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IT Development

With costs for IT services considerably lower than those of more developed countries, Mexico does offer affordable solutions for a variety of local and international developers. However, the country seeks […]

With costs for IT services considerably lower than those of more developed countries, Mexico does offer affordable solutions for a variety of local and international developers. However, the country seeks not to position itself like India—a country with an IT sector characterized by low-cost services alone—and instead emphasizes the development of quality, sophisticated software, and technology used in the areas of virtual reality, manufacturing, aerospace, finance, and digital creation.

With $3.75 billion in exports on a yearly basis, Mexico is the fourth largest IT services exporter after India, China, and the Philippines. With double-digit growth recorded every year with the exception of 2009, Mexico seems set to improve its ranking as FDI continues to flow into the sector and the capacity of the workforce expands.

Incentives for FDI are also a key factor in the promotion of Mexico as an IT hub. The government has worked on several initiatives to attract foreign investment and highlight the country as a geostrategic business location. Introduced in 2004 by the Secretariat of Economy, one such incentive is the Software Industry and Information Technology Services Development Program (PROSOFT). The program provides financial assistance for project investment and development, and has helped 500 students and 121 universities get involved and grow in the IT sector. In 2013, the PROSOFT project is seeking to achieve an annual software output figure of $5 billion, which would establish Mexico as Latin America’s number-one developer of software and digital content in Spanish. Two other projects—MexicoIT and Mexico FIRST—are also boosting IT development and services. While MexicoIT seeks to create brand awareness about Mexican technology in the US, Mexico FIRST has played a crucial role in developing the human resources potential of the industry.

OPERATIONS BASE

With Mexico as a growing IT hub, a multitude of countries have looked to build data center facilities, R&D laboratories, and cloud-computing services in the country. It is estimated that approximately 400,000 people in the country work in software development, with many of them operating out of one of Mexico’s 38 IT clusters.

These IT development clusters unite university professors and their companies with software, hardware, mobile apps, consulting, and digital animation services. As foreign investment from abroad and ongoing demand for Spanish-language products in Mexico and Latin America takes hold, the number of employees and companies operating inside the clusters is expected to increase. R&D centers mainly focus on the production of artificial intelligence, robotics, computer vision, embedded software, and the development of applications related to mobile telephony, according to information compiled by the Mexican Information Technology Industry Association (AMITI).

Large companies such as IBM, Lenovo, Intel, and Xerox have made Mexico a base due in part to the availability of talented, young labor that is more affordable than in comparable locations. “IBM has formed alliances with 80 universities in Mexico, where we share best practices, certification programs, and policy making,” Hugo A. Santana Londoño, President & General Manager of IBM de México, explained. “Our partner schools maintain the right to use all of our software—there are 1,000 products that professors can use for free to teach students about the best practices in the corporate sector.” The company will soon be investing $70 million in Mexico in the areas of cloud computing, business analytics and optimization, and sustainable business programs. It currently exports IT services and products from its hub in Guadalajara.

Intel also has operations in Jalisco, coming off a recent investment of $177 million in the capital city. With the intention to add a further 400 engineers to its staff, Intel has formed relationships with 16 of the local IT-based universities. Although Mexico has a “high-quality workforce with teamwork and communication, self direction, pro-activeness, and English skills,” according to Scott Overson, General Manager of the company, “there is still room to be best in class worldwide, and continue to improve both technical skills and abilities.”

Meanwhile, local company KIO Networks is working on its expansion outward throughout Latin American with Mexico as its base. In 2013, the company announced its intention to invest between $120 million and $130 million in data centers across the American continent, with specific interest in Guatemala, Panama, Colombia, and Costa Rica. The company currently has 11 data centers in Mexico and a premier facility in Querétaro, which has become an IT support hub for Mexico City in recent years. “Our Querétaro facility has a campus of 40,000 sqm—the largest data center in Latin America,” Sergio Rosengaus, General Director of KIO Networks, told TBY, adding “As a tier-four facility, it is the most reliable and sophisticated type of data center and is used for mission critical applications.”

Responding to recent trends, US-based Autodesk has begun focusing on the development and use of Building Information Modeling (BIM) in Mexico. The BIM software helps developers understand how an entire architectural or engineering project will function by providing interactive design and visualization. Autodesk’s BIM software was used to build the Shanghai Tower’s turbine, which generates energy and helps make it a sustainable building. For the World Cup in Brazil, BIM was also used to develop solar panels so that sustainable energy could be used for stadium construction. In Mexico, many of Autodesk’s services are being offered through a cloud-computing network, allowing companies, SMEs, and individuals increased access to their projects and designs.

Nevertheless, there are still significant growth opportunities in the domestic market due to the lower-than-average rate of IT adoption among SMEs and entrepreneurs. Today, the rate of adoption is accelerating in line with the increased complexity of the technology available. As a result, companies that provide IT solutions for firms with core businesses in different fields will find ample opportunity in Mexico and demand that could potentially exceed supply.