After 2020, the world has been living in a new era where the global supply chain is in constant crisis, proving the vulnerabilities of offshoring manufacturing activities. With borders closed, trade and access to products, materials, and services became complicated or delayed. In some cases, impossible. Nowadays, supply chain adaptability and risk management are more demanding than ever. The global market changes in delivering goods and services give companies opportunities to look for new ways to conduct their businesses. On this topic, diversifying sources of supplies may be the best call to reduce risk. Having all the eggs in one basket has proven once again to be an inefficient approach, particularly under the light of recent events. The pandemic, the trade rift between the US and China, and the Ukraine-Russia war, are only a few examples of situations that crossroads the global market, affecting prices and the access to certain goods and services, increasing the need to look into other regions to fulfill their needs.
In this context, Nearshoring has proven itself as a successful working model used by multiple companies in the US since the 1990s. It is an excellent option for companies looking forward to improving their productivity and agility, reducing the time-zone related inconveniences in a cost-effective model.
Latin America is a thriving region that has been part of the nearshoring game for goods and manufacturing for a long time, particularly Mexico. And recently, this part of the world has been strongly investing in new digital infrastructure, which aligns well with the government’s goals to produce a higher number of software engineers by working with universities in developing new and updated programs. As a result, US companies are more willing to start nearshoring software development to Latin America, especially Mexico, Argentina, and Brazil.
Between 2006 and 2012, Mexico improved its educational offerings for computer sciences. In this period, its IT graduates increased by 6%, which translate to approximately 130,000 new professionals (more than Canada or Germany) for the software development industry, with focus on latest technologies, coding languages, and best practices.
The newest regulatory reforms have simplified business operations with Mexico, currently ranked as the top exporter of high-tech products in Latin America, according to World Bank data. Another natural advantage for nearshoring software development to Mexico is its proximity to the United States, which facilitates real-time communication.
Besides the access to a talent pool of software engineers, their capability to quickly adapt to new projects, commitment to deliver quality results, hard-work culture, and familiarity with the way businesses are conducted in the US, are added values to take into account.
Nowadays, cities like Monterrey, Guadalajara and Mexico City, are home to some of the largest companies in the tech industry, such as Oracle and Intel. This way, Mexico has become one of the most reliable places to access high-educated and qualified engineers.
It is well-known that Asian countries, like India, China, Philippines, and Vietnam, offer lower rates for software development. And while this is enticing for many companies, it is important also to consider other factors that could potentially become a considerable hidden cost, like the time and effort spent in coordinating and communicating with a team that works in a different schedule, or the risks related to copyright protection, which is not always strongly regulated in these countries.
For businesses looking forward to reducing labor overhead and improving efficiency, nearshoring is a much better option. Having partners closer to home definitively minimizes risks in many ways, and the cultural affinity between Americans and Latin Americans as a result of being next door neighbors for centuries, facilitates communication and a good teamwork environment.
Why nearshoring software development to Mexico?
Because it is the smartest choice! Mexico is a promising economy ranking as #15 in the world for direct investment, with a growing number of worldwide investors with a hard commitment to improving business operations related to technology. Likewise, its thriving workforce is something to think about, with over 800,000 STEM graduates per year, high English proficiency levels, and high cultural affinity to the American culture.
Another fact to consider is the latest US policy: “at home first”. It can result in 33% of supply chain leaders leaving their business from China by 2023, representing an opportunity for nearshoring goods and services to Latin America. Regarding software development, 87% of IT leaders are considering nearshoring, either to increase their workforce or to start doing it, according to a Deloitte survey.
Also, American companies don’t have to worry about topics like IP protection or corporate espionage when nearshoring software development to Mexico. Trade agreements with the United States include provisions that allow sharing information within a risk-free legal framework.
Ultimately, connecting with software development teams close to home is a very attractive solution that can make a big difference in your business’s success: real-time communication, a larger talent pool and remote teams working on a difference from 0 to 3 hours of overlap is something to give a chance to.