US Tech Talent: Why Mexico is the Next Frontier

The Expanding Tech Industry and Talent Shortage

Worldwide, the technology industry is experiencing significant expansion. The rapid advancement of technologies like cloud computing and artificial intelligence (AI) is driving a surge in demand for skilled tech professionals, exceeding the current global supply.

The U.S. tech sector, in particular, has witnessed remarkable growth in recent years. By the start of 2020, four technology companies had attained a market capitalization of $1 trillion.

Growth Drivers and Digital Transformation

A key contributor to the growth and widespread adoption of technology within the U.S. is the increasing emphasis on Software as a Service (SaaS) and comprehensive digital transformations across various industries.

These transformations have been significantly accelerated by the COVID-19 pandemic, creating an immense need for highly qualified tech personnel.

Projected Job Growth and the Talent Gap

Projections indicate an 11% increase in tech job openings between 2019 and 2029, translating to over 500,000 new positions within the U.S.

However, the U.S. only produces approximately 65,000 computer science graduates annually.

The Scale of the Problem

This discrepancy has resulted in a substantial deficit in the tech talent market. In 2019 alone, there were over 900,000 unfilled IT and related positions.

A survey conducted by Robert Half, a leading HR consulting firm, revealed that over 80% of U.S. employers identify recruiting tech talent as a primary business challenge.

• The demand for tech talent is outpacing supply globally.
• The U.S. tech sector has experienced unprecedented growth.
• Digital transformations, accelerated by the pandemic, are fueling the demand.
• A significant talent gap exists, with hundreds of thousands of unfilled positions.

Growing Demand for Tech Professionals from Mexico

A competitive U.S. tech market is experiencing shortages in skilled workers, and Mexico presents a viable solution. A significantly higher proportion of Mexican university graduates – 20% – earn degrees in engineering fields. This translates to over 110,000 qualified graduates annually, exceeding the technical talent output of the United States.

Consequently, both investors and technology companies are expanding their presence within Mexico. Cities like Monterrey and Guadalajara are frequently dubbed the “Silicon Valley of Latin America.”

However, despite substantial growth in these tech hubs, the rate of talent creation outpaces the expansion of the sector itself. This results in a considerable pool of highly skilled and proficient tech professionals. The comparatively lower cost of higher education in Mexico is expected to further increase this surplus in the years ahead.

Currently, the United States is uniquely positioned to benefit from Mexico’s abundant tech talent. Due to a comparatively limited number of available tech positions within Mexico, the cost of employing skilled professionals is substantially lower than in the U.S. or Canada. Generally, Mexican tech talent can be secured at a cost two to three times less than in the U.S., without compromising on quality or specialized expertise.

Mexico distinguishes itself from other Latin American nations with its established infrastructure and economic stability, fostering a thriving tech talent export environment. The concentrated market in Mexico City is larger than all other Spanish-speaking Latin American countries combined.

IT outsourcing from Mexico is experiencing robust growth, with an annual expansion rate of 10%-15%. This positions Mexico as the third-largest exporter of IT services globally.

Strengthened U.S.-Mexico Collaboration

The relationship between the U.S. and Mexico is strengthening following a period of instability. Mexico currently ranks as the top U.S. trade partner, providing a solid foundation for investment and collaborative partnerships.

Leading technology companies, including Cisco and Intel, have already established operations in Mexico. This demonstrates a strong vote of confidence in the country’s capacity to support technological advancement and economic development.

• Mexico produces over 110,000 engineering graduates annually.
• Tech talent costs in Mexico are 2-3 times lower than in the U.S.
• Mexico’s IT outsourcing industry is growing at 10-15% per year.

The availability of skilled tech talent, coupled with favorable economic conditions, makes Mexico an increasingly attractive destination for companies seeking to expand their technological capabilities.

Advantages of Geographical Proximity

Mexico presents several advantages that streamline and enhance the process of leveraging its abundant skilled workforce. A key benefit lies in the alignment of Mexico’s time zones with those of the United States, facilitating seamless, real-time collaboration optimized for both teams.

This contrasts sharply with locations like India, which experiences a significant time difference – exceeding 12 hours compared to Silicon Valley in California.

Furthermore, substantial cultural affinities position Mexico as a preferred destination for IT outsourcing. The United States boasts a population of over 41 million native Spanish speakers, alongside an additional 12 million individuals proficient in both Spanish and English.

This makes the U.S. the second-largest Spanish-speaking nation globally, following Mexico. The consistent flow of cultural and consumer goods from Mexico to the U.S. also fosters mutual understanding and strengthens the bond between the two nations, positively impacting their working relationship.

Key Advantages Summarized

• Real-time collaboration due to aligned time zones.
• Significant cultural overlap and linguistic commonalities.
• Strong existing economic and cultural ties.

These factors collectively contribute to a more efficient and productive outsourcing experience when partnering with Mexican talent.

Strengthened U.S.-Mexico Relations Driven by Geopolitical Shifts

The advancement of the American technology industry is increasingly recognized as a crucial strategic objective at the national level. Simultaneously, both public and private sector leaders are demonstrating a heightened interest in engaging in commerce under advantageous trade agreements with allied nations, particularly given the current environment of global geopolitical instability.

Continued expansion within the U.S. technology sector will necessitate that companies explore supplementary avenues to bolster their highly sought-after technical workforce. Instead of focusing on nations facing heightened regulatory oversight, or remote talent pools demanding extensive travel, industry executives are prioritizing geographically proximate and diplomatically aligned countries.

Mexico’s position as a vital business partner and strategic collaborator is proving to be a substantial benefit for U.S. firms. This is due to the country’s favorable trade relations and its increasing importance in the global landscape.

Projections indicate that Mexico’s middle class is anticipated to swell to 95 million individuals by the year 2030. This growth will position Mexico among the top ten nations globally in terms of middle-class consumer spending power.

As the middle class expands, demand for goods and services will increase, fostering growth within Mexico’s own technology sector. Consequently, the need for skilled tech professionals within Mexico will rise, potentially diminishing or even eliminating the current surplus of available talent.

The emergence of successful Mexico-based technology companies, such as Kavak, a used-car marketplace valued at $4 billion, exemplifies this trend. This dynamic environment of escalating tech valuations and potential makes Mexico a key market for growth and a valuable technology partner for the U.S.

The present moment represents an opportune time for the U.S. to leverage the existing abundance of qualified technology professionals in Mexico. Strategic partnerships will be crucial for both nations.

Key Factors Driving the Shift

• Increased geopolitical uncertainty globally.
• The growing strategic importance of the U.S. tech sector.
• Mexico’s expanding middle class and consumer market.
• The rise of innovative Mexican technology companies.

These factors collectively contribute to a more favorable outlook for strengthened ties between the U.S. and Mexico. Collaboration in the technology sector is poised to benefit both economies.