Nearshore Americas

Four Ways For Mexico to Rediscover its Nearshore Spark

Sharing a border with the United States means that Mexico will always be in the minds of business customers looking to participate in the remarkable advantages of Nearshore services. But in recent years, Mexico’s Nearshore shine seems somewhat faded, as internal policies have clouded understanding of outsourcing regulations and the performance of competitor markets has risen.

During 2020, Mexico suffered a fall of US$29.1 billion in foreign direct investment flows according to the United Nations Conference on Trade and Development. This drop was not as steep as seen in neighbouring countries, but as Mexico looks to kickstart the economy, a back-to-basics approach could attract the investment that the country is looking for.

Reinstate an Investment Promotion Agency

Most foreign companies look for trustworthy institutions when considering serious investment in a foreign land. And most of the time, these companies end up knocking on the door of one of the region’s investment promotion agencies (IPAs).

IPAs like Jamaica’s JAMPRO and Colombia’s ProColombia have helped draw foreign director investment into their respective countries by linking companies with prospective service providers, advising about internal geographies and demographics and offering insight into attractive tax initiatives.

But since ProMexico was shut down in 2019, companies looking for new territories have generally had to do more of their own legwork and analysis. They are often trying to  obtain information that is compartively far easier to get a hold of in much smaller Latin American countries. In fact, Nearshore Americas has directly observed that Mexico has lost out on business as a result. Of course, one could make the argument that other regional or city-based agencies or business chambers could pick up the slack – but frankly, a nationally-powered agency with a mission to engage international investors is what a major market like Mexico deserves.

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“When I started looking for a new destination in the region in 2019, I could very easily get in touch with IPAs from other countries,” Diane Limouzineau, Director of New Markets and Strategy at TDCX told Nearshore Americas in an article earlier this year.

“In Mexico, there was nowhere obvious to start. In the end, I had to reach out to the consulate in New York City. They explained that there was no Mexican investment agency which meant information couldn’t be quickly gathered for a market survey. On the other hand, having an IPA as well organized and efficient as ProColombia, for instance, clearly facilitated TDCX’s decision to invest and launch operations in Colombia,” she added.

Reinstating some form of IPA would increase the changes of Mexico capturing business that otherwise goes further south. Without a clear point of contact and assistance to connect to local companies, potential investors into Mexico will simply look elsewhere.

Look Beyond the Cities

The pandemic has opened the doors to recruitment in towns and cities that lie outside of the traditional IT cities of Mexico like Guadalajara, Monterrey and Mexico City. But still, small towns in Mexico remain overlooked by large IT service companies.

Pablo Tena, the ‘Social Preacher’ at Punto Singular – a Mexican IT services and team building company that specializes in training IT talent in the small and sidelined towns of Mexico – like Zitacuaro, Michoacan. One way to help solve the tech talent shortage would be to leverage the skills of talent in these smaller, lesser known towns.

“Sometimes there is the suggestion that people from bigger metropolitan cities are somehow better professionals and that isn’t true” — Pablo Tena

“There’s a hunger for success from people in these areas,” Tena explained. “They want to prove the quality they offer. Sometimes there is the suggestion that people from bigger metropolitan cities are somehow better professionals and that isn’t true,” he added.

If Mexico can increase internet connection to underserved areas and develop the infrastructure that is required for large service operations, then large companies can look to set up shop in these non-traditional areas. This has already happened in other Nearshore markets, and would also help with the government’s own decentralisation efforts. Efforts to connect the country are happening, but companies require more than 5G if they’re to break new ground in unknown territories.

Steal a Lead on Soft Skills and Talent Generation

When it comes to IT services and IT talent, the Nearshore region provides some world class technical abilities. Indeed, Mexico, where 130,000 engineers graduate each year from internationally-recognised universities, the strength of technical abilities leaves no room for doubt.

But as in other Nearshore markets, IT practitioners need to work on their soft skills if they are to meet the expectations of clients north of the border.

Armando Ortigosa, founder and CEO of KTBO, a full stack digital agency that works out of Mexico City and Sao Paulo, told Nearshore Americas that the lack of soft skills among his tech employees was a major obstacle.

“We have a lot of people who simply lack a lot of soft skills that are needed when dealing with offshore and Nearshore clients” — Armando Ortigosa

“It’s definitely not a cliche. It’s one of the greatest challenges in my line of business. We have a lot of people who simply lack a lot of soft skills that are needed when dealing with offshore and Nearshore clients,” said Ortigosa.

Similarly, Frank van de Ven of Mexico City-based digital product development company UMVEL said certain skills are entirely lacking: “It’s easy to find good IT specialists in Mexico because there are great universities that have trained this talent for 10+ years. However, if you look at what I do – service design and UX design – few universities offer these courses. Traditionally, Nearshore industries are well versed in technology but aren’t so strong when it comes to design, client services and understanding the customer journey. Some miss the glue between the challenge and the final execution because that talent is not here.

If soft skills are brought up to the level of technical ability, then there is no reason why companies would not look at Mexico as their primary market for IT talent and team augmentation in the Nearshore. Other countries offer ‘finishing schools’ that polish soft skills and, if needed, English abilities. Should Mexico consider doing the same?

Shout About Cultural Understanding

Cultural alignment is at the heart of the Nearshore offering, but Mexico can lay claim to providing the contact center and IT talent that is best able to understand the subtle cultural elements of smooth, problem-solving communication with US clients. And it has a price point to match.

Mexico and the US share a 2,000-mile border and 55 land points of entry. The US is Mexico’s largest trading partner. Over 10 million Mexicans reside in the US (as of 2019), making Mexicans the largest group of migrants in the country. The understanding between these two nations runs deep.

Mexico’s familiarity with US culture has impressed many decision makers in the past, and now Latin America entrepreneurs are landing in cities like Miami where Latin American culture is strong.

Cultural affinity is fundamental to outsourcing work of any kind. Mexico does it better than most. So why not increase the volume and make it more universally known?

Peter Appleby

Peter is former Managing Editor of Nearshore Americas. Hailing from Liverpool, UK, he is now based in Mexico City. He has several years’ experience covering the business and energy markets in Mexico and the greater Latin American region. If you’d like to share any tips or story ideas, please reach out to him here.

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