Nearshore Americas

Packaged Staffing & Services Model Emerges in Sonora & Jalisco, Mexico

Placement for IT jobs has always been a challenge, even in the best of times. Cross border talent sourcing can seem downright impossible. There are companies springing up however, that are building a business model around connecting cross border talent with employers and project development clients. This is especially true for cross-border IT work between Mexico and the United States.

According to HSBC’s Economics and Equity Strategy Mexico Handbook, Mexico is the 12th largest economy in the world and the second largest in Latin America in terms of GDP, and is expected to be the eighth largest in the world in 2050. HSBC notes that “highly developed economic sectors offer competitive costs and Mexico has benefitted from large amounts of direct foreign investment, in the automotive, manufacturing, aviation, information technology and tourism.”

One company, Intugo, which recently rebranded from Vangtel Nearshore Solutions, cites data furnished by theNational Institute of Statistics and Geography (INEGI) and the National Association of Universities and Higher Education Institutions (ANUIES), which states that over 745,000 students – 30% of the country’s total university population– were enrolled in STEM (engineering and technology) courses, which yield some 115,000 graduates every year.

In a statement HSBC said, “Rising labor costs in China, and escalating distribution costs from East to West, are driving firms to re-look at production possibilities closer to home. With its wide network of Free Trade Agreements, competitive costs and its strategic geographic location to large markets, Mexico is re-emerging as an attractive trade hub.”

Intugo describes itself as a connector. Under its business model, companies establish a near-shore software development or tech support operation and have total control of it—in Intugo’s facilities, operational support and human resources support. Clients benefit from modern facilities that are company owned or long term leased from Hermosillo and Obregon in the state of Sonora and Guadalajara in the state of Jalisco. The client’s operation is theirs to manage and run as they see fit—all with Intugo support services.

What sets Intugo apart from the competition is the level of control that clients have over nearshore Mexican operations. The client company is able to protect intellectual property, maintain their business culture and run their operation as they see fit.  “Many small and midsize companies in different industries now can enter the Mexico market as if they were a Fortune 500 company,” Marketing manager Larry Carlson said. That means that the employees in the near-sourced operation become part of the company’s culture and processes, providing a seamless experience for customers and staff.

Carlson explains, “Let’s say company X in Silicon Valley has had enormous difficulty getting PhP senior level mid-level talent so they are looking for options. They could choose insourcing, US-based, near shore or offshore. By choosing Intugo, they can benefit from a 50% saving, because they will have hiring control and screen these folks with our help plus their Mexican operation retains the corporate culture look and feel of that company.”

Carlson emphasizes that the IT market has been consolidating in Guadalajara.  “We have noticed in particular a growing trend for new operations for INC 500 companies.  There is ample talent in Guadalajara as big players have set up key resource centers as well: Microsoft, Dell, HP, IBM,” he said.

Mexico is a good fit for US companies because of its proximity, similar time zones and, for the most part, cultural and linguistic similarities. Intugo ensures that the talent specifications meet the client needs, so if English fluency is paramount, only candidates with those skills will be provided as options.

Carlson says that Mexican government is committed to growing its nearshore industries. There are a number of coding campuses in Guadalajara. “Engineering graduates become engineers, graduate and either start businesses or look for unique companies that have that entrepreneurial spirit. This mirrors what our needs are in US-based companies. The talent managing these enterprises is looking for the same,” he said.

Mexico is continuing to put resources into the IT and engineering industries. In fact, Silicon Valley has had Guadalajara on the radar for years and Guadalajara is often described as the Silicon Valley of Mexico. Intugo has seen a great deal of venture capital and private money flowing into Mexico to capitalize on this over the past few years. “The innovation and technology are coming together. Start-ups are growing in Mexico. You can compare what’s happening there with what happened in Silicon Valley.”

Carlson is quick to point out that technology has played a role in enabling the kind of remote operations that Intugo specializes in. “With all of the new tech, with the cloud, what we don’t talk enough about is how easy it is to manage a remote operation using the cloud,” he said.

“We created something called an accelerator, which has made it possible now for small and mid-sized companies to start their own operation in Mexico with just a few people and be up and running in 30 to 45 days.” Carlson adds that it is an affordable solution, giving small business the opportunity to tap into Mexican talent and save 50% on software development.

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While outsourcing, even to the near-shore, is not without its controversy and companies are often criticized for taking jobs away from America, Intugo has a different business model than BPO; operating more as a nearshore branch-office facilitator that provides packaged real-estate, staffing, and support services.

“By achieving their goals with their mobile deployment and software development, companies are able to achieve what they need to do to be competitive and expand their business with Latin America and Mexico as the solution. Many companies are doing it. It’s a global economy,” says Carlson, who is confident that the Mexican wave is still going. “We expect double-digit growth annually at least for the next few years.” Carlson further expects niche markets to develop and industries such as mobile development and animation to thrive.

This story was originally appeared on NSAM’s sister publication Global Delivery Report

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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