markets. So, when overall employee costs are factored in, Mexico City’s advantage over other markets increases. This is especially true when comparing Mexico City to Costa Rica, where regulations and bonuses drive up the cost of employment significantly.
Second, Mexico City’s wage competitiveness is not the result of lower wages for entry-level programmers. Actually, it’s quite the opposite. The entry-level salary for back-end programmers in Mexico City is on par with those in Monterrey, Costa Rica and Guatemala; only in Guadalajara does the typical junior-level back-end developer earn significantly more.
Rather, Mexico City’s advantage emerges as you go up the experience ladder. At the mid-level, which for the sake of the study we define as 3-5 years of experience, a back-end developer in Mexico City makes just below $25,000 a year. That’s 13% below the same wage level in Costa Rica and nearly 25% below the wage level in Guadalajara. Guadalajara’s salaries skew toward the high side for back-end developers, but this is not the case for other IT jobs.
Finally, when it comes to senior-level back-end developers, Mexico City is the only market in the region except for Guatemala where back-end developers consistently make below $30,000 a year.
Although Mexico City is widely perceived to have a higher cost of living than Mexico’s industrial cities, wages for several types of programmers are lower on average in the capital than those found in Monterrey or Guadalajara. A few factors are at work. Skilled talent is in relatively ample supply in the capital, thanks to the numerous universities, not to mention a blossoming start-up culture. This may be helping to keep wages competitive.
Also, unlike Guadalajara and Monterrey, where major multinational firms account for a larger share of programming positions, small-to-midsize firms dominate in Mexico City. And many of these firms reported paying salaries in pesos. Given the peso’s decline in recent years, dollarized wages have also decreased.
During the last two to three years there has been a strong wave of interest in Mexico outsourcing from Silicon Valley. Much of this attention has been directed toward Guadalajara. However when investors take the time to further investigate other options outside of Jalisco, they are often pleasantly surprised by the value offered in the greater CDMX metro area. We expect this value dynamic to continue for the foreseeable future.
Need solid data and expert guidance in your evaluation of Nearshore locations and partners? Reach out to Nearshore Americas Advisory services