Matt KendallNew studies are providing fresh insight into tech salaries in North America, with software developers and engineers in the United States becoming more expensive, resulting in higher value for Mexican talent.
Despite an ongoing battle for talent in Mexico, as some tech companies offer double wages to attract experienced workers, average Mexican salaries have not risen as high as expected. Meanwhile, US workers continue to command higher tech salaries, giving companies more reason to consider hiring in Mexico.
High Salaries in Canada and United States
To understand the value of Mexican talent, we must first look at the trend of increasing tech salaries in its two neighbors to the north.
Reflecting more than 420,000 interview requests and job offers across 10 US cities, Hired, an online employment marketplace, found in its State of Salaries Report 2018 that Los Angeles has seen the highest increase in annual tech salaries, rising from $118,000 in 2015 to $129,000 in 2017.
In the same three-year period, Austin tech salaries increased by $10,000, SF Bay Area by $9,000, New York by $8,000, Seattle by $7,000, and Chicago by $5,000.
Annual wages in Boston and Washington DC decreased by $3,000 and $5,000, respectively, while Denver and San Diego stayed the same at $112,000 and $108,000.
Across all 10 cities studied in the United States, SF Bay unsurprisingly takes the top spot with an average salary of $142,000, while San Diego is the lowest at $108,000. The mean average salary for all cities studied is $121,600 per year.
Toronto offers the lowest salaries for tech workers in Canada and the United States, at US$73,000 per year, increasing by $4,000 since 2015. Despite a recent influx of companies and initiatives that are driving up the city’s reputation for technology. This has remained largely similar for three years, going against a trend of larger salary increases in the United States.
However, these base figures shift dramatically when factoring in the high cost of living in the SF Bay Area, with some adjusted salaries increasing almost $90,000, which shows how difficult it is for tech workers to get by in Silicon Valley.
“Despite the fact that the Bay Area offers the highest salaries for tech workers, job candidates are beginning to notice the perks of living and working in other cities,” writes the report. “Austin tops the list at an adjusted salary of $202,000, meaning Austin tech workers would need another $84,000 raised to maintain their current standard of living in San Francisco.”
Mexico has the Talent and the Prices
Looking at the top three cities in Mexico for the volume of tech employees, namely Guadalajara, Monterrey, and Mexico City, it’s no surprise that their average wages are significantly lower than in cities in Canada and the US.
According to data collected by Software Guru Magazine in 2017, the median average gross salary for a software professional in Mexico is 32,000 pesos per month. The magazine’s study collated information from a total of 1,679 people in the industry, 50% of which earn between 19,906 and 45,000 pesos.
The Salary Survey SG 2017 concludes that tech workers in Mexico City are earning an average of 444,000 pesos ($23,807), while those in Guadalajara earn 420,000 pesos ($22,520), and in Monterrey then earn 384,000 pesos ($20,586).
Interestingly, the small city of Colima in central-western Mexico takes the top spot for highest median average salary, at 480,000 pesos ($25,719), but this is apparently skewed by a group of developers working for clients in the United States and Canada.
Other emerging cities for technology workers include Morelia, Queretaro, Puebla, Cancun, and Aguascalientes.
Overall Hiring Climate in Mexico
According to the Manpower Group Global Employment Outlook Survey for Q1 2018, “the hiring climate in Mexico remains favorable and, despite uncertainties associated with ongoing NAFTA negotiations, forecasts are positive in all industry sectors and regions”.
Furthermore, in its Total Workforce Index Global Analysis for 2017, the company stresses that the country’s overall workforce is still very young, with over two-thirds (69%) aged 41 or younger, and that the market has become far more favorable in terms of labor market maturity and flexibility of employer regulations.
“With a high rate of enrollment in secondary education, the emerging workforce continues to offer many opportunities for program cost efficiency along with a skilled workforce despite low levels of English proficiency,” states the study.
Comparing Markets
If the average price of a tech worker in Toronto is currently US$73,000 a year, this is still $41,000 more expensive than Mexico’s median average of $32,000, and $49,193 dearer than a worker in Mexico City, despite being the cheapest city in Canada and the United States.
Currently, for every one tech worker in Silicon Valley you could hire 4.4 workers in Mexico, and for the average annual salary of $121,600 in the States you could hire 3.8 Mexican workers – a significant bump when you consider that quality of talent is almost indistinguishable when comparing both markets.
Even so, as the thirst for tech talent increases, these prices are unlikely to stay so low for much longer, as more companies offer higher tech salaries to more experienced developers and engineers in Mexico, snatching them from rival companies in an effort to negate the global talent shortage.
“There is a very high demand and supply is very scarce, which generates tremendous wage inflation, because the little talent that exists is being fought for by everyone,” said Gerardo Kanahuati, General Director of Hays Mexico, in an interview with Forbes Mexico.
On top of all this data, when you consider that, investment-wise, Mexico still offers 33% savings in operating costs for the software development industry compared to the United States, this reality, combined with the high ability of Mexican tech workers, will not go unnoticed forever, especially as US tech salaries keep rising and immigration policies remain constrictive.
Matt,
A Mexican journalist should take your job and do it better and cheaper. Your reasoning begs the question why should you even be working in Mexico if a Mexican journalist can do your job just as well if not better? There are plenty of Mexican journalists that are proficient English speakers and with technology they can write in perfect native English.
Agendas like yours is what got Trump elected in the first place. You are basically advocating for all Americans to loose their jobs to low cost countries.
Elisandro
Right on buddy.
I love that the USA is selling what were once trade secrets and people were jailed for selling them. What really galls me is pimping Mexicans. If they are going to do the work and do the same job then quit being racists pigs and pay them the same money regardless of where they live. Then we in the USA won’t hate them so much. Don’t undercut what we paid taxes to develop for USA jobs. Only a pimp would do it differently. Especially when Mexico won’ t let me work in Mexico, even at USA developed trades.
I like the article… but factually inaccurate. The salary amounts are only PART of the equation so listing the salaries alone do not give fully insight to the total cost of an employee. Dont forget about the 16% IVA paid and the Healthcare requirements or the Aganaldo which is another 8% after 2 years. Or the mandatory PTO dates and merit awards. Not to mention the 3 months severance when you fire someone. Also those salry amounts are going to usually be paid based on NET salary. So add 33%. you would need to add an easy 50% to those numbers to be accurate.
Lots to consider here that is not addressed.
Source: Own a software dev company in Mexico with 200 people for last 5 years.