Nearshore Americas

How Does Guadalajara Do IT?

Relatively untouched by the recent wave of violence in northern Mexico, Guadalajara, capital of the state of Jalisco, seems like the promised land for those who still see big rewards in Mexican outsourcing. With a strong technology focus, the city of 4.3 million has over the years attracted some of the largest software development and IT engineering firms all looking for skilled workers. But with labor saturation fears mounting, whether even greater numbers of those workers can be produced is what will determine its future attractiveness. We spoke to some of the big tech players in Guadalajara to get the story on the ground.

Economic climate

Ranking fourth on our Leading IT Cities for Skilled Human Capital report, Guadalajara is the second largest city in Mexico, but largest in terms of GDP. Its economy is based mainly on commerce and services, with foreign investment being one of the primary catalysts of growth over the last two decades. FDI Magazine in 2007 ranked Guadalajara as most business friendly in Latin America, and it has become the main producer of software and electronic components in Mexico.

The city is home to a blue-chip roster of companies, most of whom operate captive centers in the area. Notable players are HP with over 1500 people providing IT support; Tata Consultancy Services (who we visited for an on-the-ground report last year),  IBM and Dell focused on infrastructure management services; Hildebrando for software services; and GE, Intel and Freescale Semiconductors that all operate design centers in the city.

Education system


The fact that all these companies are able to find the required numbers of technically trained labor, is frankly quite impressive and speaks volumes about Guadalajara’s education system. “The talent available here is very good”, says Mike Barrett, President of Unosquare, an IT consulting firm in Guadalajara, and a winner of our Red Hot Startups contest last year. “Universities are well rounded on both hardware and software engineering degrees, as well as infrastructure engineering, and produce many English speaking grads”.

Guadalajara is home to the second largest public university in Mexico, the University of Guadalajara, as well as several private ones like Tec de Monterey, Universidad Panamericana and ITESO – all with very reputed tech programs. There are eight universities in total, and consulting firm Neo Advisory estimates that approximately 3200 IT-specific graduates are produced in the city, out of 6500 general tech graduates annually.

English numbers – It’s not technical training that Guadalajara lacks, but English proficiency. Only the private universities teach in English, which means their grads are close to bilingual. But the real numbers are in the public universities, which are still slow to integrate English in their IT programs. “Right now we have a pool of good technical workers, but only a subset of them that speak English well. Most of us international firms require both”, says Enrique Cortes, VP of Dell Services for Latin Amerca. “Univ. of Guadalajara for example has a very good computer science program, but they don’t teach in English. Half my workers came from there, but they had to learn English on their own”. He manages a staff of about 600 in Guadalajara.

Public and private synergy


Apart from the English issue, Guadalajara is able to produce the kind of IT talent companies need mainly because of a system of cooperation between the universities and firms. “I am on the board of Tec de Monterrey, a highly selective institution”, says Cortes. “That’s common for others like me as well – we help them shape their future curriculum and suggest electives focused on what we’re looking for in employees”. Also helping with this is the Information Technology Institute of Jalisco (IJALTI), a council of the universities, IT firms and the government. Its role is to identify the requirements of companies and help integrate them into university programs.

“The government is working hard on the English issue”, says Abraham Ramirez, Business Development Director at the Hildebrando factory in Guadalajara. He mentions the PROSOFT fund by the Ministry of Economy that offers subsidized training for workers to make them employable for IT companies. “They provide 50% of the funds and we provide the other half for training of workers. It’s a very good program”. Ramirez has grown his staff from 100 two years ago to 450 at present. He intends to ramp up to 600 this year.

Attrition and multinationals

Guadalajara has also attracted a number of top tier Indian tech players. Tata Consultancy Services, Patni, Cognizant and HCL Technologies have all arrived in recent years looking for embedded systems and application development, and software testing services.

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When large multinationals enter a space in a short time, we usually see attrition rates turn skyward – but firms we spoke to say that’s not the case. “It’s true, we have been expecting it for the last 24 months, but it hasn’t happened yet”, says Cortes who earlier told us that he keeps a churn rate of 4%. We found that quite impressive, but apparently it’s not unheard of in Guadalajara. “Last year my attrition rate at Hildebrando was 5%. Usually for companies here it hovers between 5-10%”, says Ramirez. Relative to crowded cities like Monterrey or Mexico City, that’s a big attractor for firms.

One explanation may be that it’s not difficult to attract workers from those other Mexican cities, since the standard of living in Guadalajara is much better. Wages have also stayed relatively low – between US $400 and $800 a month for entry level IT programmers who recently graduated. But even if firms are not seeing hiring pressure now, they continue to expect it. As more large tech players turn up, it may be just a matter of time.

Tarun George

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  • There are professionals who have both the technical skills and languages but are unable to offer themselves because they just don't know where to turn. It is my belief Guadalajara has one of the best groups of human resources to run a first-class company, and it would be helpful if there were programs to beacon the opportunities when available.