If you suffer from the vague impression that outsourcing IT work to Mexico is a bad idea because of one perception or another — personal security issues, lack of technical expertise, afternoons squandered by siesta time — you should re-consider. A new ranking of nearshore sourcing locations puts Mexico at the top of the list, ahead of countries known for their IT sophistication like Brazil and Argentina.
The folks at ThinkSolutions, who developed the report, "Latin America's Best Nearshoring Destinations," say it's "no surprise" that they chose Mexico for the #1 slot. They cite reasons that won't surprise most people who've been working with IT partners in places like Guadalajara. "With an important economy so close to the U.S., it's natural that Mexico be a player in the global market for outsourcing services," they say.
The factors they looked at that resulted in Mexico's high rating include cultural affinity with the U.S., which some experts say is the most important feature of nearshoring. John Parkinson, chairman of ParkWood Advisors and a man with 35 years in the IT and consulting business, puts it bluntly: "If you don't have cultural alignment, it doesn't matter how cheap your workers are."
ThinkSolutions points out that Mexico has "expensive wages," but suggests that cost is balanced out by other positive factors, including strong command of English. In a recent study of "enterprise-level English skills" by GlobalEnglish Corp., Mexico scored 4.07, a little below the world average of 4.47 but comparable to most other Latin American countries and better than Brazil and Chile.
Another advantage mentioned is the ease of doing business in Mexico. The country ranks highest, or "easiest," in all of Latin America, according to the annual study by the World Bank. Although bemoaned by many, NAFTA has given Mexico some trade benefits no other nearshore nation currently has.
Then there's the IT talent. According to ThinkSolutions's tally: "Mexican IT outsourcing has already reached its tipping point with over 2,000 IT companies, 550,000 trained IT professionals, and a growing labor pool. More than 64,000 IT professionals graduate each year from 121 technology-focused universities – more than any other Latin American country."
That talent includes specialized capabilities. "Within Mexico, different regions demonstrate various niche skills, so an experienced provider is readily available for almost every kind of service," ThinkSolutions says.
This topic came up at a recent BPO investment forum in New York City, where speakers pointed out that parts of Mexico, like Jalisco state, have a large population of people expert in things like chip design and embedded systems. This is where India loses its bottom-line advantage.
As Enrique Cortes of Dell Latin America said at that forum, cost savings in India are greatest for lower-level staff, but “as you go up the scale to project leaders and highly sophisticated software developers, that’s very little difference between India and Mexico.”
The country has also made an effort to build a strong tech policy, as Claudia-Ivette Garcia of the Ministry of Economy explains in this video interview. That policy is resulting in an influx of investment dollars, particularly in the BPO space, Ms. Garcia says.
There's one other factor not mentioned explicitly by the developers of the new rankings. That's Mexico's affinity for hard work. While Mexico is known to some outsiders as the land of siesta, it is apparently the rest of us who are napping. In its study of "Who's busiest," the Organization for Economic Co-operation and Development found that the hardest-working people in the world are in Mexico.
"Mexicans work longer days than anyone else in OECD countries, devoting 10 hours to paid and unpaid work, such as cleaning or cooking at home," they found. The study also found that despite high levels of poverty in their country, Mexican people "report the third highest positive psychological experiences (feeling rested, smiling, learning, and enjoyment)."
There's something to be said for hard work and a positive spirit, whether you're picking crops or building cars or writing code.