In today’s rapidly evolving tech landscape, where technology now defines the core of nearly every product, traditional outsourcing models are becoming increasingly obsolete. For years, companies have relied on staff augmentation to strengthen their tech teams by bridging gaps in skills and expertise. But those days are numbered.
According to insights from Info-Tech Live 2024, up to 75% of companies are shifting toward in-house development of AI capabilities, recognizing that technology is no longer just part of their offering—it is the product.
The evolution of technology: Tech is now the product
Over the past two years, technology has advanced at an unprecedented pace—what would typically have taken seven years has happened in just two. AI is no longer a futuristic concept; it’s an essential component of modern business operations.
In today’s competitive market, relying solely on outsourced development for AI capabilities is a strategic risk. The days of viewing technology as just another department are long gone—today, it defines the core of a company’s value proposition.
Companies that fail to recognize this shift are at risk of falling behind. A significant 58% of businesses believe that failing to implement AI could result in substantial market share losses in the coming years.
The race to develop in-house AI expertise is already underway, and for good reason: organizations with internal teams dedicated to AI are proving to be more agile and innovative than those relying solely on external providers. Having the ability to respond quickly to market changes and advancements in technology is key to maintaining a competitive edge.
More than 75% of organizations globally are adopting in-house models for AI development, marking a seismic shift in how technology is managed internally. This shift isn’t just about cutting costs—it’s about maintaining control over critical functions, gaining flexibility, and boosting the capacity to innovate.
The growing need for AI integration
AI has rapidly evolved from a "nice-to-have" tool to a critical "must-have" for organizations seeking to stay competitive. Across industries like finance, healthcare, and retail, AI is being used to automate tasks, analyze vast datasets, and personalize customer interactions. As AI becomes more integrated into core business operations, its advantages become increasingly clear.
Companies that have adopted AI have seen revenue growth of 6% or more, and 80% of businesses will soon depend on AI for vital functions like customer data management and operational automation.
With 70% of companies already using AI in some form, the question is no longer “if” but “how fast” businesses can scale these capabilities. AI’s ability to predict market trends, streamline processes, and deliver personalized experiences has become indispensable.
Companies that delay adoption risk being left behind, particularly as 80% of organizations are poised to rely on AI for key customer and operational decisions in the coming years.
Why internal teams are the future
The move toward in-house AI development is largely driven by the need for agility. Companies that build internal AI teams are better equipped to adapt quickly to market trends, technological advances, and evolving customer needs. In contrast, outsourced models often lag, constrained by communication barriers, talent misalignment, and a lack of flexibility.
But it’s not just about being more agile—it’s also about maintaining control. Companies that rely heavily on external partners for AI development risk losing control over their data and intellectual property. In today’s business environment, data is the new gold, and companies cannot afford to hand over such a valuable asset to third parties. Building AI capabilities internally ensures that businesses maintain control over their most critical asset—data.
According to recent studies, 55% of companies are already scaling their AI and automation initiatives in-house. However, the transition isn’t without its challenges. Talent alignment remains a significant hurdle, with 60% of tech offshore operations failing or underperforming due to poor talent matches.
For many companies, this has underscored the need to build internal teams that not only understand the technology but are also fully aligned with the company’s broader strategic goals.
The nearshore advantage: Mexico as a strategic AI hub
While building internal teams is essential, companies still need cost-effective solutions to complement their talent strategies. That’s where Mexico comes in—a nearshore hub that offers U.S. companies a high-quality, cost-effective alternative to expensive local teams. With labor costs up to 75% lower than in the U.S. and a talent pool nearing 1 million IT professionals, Mexico is quickly becoming a go-to destination for AI and tech development.
Mexico’s proximity to the U.S., both geographically and culturally, is a huge advantage. With 80% of the country within the Central Standard Time zone, U.S. companies can collaborate with their Mexican teams in real-time, eliminating many of the communication delays common in traditional offshore models. Furthermore, Mexico is the leading B2 Visa issuer in Latin America, with over 750 flights to and from the U.S. daily, making travel and collaboration seamless.
Mexico produces over 140,000 engineering graduates annually, ensuring a constant flow of fresh talent into the workforce. This level of bilingual, highly skilled professionals positions Mexico as an attractive nearshore destination for U.S. companies looking to strengthen their AI and tech capabilities.
Case studies: Global companies leveraging nearshore COEs
Several leading tech companies have already capitalized on Mexico’s strategic advantages. For example, Cognizant has established Centers of Excellence (COEs) in Guadalajara, Mexico, and Chennai, India, ensuring 24/7 continuous operations. IBM’s COEs in Bangalore, India, and Mexico City, Mexico, collaborate on global projects, with the Indian team leading AI development and the Mexican team customizing those solutions for the U.S. market.
This structure allows IBM to seamlessly integrate AI solutions with a deep understanding of both technological advancements and local market needs.
Similarly, Accenture and TCS have adopted dual-location strategies that allow them to minimize risk and ensure project continuity, even if one region faces disruptions.
By assigning backend development tasks to Indian teams and client-facing roles to Mexican teams, these companies have improved both the quality of their solutions and their time to market.
This model leverages Mexico’s bilingual workforce, cultural alignment, and proximity to the U.S., offering a well-rounded approach to nearshore development.
The future belongs to in-house AI innovation
As technology becomes the core product for businesses, traditional staff augmentation models no longer provide the level of control, flexibility, and innovation required to stay competitive.
Companies must invest in building internal AI teams that can drive innovation, maintain control over critical data, and respond quickly to market changes. While nearshoring to hubs like Mexico offers a valuable supplement to in-house teams, the real advantage lies in the ability to cultivate and scale AI capabilities from within.
The race for AI dominance is already in motion, and the companies that emerge victorious will be those that understand the importance of agility, control, and talent alignment. The era of staff augmentation is coming to an end—welcome to the age of in-house AI innovation.
Looking to nearshore a Center of Excellence (CoE)? Codifin can support your journey by providing the expertise and resources needed to establish and grow your CoE effectively.
Some of the benefits you get with Codifin are:
- Access to specialized talent: Codifin focuses on recruiting highly skilled profiles in technology and engineering, which ensures that companies can find candidates with the necessary skills for critical positions.
- Nearshoring solutions: The company facilitates access to Mexican talent, allowing U.S. companies to take advantage of nearshoring, reducing operating costs by up to 75% compared to local hiring.
- Agility in the hiring process: With its experience in the technology market, Codifin accelerates the candidate search and selection process, helping companies to fill vacancies more quickly in just one week.
- Customized hiring models: Codifin tailors its services to the specific needs of each company, whether for temporary, permanent or project-based contracts, allowing for greater flexibility.
- Strong focus on artificial intelligence: The company uses advanced technology to improve efficiency in the selection process, filtering and analyzing candidates more accurately.
