The Monterrey Revival: A Stalwart Outsourcing Hub Buzzes with New Investment

By Tim Wilson The city of Monterrey in the state of Nuevo León, Mexico, is seeing a revival. Already the city with the nation’s highest per capita income, …

monterreyBy Tim Wilson

The city of Monterrey in the state of Nuevo León, Mexico, is seeing a revival. Already the city with the nation’s highest per capita income, Monterrey is seeing new investments by high tech firms looking to take advantage of its skilled workforce and close proximity to the United States.“Monterrey is on the right track,” says Guillermo Safa, the Director of the Software Industry Council of Nuevo Leon, known as Csoftmty. “Manufacturing exports, automotive industry growth, bank stability, as well as activity in other sectors are important factors for our current success.”

Proof of the increased activity is the membership growth in Csoftmty itself. Two examples: Alestra and SiS Organización. Alestra was the first telecom operator in Latin America to expand its network capacity by adopting DWDM (Dense Wavelength Division Multiplexing), and is continuing to invest in latest DWDM infrastructure. SiS Organización, founded in 1987, is an IT company focussing on vertical markets such as finance, retail, construction, and telecom.

“Companies like these need a range of software development, analysis, design, and testing skills,” says Safa. “This includes application maintenance, enhancements, and ITO related services such as desktop and application support.”

Monterrey has the workers with these abilities, as well as those “soft” skills that lend themselves to advanced project management, English language – both written and verbal – and human resources capabilities.

“In the case of SiS Organización, for example, we see human capital with experience in projects involving enabling technologies such as Microsoft, HP, Eternity, SAS, IBM, Oracle, Ultimus, Microstrategy, and BMC,” says Safa.

That’s an impressive list, and helps explain why local sales number for IBM and Microsoft are on the upswing, and why over 2,400 foreign companies have established operations in Monterrey. It makes sense: Monterrey has more than 200 weekly non-stop flights to major US cities, with well-established cross-border access to the world’s largest market.

Technology from the Ground Up

Often when discussing the appeal of a nearshoring location the discussion is top-heavy: the focus is on policy, infrastructure, and education. But equally as important is a can-do culture of business – and technology-savvy entrepreneurs. Monterrey’s 4.4 million citizens have that in spades.

Proof is the recent “hackathon” in Monterrey, held May 25 and 26, in which two winners will win a trip to Silicon Valley in September for the opportunity to land $100,000 in start-up capital. This is a first time for the event in Mexico, which is being held around the world in 30 cities –including Mexico City – with approximately 900 developers participating.  Of those, 150 are expected to be in Mexico.

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“This is a very positive development for Mexico IT professionals,” says Safa. “They are showing the worldwide IT market their ability, and their interest, in handling current technologies and embracing new ones.”

Monterrey, which is considered a “Beta City” – in effect, a critical urban node in the global economic system – supports a wide range of advanced industries, all of which require technological support. And this support is best served when there is a healthy culture of young innovators able to develop projects, as is exemplified by the Monterrey hackathon.

“The idea is that, over two days, the participant will develop one project,” Eduardo Ruiz Esparza, National VP of Telecommunications at CANIETI, Mexico´s Technology Chamber, told Mexico’s El Financiero. “It doesn’t have to be 100% complete, but the overall idea has to be very clear.”

Javier Rodríguez, the president Nuevo León’s IT Cluster (Cluster de Tecnologías de la Información de Nuevo León), added that students who have not yet developed their own businesses could in turn find work with sponsoring companies.

As well, the northeastern chapter of CANIETI has signaled that, in addition to the winners, two projects could be incubated by mobile media application developer Naranya, and another two by Tecnológico de Monterrey, a leading technology college in the city.

“Our IT professionals are showing through these global events that they are capable of applying the latest technologies to high availability projects,” Safa from Csoftmty told Nearshore Americas. “And we are proving it in a variety of industries, such as banking, insurance, and retail, among others.”

Certainly, the solid numbers coming out of Nuevo León have earned the state capital Monterrey some bragging rights. The software industry alone provides direct employment to 12,000 people in the state, and puts $500 million into the economy. And that number is expected to grow significantly by 2016, to 20,000 people and $1.1 billion.

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