Nearshore Americas

Overlooking the Potential of Mexico’s Underdeveloped Areas is Short-sighted

Mexico is widely accepted as one of the leading nearshore locations for IT and BPO work, but there is great disparity from one part of the country to another in terms of development. Investment is concentrated in internationally renowned tech hubs like Mexico City, Monterrey, Guadalajara and Queretaro, while great swathes of this vast country are ignored by investors, recruiters and the government alike.

Proponents for the expansion and diversification of the nation’s tech landscape argue that it would generate a healthier market, allowing employers to tap into the potential of a wider talent pool, while also bringing greater socioeconomic opportunity to underprivileged parts of Mexico. However, greater investment in education and basic infrastructure may be necessary before some areas are able to capitalize on the opportunities presented by new technology.

Widening Mexico’s Talent Pool

“In order for Mexico to become a developed country in the next 15 or 20 years we need to develop our capacities and our talent,” said Carlos Mota, a respected journalist from El Financiero newspaper, during his speech on the nation’s economic panorama at the FutureSource Summit in Mexico City last November. Diversifying Mexico’s talent base and investing in the poorer, more remote and overlooked parts of the country is key to unlocking the nation’s potential, Mota said: “There are many good universities in a few cities like Mexico City, Puebla, Monterrey and Guadalajara, but there are no good universities in the states of Campeche, Torreon, Matamoros, Chiapas or Guerrero. Who knows how much talent there is there that we’re not developing.”

Mexican citizen Manuel Lopez, whose role as Global IT Director at Gowan Company includes “developing talent to support the future growth of the organization,” agrees that Mexico must do more to develop its talent beyond the more established locations. “We’re located near Baja, California but there’s not a whole lot of infrastructure or IT talent so I always have to go to Monterrey or Mexico City. One of the things I want to do is promote the idea that companies invest in other cities,” he told Nearshore Americas.

Lopez believes – and his experience has shown him – that there is great potential in some of the more off-the-radar locations like Mexicali in the north, Tlaxcala in the center of the country and the Yucatan peninsula in the southeast. Just over a decade ago, he hired a team of university graduates who had come through an Oracle development program in the poor state of Tlaxacala. “They were very inexpensive, very dedicated, wonderful guys,” he said. “I think that’s the secret: companies and the government putting money into developing guys in these places, so people who would otherwise become farmers can now become great technicians.”

In order to take advantage of Mexico’s untapped potential, Lopez said he tries to hire from small, local universities, where he often finds people who have moved from even more remote areas because they could not find work there. “There are a lot of universities and small towns that have people who are willing to learn and get technologies but they don’t understand these latest technologies. So big companies like Cisco, Oracle, SAP and Microsoft should be teaching these guys,” he said.

The government should also invest more in these areas, Lopez added: “Instead of investing in the same cities they should put the money in the cities that are undeveloped. Like in the United States if you go to certain areas that are undeveloped they give tax breaks, so the government is able to provide infrastructure for the universities or find companies to invest in talent. That’s the most important thing: the talent that’s available and can be developed.”

IT Cluster Struggles for Funding

In some cases, persuading the government to invest is easier said than done. Raul Paredes Trinidad, President of the nascent Chiapas IT Cluster, said that the Chiapas state government has refused to back investment in the technology sector.

Formed two years ago, the Chiapas IT Cluster is comprised of eight small tech companies focused on serving or producing products for industry, renewable energy and tourism. During its first two years, the cluster has received just “$2 million pesos (US$137,000) in federal resources for consulting, planning and implementing our strategy, plus $1.2 million pesos (US$82,000) from a business in Mexico City for our feasibility study,” Paredes said.

The funds made available by the federal government came from a World Bank program to support clusters and were released through Mexico’s Program for the Development of the Software Industry (PROSOFT) and the National Council of Clusters. However, Paredes said PROSOFT was only responsible for supplying 75% of the funding, while the remaining 25% was meant to come from the state government. “There are many political barriers. The state government does not seem to be very interested in supporting us,” Paredes explained. “The federal funds are ready but the state government is supposed to cover 25% and we have no idea when that’s going to happen. These are the kinds of problems we’re constantly facing.”

Elsewhere in southern Mexico, there has been a similar lack of development. “The reality in the south of Mexico is very different to the reality in the north and the center of the country,” Paredes said. “There aren’t any clusters working in the states of Tabasco, Campeche or Quintana Roo as far as I know. In Veracruz they’ve just reactivated a cluster that hadn’t been operating in the last few years. Oaxaca is about to open its own cluster, while Merida (in the state of Yucatan) has the oldest cluster in the country, but they’ve had a lot of political problems too.”

Making Use of Technology

Home to a large indigenous population, Chiapas is paradoxically the poorest state in Mexico but the richest in natural resources. It is also a popular destination for both foreign and national tourists, who flock to see the spectacular Mayan ruins of Palenque, the gorgeous colonial city of San Cristobal de las Casas, and the large swathes of lush rainforest full of spectacular lakes, towering waterfalls and the breathtaking Sumidero Canyon.

Full of popular tourist attractions such as Palenque, Chiapas was once home to ‘Mexico’s Silicon Valley’: the Mayan empire.
Full of popular tourist attractions like the ruins of Palenque, Chiapas was once home to “Mexico’s Silicon Valley: the Mayan empire,” Paredes said.

“There are many opportunities in Chiapas to develop technology focused on tourism,” Paredes said. “This opportunity has been completely overlooked. There are tourists that come to places like Tuxtla Gutierrez, San Cristobal de las Casas and Palenque and there are many ecotourism centers located in the Lacandon jungle or other regions where you can explore nature tourism, but people don’t know about these places so we’re developing a project aimed at spreading information about them.”

Paredes continued: “The tourist sector would benefit from greater investment. Many people here live from tourism but they haven’t been able to take advantage of these opportunities because they don’t have the training or the technology. For example, we’re working with a resort called Tres Lagunas in the Lacandon jungle and they don’t even have Internet there so the reservations have to be made by telephone. This means they’re missing out on potential customers. These issues can be solved easily using technology but it’s not being done.”

But are poorer states like Chiapas ready for an influx of modern technology? Guillermo Ortega, co-founder and COO at iTexico, an Austin, Texas-based software development firm with a delivery center in Guadalajara, believes that certain preconditions must be in place first. “It makes sense to bring technology to underdeveloped areas because it can help them to build a better economy,” Ortega said, but only if there is a “stable and active economic base” on which to build. “What happens if you create an app to monetize the harvest in the countryside, or if you create software for small grocery stores? It sounds great, but the farmers or the shopkeepers and their clients do not necessarily have the means to benefit from them,” Ortega explained. The government must first invest in basic infrastructure and education as “part of a wider plan for economic development in these regions,” he said.

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Mayan Innovation

Nonetheless, given funding, training and employment opportunities, Paredes is convinced that Chiapas has the potential to prosper. “We have the human capital, but the people have to go elsewhere to find work. We’ve had very good feedback from businesses and research centers in other states regarding our developers from Chiapas,” he said. “I’m convinced that we’d be working wonders in Chiapas if we’d received just five percent of all the resources that they’ve given to places like Guadalajara.”

However, he recognizes that it is up to the people of Chiapas to start creating an impulse for change. “I think we need to find more projects for our businesses. Because without projects we cannot generate more employment, and the developers have to leave to find work,” he said. “One of the most important challenges that we face is how can we create the right links and meet the requirements so that we can offer outsourcing services. Because we know we have the capacity but there are certain barriers that we have to overcome.”

Among them are cultural barriers, that the people must work to overcome, Paredes said. “The mentality of the people in Chiapas has been one of very low self-esteem and now it’s beginning to change a little as we realize that we have many great qualities,” he explained. “As a businessman from the tourist sector told me, ‘A long time ago we built the Silicon Valley of Mexico: the Mayan empire.’ We developed technology that didn’t exist anywhere in the world, so we already carry this aptitude for innovation in our DNA, but at some point in history we fell into depression and subjugation. We need to reactivate this DNA that we carry in order to compete and fully develop the capacities of the people of Chiapas.”

Duncan Tucker

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