Our Advantages test – Nearshore Software Development from Mexico

Whether augmenting software development staff, providing new skills, upgrading staff quality and/or reducing costs, outsourcing is now a time-tested concept. However, the explosion in outsourcing has led to challenges, with outsourcers located in countries far off from the Unites States and in significantly different time zones.

With Software Next Door, United States organizations can now outsource to a nearby country in the same time zone as the United States. This Nearshoring – sourcing software development services from a nearby lower-wage country – offers key advantages:

The close proximity of personnel in a Nearshore engagement enhances collaboration by permitting daily Scrum meetings without time zone differences, and by allowing for much shorter trips to and from the United States for desired time on site.
Because of NAFTA, the treaty between the United States and Mexico regulating trade between the two countries (as well as Canada), there is no cap or date constraint on visas for Mexican software engineers to work in the United States whereas H1B visas are issued under a strict quote and are only issued in October.
Nearshoring to Mexico offers cost advantages which are comparable to those of outsourcing with outsourcing suppliers from distant shores.
Mexico offers a large pool of highly qualified software engineers, steeped in cultural traditions similar to the Untied States and operating in environments with very strong infrastructure. Wage rate increase and turnover are much lower than those in many of other outsourcing countries

The Trouble with Outsourcing to Distant Locales

While the success of India, China, Russia, and other nations have experienced has been positive for all involved, rapidly rising wages and high turnover has presented challenges for outsourcing customers. Wages have risen in popular outsourcing areas, particularly in India, where they have increased 16 to 18 percent annually. In the battle for experienced talent, turnover regularly exceeds 20 percent per year. Constant personnel churn necessitates continual training, putting pressure on project continuity and escalating project costs. Mexico has not experienced these types of wage rate increases or high levels of turnover.

In addition, the time and cost of travel to faraway locales, plus the strain on productivity when working in a different time zone, is well documented. So too are the issues related to operating with software developers located in different time zones – see below for the impact this critical factor has on total project costs.

What’s Different About Mexico

Nearshoring, specifically to Mexico, offers advantages similar to those offered by outsourcers operating in the leading country for outsourcing to the United States, India, and, in addition, alleviates many of the challenges posed by outsourcing to other parts of the world.

Technical Proficiency

Mexico’s many universities offer excellent computer science, engineering and other technical degrees. More than 60,000 four-year IT-program graduates join the workforce each year. More than 10 percent of Mexican students are enrolled in a computer science or IT-related program. These graduating engineers earn roughly one-third what their U.S. counterparts earn – a boon for organizations nearshoring to Mexico.

Lower Total Project Cost

When comparing costs, Mexico is similar to or only slightly more expensive than the major outsourcing countries. When all the cost factors are considered – turnover, ease of communication, productivity, travel time, lack of visa quotas and cultural affinity – Mexico offers a lower total project cost, even in cases of lower wage differentials.

Mexico’s proximity to the United States means work occurs in the same time zone as the United States. Working-hour compatibility facilitates communication, enabling the use of Agile and other rapid development processes. Meetings and calls can take place ad hoc, during regular business hours. No more phone calls in the middle of the night or on personal time. Travel is more convenient, affordable and comfortable, with more flights from the United States to Mexico than to any other country.

Mexico also shares more cultural traits with the United States than any other outsourcing hotbed. A common culture contributes to higher productivity and lower cost. The cultural affinity is partially based on the constant exchange of goods and services and the fact that many of Mexico’s IT professionals work for the United States or global companies. As the language of computer science and other technical degrees, English is the norm among IT technical professionals in Mexico.

NAFTA Simplifies Visas

Because of NAFTA, there are no caps on visas for Mexicans coming to the U.S, and visas to work for an extended period of time on site in the United States can be applied for and grated at any time during the year. Applications for H1B visas can be submitted in April, but work cannot begin until October 1. There is always an over subscription for H1B visas, and applicants must pass thorough a lottery to be considered for these visas. Engineers from Mexico can freely come and go to suit the needs of a project, with visas being issued within three weeks.

Quality Infrastructure

Mexico’s power infrastructure is sound with solid electrical grids. Power outages are rare in Mexico. Traffic jams and gridlock is limited outside of Mexico City. In recent years, the Mexican government has undertaken a telecommunications modernization initiative, investing in fiber optics and satellite links. Mexico now shares nearly the same communications advantages found in the United States.

Low Risk Profile

Mexico is politically and economically stable. It is currently the United States’ second-largest trading partner and enjoys trade agreements with Canada, the EU, Israel, Japan and various Latin American countries. While drug-related crime is a problem and generates frightening news headlines, it is isolated to limited locales. Software Next Door is headquartered in Queretaro, one of Mexico’s safest cities, and a home to many multinationals, high tech and medial research companies.

Intellectual Property Protection

Mexico is part of the North American Free Trade Agreement (NAFTA), and affords far more intellectual property protection than any other country with relatively low labor rates.

Moving IT operations into developing countries like Vietnam or China can pose big risks, such as insurmountable language and cultural differences, geopolitical instability, and the risk of stolen intellectual property.
BusinessWeek

NAFTA gives Mexico a very clear advantage over other regions. Mexican firms can get business-work visas to the U.S. without having to worry about H1B quotas or other immigration issues that plague the Indian outsourcing companies. NAFTA also allows U.S. businesses to treat Mexican firms as local, making procurement much easier than it is when dealing with foreign firms.
Global Services Media

Mexico is now one of the top producers of engineers in the world, according to Oscar Suchil, director of graduate affairs at the public National Polytechnic Institute, where 60 percent of its 163,000 students are studying engineering and paying just $12 a semester in tuition.
– The Washington Post