By Nathaniel Parish Flannery
With a population of nearly six million and a surface area roughly equivalent to the size of Maryland, Puebla is a center of economic activity. The state’s capital sits nestled in the mist covered hills, a two hour car drive away from Mexico City. Puebla has solid transport and telecommunications infrastructure and is expanding on its sizable industrial base and building itself up as a business process outsourcing (BPO) hub. Home to North America’s largest automobile factory, a Volkswagen facility that employs 15,000 people, Puebla has a strong contingent of engineers and technicians. Nearshore Americas visited Puebla in July to assess the state’s capacities as an information technology (IT) and BPO center. While lesser known for outsourcing than cities such as Guadalajara, Monterrey, and Mexico City, Puebla has a strong industrial base that a number of entrepreneurs are using as a launching pad for business process exporting companies.
Edgar Moreno, a public policy analyst from Impacto Social Consultores, who grew up in Puebla, explained “the state has huge strengths in high skilled workers. Five of the top hundred universities in Latin America are based in Puebla, all of them offer several options to pursue careers in engineering, communications, and technology.”
“Plus the incumbent governor is promoting pro-business regulations and working to attract more long-term, capital-intensive, and high-tech investment projects to Puebla,” Moreno added.
Puebla’s capital city, with 1.5 million residents, is the fourth largest metropolis in Mexico. Situated on the trade route between Mexico City and the port of Veracruz, Puebla was designed and built up by the Spanish during the colonial era. Many of the city’s historic buildings still stand, but today trucks carry automobiles and auto parts along the trade route between the coast and Mexico City. Overall, industry accounts for about 80 percent of Puebla’s economic output. Ulises Mejia, the CEO of Evolucione, a human resources and payroll outsourcing company that directly employs 100 people and pays 2,000 contract workers in Puebla, said that there are opportunities for outsourcing in the automotive sector. “We have Volkswagen and Audi here.”
Solid Economic Base
Puebla is located in central Mexico between the port cities of Veracruz and Acapulco. Over the course of the late twentieth century, Puebla emerged as an automotive industry heavyweight. In May 2013, Audi announced a plan to build a $1.2 billion facility in Puebla, the company’s first factory in North America. Puebla’s capital city, a high-altitude metro center with a temperate climate, has modern infrastructure and roads and a broad array of historic colonial streets and parks.
Juan Pablo Jimenez, the head of the Puebla office of Mexico’s federal government’s Ministry of Economy explained, “Puebla has enough strength to develop a strong service outsourcing and business process outsourcing sector.” The city’s well-preserved central square and world-renowned cuisine draw in tourists from throughout Mexico and around the globe. Although some parts of Mexico have experienced significant problems with security and criminal violence in the past few years, Puebla enjoys a relatively high level of public safety. Unlike some industrial cities to the north, Puebla is not home to a major rift between rival organized crime groups.
Fernando Macias, CEO of Validata, a company with a sales office in Austin Texas that runs an operation with 500 employees in Puebla and 300 in Mexico City, providing document processing services to U.S. financial sector clients. Macias explained that in terms of security, “a lot of people tend to think of Mexico as one big blob. They don’t understand that things are quite different depending on location.”
“As a location for BPO businesses, Puebla stacks up well,” Macias said. “There are a lot of call centers here and several very prestigious universities here.”
Daniela Dibs, a communications representative from Endeavor, a non-profit with in an office in Puebla that works to foment small business growth and provide entrepreneurs with consulting and mentorship explained that in Puebla’s nearshoring sector, “what we see is consulting more than business process outsourcing.”
Despite these advantages and achievements, Puebla’s IT outsourcing and BPO sector does not yet rival the clusters in other more established IT outsourcing hubs in Mexico. “Puebla lacks the ecosystem of businesses that exists elsewhere, but sometimes that can work against you if your employees hop to other jobs,” Macias explained. Daniela Dibs, of Endeavor, the non-profit says that although there is an important base of college graduates, many don’t stay in Puebla. “They go to Mexico City or Guadalajara where there’s more of a tech sector. Right now there’s a shortage of opportunities in tech in Puebla,” Dibs added.
Puebla’s weaknesses may also be a strength in a certain sense, however. “There might be more people in Mexico City but there’s also more competition for job seekers,” Macias said.
Unlike other Mexican BPO hubs, major multinational companies don’t yet have a strong presence in Puebla’s outsourcing sector. “There’s T-Systems, a subsidiary of Deutsche Telekom, but mostly I haven’t seen multinationals here, it’s more small and medium sized businesses,” Mejia, the CEO of Evolucione explained.
Despite certain challenges, Puebla enjoys the benefit of being tied to one of the strongest brand-names in nearshoring: Mexico. In terms of pro-business policies and strategic cluster formation Mexico already has a proven track record in cities such as Guadalajara and Monterrey. Puebla has made its name as an industrial exporting hub, but local entrepreneurs are now diversifying into business process outsourcing. “Ciudad Juarez and Tijuana have more English speakers and Guadalajara and Monterrey have more advanced skills, but Tijuana is expensive, Monterrey is expensive, in terms of office space and wages, Puebla is more attractive,” Mejia added.
Many of the same traits that have helped Puebla develop its industrial sector could also lead to outsourcing sector growth. “The advantages the city of Puebla has for entrepreneurs who want to open business process outsourcing offices are public security, infrastructure, universities, climate, and geographic location,” says Juan Pablo Jimenez.
Overall, although the Puebla has a lot more work to do, to many entrepreneurs the state seems well positioned to continue to cultivate its nascent outsourcing sector. “There’s a lot of potential, businesses just have to come here and invest,” Mejia said.