San Diego is one of the leading biotech and life science regions in the world. San Diego County boasts more than 80 public-private institutions that for decades have attracted some of the world’s best researchers and scientists. These minds are now addressing some of the global health challenges that we face, such as polio, HIV, AIDS, cancer, and genomics. As a result, biotech companies in San Diego have easy access to that talent and their research, allowing them to continually create new IPs and new science, while drawing on the deep synergy between academia and private industry.
Mexico’s northwest border city of Tijuana in the state of Baja California is uniquely positioned to benefit from that concentration of talent and knowledge north of the border, as well as offering its own set of benefits for potential investors. One such company is Thermo Fisher Scientific, a multinational, biotechnology product development firm that recently set up a software development center in Tijuana.
Establishing in Tijuana
Mark Field, Thermo Fisher’s CTO, was a vital component in setting up the center. After previously establishing a development team in Guadalajara as VP of Oracle’s application development division, Field became an advocate for what Mexico could offer. “This was my first piece of significant insight into the fantastic software engineering talent that Mexico possesses,” he said. “When I told other leaders in the company about my plans for Tijuana, I got many puzzled looks. People were unaware that Mexico produces almost as many software engineers as the U.S., and were shocked when I said the best I’d ever worked with were from Mexico. But we got the go-ahead on a pilot program to see if we could source the talent.”
The initial pilot started in September 2015, which involved hiring 30 engineers and investing in networks, furniture, and equipment in an office complex just five minutes south of the border. The team is now comprised of 40 engineers who are pioneering new cloud capabilities and are receiving huge praise from other Thermo Fisher teams, leading to the company expanding the office to another floor. While this expansion will bring the center’s total capacity to 110 by September 2016, there are currently 56 open positions that the company is trying to fill.
Leveraging Mexican Talent
According to Field, Thermo Fisher is not a name that software engineers instantly recognize, so the company had to explore unique strategies for sourcing talent. “We offer the opportunity to build software that could help scientists cure a disease, not just create video games or ERP systems; Millennials respond very positively to that,” he said. “Once a candidate qualifies, we fly them up to Tijuana to check it out. They get treated to dinner, they check out the ocean, and see the lifestyle that Tijuana can offer. This really helps to change perceptions of the city.”
Tijuana had been commonly thought of as a hub for high-tech manufacturing, not so much for a standalone software industry. Even so, Thermo Fisher saw this as a both challenge and an opportunity. “While it will bring competition and talent will likely move around, it’s in our interest to create a vibrant software engineering culture in Tijuana in order to sustain it,” said Field. “Although we are at the early stages, Thermo Fisher is working closely with universities, government, and companies on both sides of the border to help build a strong base of software engineering talent in the bi-lateral region.”
Only around one third of Thermo Fisher’s engineers hail from Tijuana; the rest are sourced from Mexico City, Guadalajara, Cuernavaca, Monterrey, and smaller towns like Mexicali due to the city’s small software community. “New employees are paid for their relocation with a variable cash sum to spend however they like. It amounts to around 20% of their annual salary, depending on where they come from,” said Field. We also host them in accommodation for a few weeks while they figure out where to live. After finding the best talent possible, this approach pays for itself within a year.”
Thermo Fisher first looked at Eastern Europe, Vietnam, and India before settling on Mexico for the nearshore benefits of accessibility and time zone matching; the benefits of driving for just one hour from San Diego to Tijuana are clear. City-wise, while Guadalajara was the obvious choice, it wasn’t the best choice for Thermo Fisher because its main software and IT teams are in San Diego. From a talent-cost perspective, the company didn’t share average salaries, but did stress that salaries are in line with the other software development companies in Mexico.
Thermo Fisher is now making investments that were prohibitively expensive in California, but cost much less in Tijuana, making it possible to develop new innovations. “The innovation that is coming from these investments is what I’m truly excited about,” said Field. According to Field, there was plenty of support in Tijuana when setting up the business, and the process was far less painful than he expected. The main challenges stemmed more from internal factors of cross-border business, such as how IT systems are connected, how HR processes work, and how to perfect software engineering processes.
While weighing the feasibility of setting up in Tijuana, Field met with the San Diego Economic Development Corporation (EDC) to discuss options. “Our role in Tijuana was to streamline the service that Thermo Fisher needed to support their expansion,” said Sean Barr, Senior Vice President, Economic Development at San Diego Regional Economic Development Corporation. “This was related to real estate, infrastructure, and human resources, as well as identifying the right partners and educational institutions for them in Tijuana.”
The San Diego EDC exists to “maximize the region’s economic prosperity and global competitiveness”, specifically the bi-national region, which includes San Diego County, the state of Baja California, and Tijuana. “There is already a strong economic tie between the cities of Tijuana and San Diego, so the EDC works toward the retention, expansion and attraction of corporate investment into the bi-national region,” said Barr. “By bringing investment to Tijuana, San Diego benefits from the jobs that are created: every job that is created in Baja has an economic impact north of the border. They result in new jobs in our community and both direct and indirect investments spill over in the city.”
San Diego’s unique value differentiator is the bi-lateral ties it has with Tijuana. The benefit that both sides gain from leveraging each other’s strengths cannot be offered by any other U.S city. “Why send jobs to India or China when Mexico is an easier option?” said Field, who predicts that this trend will continue. “Software companies were leaving San Diego because they couldn’t find talent, but it’s right there across the border [in Mexico]. We just need to expose it.”
Bi-national Economic Development
Thermo Fisher, Illumina, its direct competitor, and the Tijuana EDC all sit on the board of directors for the San Diego EDC, whose vast majority of funding comes from private industry, not local government. This unique model means that Thermo Fisher dictates the EDC’s priorities, intimately tying to two organizations. “They’re not only our client, but they’re also our shareholder,” said Barr. “They are deeply involved in our economic development committee, setting the terms for our economic development agenda in the bi-national region. This agenda includes the challenges and opportunities related to workforce attraction, retention, and development, which is a huge priority for all companies in San Diego.”
In light of Donald Trump’s ongoing political rhetoric calling for a breakdown of US-Mexico relations, Thermo Fisher and the San Diego EDC are defiant, each claiming that together they will continue to push for cross-border, bi-lateral ties in the event of his presidency. The relationship of these two cities is globally unique and shutting down this connection will likely result in economic catastrophe for both countries.