Mexico is Constantly Improving Nearshore Services to the United States

Mexico’s offshore outsourcing services are consistently getting stronger. The financial benefits provided by these services are having an impact on the economies of numerous countries, which is why …

Julio Barajas, IT Services Analyst, IDC Mexico

Mexico’s offshore outsourcing services are consistently getting stronger. The financial benefits provided by these services are having an impact on the economies of numerous countries, which is why Mexico will continue to see significant growth in the outsourcing of IT and BPO services.

The annual rate of projected growth from 2013 to 2018 for offshore outsourcing services on a global scale is 10.8 percent, with the United States, the country contracting the most outsourcing services, seeing 66 percent growth in 2013. It is hoped that by 2018, Europe – the second most important region when it comes to contracting outsourcing services – will increase its global participation from 29 percent to 34 percent.

In the United States the two segments contributing most to the growth of this market are Application Maintenance Outsourcing (thanks to the need for businesses to unify their software platform portfolios) and Infrastructure Outsourcing (which is benefiting greatly from the growing faith placed in outsourcing services, as businesses are outsourcing ever more important projects to external data centers).

Mexico’s Strengths

It is worth noting that Mexico is making a name for itself in the aforementioned sectors. This is thanks, in part, to the implementation of new infrastructure and delivery centers.  Mexico’s proximity to the United States, the benefits afforded by working in the same time zone and the Mexican workers’ strong command of the English language have all helped it to become one of the best nearshore IT center options.

The availability of skilled labor and the advantage of competitive costs are key to Mexico’s strengths.

Data from the Ministry of Labor reveals that in 2014 there are 301,551 professionals trained in ICT and of these 87% are currently employed. The availability of IT talent in Mexico contrasts with the United States, where the Department of Employment and Education projects that by 2020 there will only be 400,000 people available to fill 1.4 million jobs in IT.

It is not surprising therefore that, over the last four years, many leading, multinational businesses have established and expanded their service centers within Mexico.  These include several Indian providers who have entered the country to establish their own nearshore delivery centers and benefit from the aforementioned competitive advantages.

National universities such as the Monterrey Institute of Technology and Higher Education (ITESM) have also played a key role in this growth as they have provided the installations and professional resources these businesses need in order to start operating in Mexico.

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Key Services

Other players offering delivery center services have a sufficient presence in Mexican territory to be able to offer Application Management, Application Development and Infrastructure and BPO services. As far as the offer of infrastructure services is concerned, Mexico currently has around 30 data centers with low latency towards the United States. Of these, the vast majority provide infrastructure outsourcing services, whether for accommodation, administrative services or clouding.

Mexico is also improving when it comes to outsourcing BPO procedures.  This is, in part, down to the arrival on the market of several internationally renowned service providers, as well as the incursion to this segment of providers already established in Mexico, and the funding received from local businesses.  This year, we are seeing how businesses that previously only got involved in the outsourcing of transaction procedures or back office procedures (such as the financial transaction sector) are gradually starting to get involved in outsourcing human resources (nomination and/or selection) and client services.

What Next?

In the future, it is hoped that businesses become more and more open to delegating important projects to outsourcing services.  New developments, such as Business Analytics and Big Data will be the driving force behind the growth expected for the large BPO contracts.

Willingness on the part of many American businesses to make use of process and data migration will be a determining factor that will continue to impact upon this trend.  However, the quality of the Mexican work force, the significant financial advantages on offer and the constant supply of IT talent will be the main factors contributing to maintaining the rate of growth Mexico has sustained up until now.

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