Nearshore Americas

Merida: Top-Notch Talent and Tax Breaks Tucked Away in Mexico’s Paradise State

One of the quietest corners of Mexico is starting to make some big waves in IT innovation, but don’t expect to hear a lot of boastful claims shouted from the rooftops. The city of Merida is located in a part of Mexico renowned for its intellectual heritage, and is a place that cruises along at its own highly-functional and modest speed.
Merida simply works. It’s not just an easy city to get around in, it’s also clean, welcoming, and inexpensive, as well as being one of the larger cites in Mexico that typical Nearshore enthusiasts probably know very little about.

From a location perspective, Merida is not as conveniently placed as Guadalajara, Mexico City, or Monterrey; this is a flat, arid, and out of the way landscape sitting atop the Yucatan peninsula. Even so, Merida has daily flights to Houston, Dallas and Miami, and is only one and a half hours flight time away. It’s also only three hours by car from Cancun, making you question why the city hasn’t historically been part of the Nearshore city-checklist conversation.
We are always excited to check out ‘newer’ Nearshore destinations, and Merida has certainly been one of those that has, for several years, sat on top of our ‘let’s check it out soon’ list, so we caught up with Víctor Gutierrez Martínez, Owner of Plenumsoft and ex-President of CANIETI, to grasp just what it is that Merida is doing for the industry.

Educational Evolution

victor gutierrez martinez
Víctor Gutierrez Martínez

Merida has been experiencing some changes since we last explored the city, the most notable of which is a public, bilingual university that specializes in ICT—the first university of its kind: Politécnica de Yucatan. The courses at the university are held exclusively in English and its undergraduates are related to some disruptive technologies.
“The university develops data science engineers, embedded systems engineers, and engineers in advanced computational robotics,” said Martinez. “It’s not just hardware specialties, but also software for AI, machine learning, and visualization, among others.” There are currently 160 students in this university, representing the “crème-de-la-crème” of the region, according to Martinez.
Merida recently welcomed Mexico’s Minister of Public Education, Aurelio Nuño Mayer, who visited the city to meet with the state governor and the university leadership. The trip resulted in a commitment for a second and third site for the university, introducing more space for additional students and more labs.
Special Economic Zone
In some areas of Mexico are special economic zones (SEZs), which offer trade facilities, streamlined regulatory processes, duty-free customs benefits, and low taxes for ten years when companies invest in the designated areas. These zones also receive increased infrastructure investment, particularly in energy and telecommunications.
The SEZ initiative helps companies to avoid some social security payments for employees. “It’s around a 50% discount of the total social security payment to the government,” said Martinez. “The employee receives the complete security benefit, but the government pays the other 50%. The IT industry is deeply impacted by talent, maybe even amounting to 60-65% of the total expenses of one company, so this ten-year plan without taxes creates a lot of opportunities for companies in Mexico to relocate to this special zone. It will also allow companies that are looking for talent with high levels of specialization to obtain benefits from the tax configuration.”
While it has been confirmed that Yucatan will enter the SEZ, it’s not quite a home run yet, but it is likely to be happening in two or three months once the permission from the federal government has been acquired.

Why Merida?
One of the main attractions of Merida is its high level of security; it’s been named Mexico’s best city to live in for two years running, as well as gaining first place in the perception of security. “People living in Merida don’t feel any panic or insecurity like they might do in some other areas of the country,” said Martinez.
Another benefit is that there is a stronger base for engineering, due to the strength of the science and mathematics education in Merida. “The population is fairly low, but the engineers’ capacity for high-tech development is better in comparison to the rest of the state,” said Martinez. “Here we are talking about complex algorithms, or emerging technologies that need deeper knowledge, such as machine learning or data science. We are looking for a brighter future in Big Data and data science and all the trends that require a high level of complexity.”
Martinez also pointed out that maybe Merida’s engineers are not particularly great at testing or simple development, but can certainly hold their own when the going gets tougher. This talent development comes from the highest ratio of mathematicians per inhabitants in Mexico. The National Center for Mathematics is situated in Merida, as well as the Special Math Labs from UNAM, and a strong board of mathematicians at the University of Yucatan in the faculty of math and computer science.
This type of bedrock foundation sets Merida up to develop solutions for the automation of knowledge work, data science, machine learning, and similar complex trends.

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The Expanding Future
There have been around four or five new companies arriving in Merida since last year, and more are expected to arrive soon, according to Martinez. “Yucatan is growing faster than the average pace of the rest of Mexico, at double velocity in comparison to other states,” he said. “This is around 4-5% of the local GDP.” These companies are coming from all over Mexico, creating software and technology for the automotive sector, oil and gas solutions, and solutions related to banking and finance.
Combining Merida’s core traits with its level of high-quality talent and the SEZ, the potential to grow and develop a tech company could actually be higher than many other Mexican cities, making Merida one to watch in 2017.

Matt Kendall

During his 2+ years as Chief Editor at Nearshore Americas, Matt Kendall operated at the heart of both the Nearshore BPO and IT services industries, reporting on the most impactful stories and trends in the sector.

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