Nearshore Americas

Demand for Talent is Red Hot in Mexico, Spurring Salary Spike

The pandemic accelerated the move towards a digitized global economy that was already well underway. The demand for tech talent, oversubscribed prior to COVID-19’s arrival, has been exacerbated further. Companies are battling to capture the best talent in a competitive market and as a result wages are rising. In short – the squeeze is on.

In March 2021, LinkedIn’s Talent Blog released a report on the “most in-demand jobs right now”, which gave a list of the roles with the largest month-by-month increase in posts on the site between January and February 2021. Of the 10 jobs listed, four were in the technology sector (security engineer [6], user interface designer [7], data architect [8], software engineering manager[9]). Meanwhile, half of the “jobs with the most demand overall” during February belonged to the tech sector with the software engineer role coming out on top. In the post, LinkedIn specified that “digital transformation initiatives are also driving the need for these roles” with companies “investing in all-things digital at a rapid clip due to the pandemic, including a shift toward meeting more customers online, an increase in developing digital products (as opposed to physical ones), and an investment in tools to make remote work easier for employees.”

Half of the most in demand jobs in February belong to the tech sector

In Mexico, the situation is no different. Here too, companies are desperate to snap up highly-qualified tech talent that the country’s private and public universities produce. For those techies that can offer both high-grade professional knowledge and fluent English capabilities, the job market appears wide open. The openness to remote work means U.S. and Canadian companies are happier than ever to look across the border for top-notch workers at a knock-down price. 

There has been a 400% increase in demand on tech talent according to Jesus Lozano

According to Jesus Lopez Lozano, Co-founder and CMO of San Antonio-based company CodersLink, a company that helps connect Latin America’s tech talent pool with remote opportunities, tech recruiters have seen a surge in interest from companies like retailers that have pivoted further towards digital channels as a consequence of the pandemic. This surge is causing the line between those companies that rely on technology to deliver their products and companies that use technology to complement their core offering to blur, said Lozano. And though Mexico’s technology talent pool was in high demand from the Nearshore industry before the pandemic, that demand has climbed fast – by a whopping  400%.

“A lot of companies are now crowding the space, hiring tech developers, engineers, and tech centers because they have a need that they did not have before. This is increasing four-fold the amount of requirements that are being submitted for these positions in Mexico,” Lozano told Nearshore Americas. 

Salaries on the Rise

A predictable outcome of this demand increase has been the rise in salaries amongt Mexico’s tech workforce. CodersLink’s Mexico Tech Salary Report 2021, which questioned 14,523 registered users and 149 partners, found that the average annual salary growth for tech workers in Mexico is 4.7 percent. In 2021, the average senior monthly net salary was US$4,968 compared to US$3,800 in 2019. The central region of Mexico containing the states of Mexico City, Morelos, Puebla, Tlaxcala, Hidalgo, Cuernavaca and Guerrero showed the highest increase over the national average salary at 27%. Jalisco, where the country’s tech powerhouse Guadalajara is located, saw an increase of 21%. Companies including Amazon, Oracle, Intel, HP and IMB have R&D and programming facilities in the city, the report notes. 

Remote workers’ salaries tend to be 38% higher than the average IT worker’s salary in Mexico, perhaps driven by the Nearshore connection. But Lozano believes that a major driving force behind Mexico’s successful pursuit of tech opportunities has been the involvement of specific state governments. “Local government in certain areas of Mexico have been providing incentives for companies to choose their location. Yucatan (where the emerging tech hub city of Merida is located) has been the most successful in offering tax and office incentives,” Lozano said. 

The major in-demand role across the tech hubs of Tijuana, Merida, Guadalajara, Mexico City and Monterrey is the full stack developer, the CodersLink report finds. 

Big Savings with Small Compromises

Labor arbitrage is, of course, among the primary reasons companies become interested in the Nearshore opportunities represented in Latin America. CodersLink found that the average net salary from all respondents, regardless of their position, was US$3,165 per month or US$37,971 annually in Mexico. Compared to US$10,154 per month or US$121,848 annually in the U.S., labor costs in Mexico are 67% lower.

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Mexico’s labor costs for tech workers are typically 67% lower than in the U.S.

In some specific roles, the labor cost saving is even clearer. CodersLink found that the average “intermediate-level engineer” data scientist net salary in Mexico is US$2,781 per month, or US$33,372 annually. This is compared to a study by U.S. staffing agency Robert Half, which found in its Technology Salary Guide 2021 that the midpoint salary for a U.S.-based data scientist is US$129,000 per year. 

Despite this huge cost saving, companies may pause for thought when they consider that hiring Mexican talent may mean living with small inconveniences. The slight time disparity between Mexico’s major tech hubs and those in the U.S. could offer some minor hurdles when quick fixes are required. Similarly, talent who do not possess completely English fluency could cause communication issues. But for Lozano, these concerns pale in comparison to the benefits a company receives when outsourcing tech positions. The sheer size of the talent pool in Mexico means competitive companies should be able to find the skills they need. 

“Mexico’s talent pool increases every year and at a faster rate than the U.S.,” Lozano explained. “In Mexico, 130,000 engineers graduate every year against 100,000 in the U.S. There are approximately 700,000 tech talents in Mexico today. That’s an awful lot of folks.”

Peter Appleby

Peter is the Managing Editor of Nearshore Americas. Hailing from Liverpool, UK, he is now based in Mexico City. He has several years’ experience covering the business and energy markets in Mexico and the greater Latin American region. If you’d like to share any tips or story ideas, please reach out to him here.

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