Mexico Now A Latin American Leader In Tech Services

May 15, 2013

MONTERREY, Mex. — In the last decade Mexico’s tech industry has flourished, growing three times faster than the global average. Most of that growth is fueled by demand from the United States. But without certain reforms Mexico’s progress can only go so far.

On the cover of April's edition of Forbes Magazine in Mexico is Blanca Treviño. She is the 53-year-old CEO of Softtek, the country's biggest technology service.

Softtek spans four continents and provides software support to clients that include Fortune 500 companies. The business sector represented by Softtek is one that’s growing rapidly in Mexico thanks in large part to its proximity to the United States, the world's largest consumer of tech services.

“I think it's safe to say that without the U.S. the Mexico market would not be doing very well,” said Morgan Yeates, an analyst with the IT consulting firm Gartner.

According to Gartner, 75 percent of tech outsourcing in Mexico is consumed by the U.S. A large global company, like Walmart or Coca-Cola, will utilize tech services to develop and manage massive computer databases that handle things like customer service or billing. They also need support for business-related applications their customers use on their smartphones and tablets.

For years India and China have been the main providers of these services, but that’s slowly changing.

“More and more partnerships are happening between the U.S. and Mexico,” Yeates said.

U.S. companies tend to mesh better with Mexican providers. Time zones are more compatible and Mexico is better able to serve a growing Latino market within the U.S.

For that reason Mexico has become a leader in Latin America for tech services. As a result there are more well-paying jobs in Mexico that require degrees in engineering and computer programming.

But it’s not all about IT support and services. Smaller companies are popping up across Mexico with the intention of creating original software they can copyright and sell on the world market.

Publish 88, a start-up based in the industrial hub of Monterrey, is one example. The company licenses a software program created in-house to print publishers that want to have a multimedia presence on their readers' tablets and smartphones.

"Our first office was a table in an apartment of a friend," said co-founder Enrique Lima.

Just one year since their launch, Publish 88 has clients like National Geographic magazine in Mexico. They also have have one client in Australia and another in the United States.

“Publish 88 is an incredible example of what you can do if you set yourself to your goals and you plan and you work hard,” said chief financial officer, Emilio Arriaga.

But while big companies like Softtek are doing business with other big companies worldwide, it’s a lot tougher for smaller Mexican companies, like Publish 88, to score foreign clients. Mexico's tech-savvy is not widely known. There is no Silicon Valley of Mexico, not yet. The country still thirsts for innovation.

No one knows that better than Guillermo Safa, a 40-year veteran of the tech industry. He directs an IT business alliance in Monterrey.

"We are driving with our hand brake on," Safa said.

In order to push forward, he said Mexico has important challenges to overcome.

"Human capital is one," Safa said.

The supply of IT professionals is not keeping up with the demand in Mexico. Most engineering graduates end up in manufacturing.

The other challenge is financing. Mexico's conservative banking institutions are not small business friendly. Currently a bill meant to reform the banking system is making its way through the Mexican congress.

Meanwhile Mexican universities are making an effort to nurture the country’s future entrepreneurs. At an interactive study center at the Tecnologico de Monterrey there are bright colors, foosball tables and trampolines — all meant to stimulate ideas. It works for freshman Rodrigo Medina.

“I'm working on a app that helps you to find objects that you don't remember where you left them,” Medina said. “Car keys, the wallet, the cell phone.”

Medina hopes to find a job in Mexico that combines mechanical engineering and computer programming. He also hopes to start his own business someday. Whether he succeeds will be determined in part by the kind of business climate his own country helps create.

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