Use of Contracted Labor Grows as Mexico Grapples With Surging IT Skill Demand

With over half a million IT professionals, the size of Mexico’s labor pool has long been one of the country’s primary selling points in the Nearshore market. But is finding IT talent in this labor pool shooting fish in a barrel, or are top IT professionals more of a drop in the ocean? To find out, Nearshore Americas spoke to a Mexican headhunter who specializes in seeking out top IT talent.

Maria Eugenia Alemon has worked in Human Resource for 20 years, the last eight of which have been spent as a freelance headhunter working in an IT sector, which, she says, is now changing rapidly. The driving force of that change has been the search among IT companies for greater flexibility in the labor market, she says.

“Permanent positions are very scarce today and have been over the last year,” said Alemon. “Basically, companies are contracting for temporary projects using temporary work schemes, and this has created a floating IT population.”

This move towards temporary contracting has brought benefits but also significant drawbacks for both companies and workers, according to Alemon.

“The good thing I see in the market at the moment is the flexibility this culture has, both on the part of the candidate and on the part of the company,” she said. “This can be a strength because it allows companies to create more opportunities and for the candidate it helps them gain experience and there are more job opportunities.”

However, finding the right people for each new project is a challenge. “It is a lot of work finding talent with exactly the right qualifications – people with experience and training that matches the companies’ demands – which are very precise,” said Alemon.

Lack of Investment in Human Resources

This has created something of a paradox. Despite high demand from Mexico’s thriving tech sector, and high supply from the colleges and universities, which churn out 90,000 IT graduates a year, there are both large numbers of unemployed tech workers and simultaneously a shortage of talent sufficiently skilled in the specialized areas companies require to fill positions on temporary projects.

“This year, demand for IT personnel in the labor market has grown but so has unemployment,” said Alemon. Responsibility for the recruitment bottleneck lies with the companies, who favor the short term benefits of flexibility over long term investment in human capital, according to Alemon.

“Companies don’t want to invest in training, they want to contract people that are already experienced and qualified, and that precisely meet their expectations,” she said.

“This is bringing us a lot of problems as headhunters,” she added. “It makes it difficult because we have too many people out there but unfortunately we don’t have people with the correct qualifications.” The move towards temporary contracts has also left many workers in a vulnerable position. “A lot of people are wandering from one project to the next with really high levels of instability,” said Alemon.

Supply and Demand

The issue of high demand, high supply but continuing recruitment bottlenecks predominantly manifests itself at operational levels, rather than in management levels, said Alemon, where the challenges can be more simple but even greater. “At the levels of mid-management and executives there are very low levels of supply,” she said. “Sometimes the positions are permanent, other times temporary – but there is a lot of demand.”

The impact of the phenomenon also varies regionally. Alemon identified the tech hubs of Monterrey and Mexico City as having both high demand and high supply, while in “Mexico’s Silicon Valley” – Guadalajara – there are now serious labor shortages in the IT sector, she said.

Overall, Alemon believes this new, flexibility focused working culture is an import from the world of international commerce. “All of this responds to the new business strategies of national companies, with the influence of the schemes that international companies have.”

According to Alemon, it is only over the last year or so that these shifts in practices have begun to changing Mexico’s recruitment dynamic. This not only means the situation is still very much in flux, it also means companies, workers, and headhunters alike have the opportunity to help direct the process to a new model beneficial to all.

“We are implementing a new culture – a culture in terms of the type of contracting, in terms of the ways of meeting a company’s requirements,” she said. “And we have to mould it into the correct shape.”