Latin America is positioning itself as a strategic location for businesses looking to build successful teams. With a population of over 650 million people, Latin America offers a vast pool of skilled professionals across various industries, especially in tech talent. According to a study by the World Economic Forum, Latin America has seen a 13% growth in its talent pool in the technology sector over the past five years.
From IT and engineering to finance and marketing, companies can find top-notch talent to drive their business forward. Moreover, Latin American professionals are known for their strong work ethic, making them valuable assets. Among all countries in latin america, two of them standout among the others. Brazil and Mexico, together account for nearly 50% of all tech-related graduates in the region, according to a report by Coursera. By tapping into this talent pool, businesses can gain a competitive advantage by accessing top-tier talent, particularly in Mexico, at a fraction of the cost compared to the U.S.
Cost savings and beyond: Leveraging lower wages in Mexico
Benefiting from lower wages in Mexico offers businesses significant cost savings and other advantages. As of 2024, the average wage for IT professionals in Mexico is approximately 60% lower than in the United States, according to data from Statista. With the cost of labor being considerably lower compared to other countries, companies can achieve substantial savings in their operational expenses.
This allows for more competitive pricing strategies, and increased profit margins. However, the benefits go beyond cost savings. By building teams in Mexico, businesses can tap into a highly skilled and educated workforce. Mexico's education system produces over 130,000 engineering and technology graduates annually, as reported by UNESCO, making it an attractive destination for companies looking to expand their operations.
Currently global companies are investing in Mexico to leverage the low wages and top talent by building “Centers of Excellence”, these places are a specialized team or unit within an organization that focuses on innovating, standardizing processes, and promoting best practices. It serves as a hub of expertise and knowledge sharing across the organization.
Centers of excellence: Driving operational efficiency in Mexico
These centers, often located in major cities like Mexico City, Monterrey and Guadalajara, are specialized hubs where highly skilled professionals come together to work on specific projects or tasks. According to Deloitte, Mexico has seen a 25% increase in the establishment of Centers of Excellence in the last decade, particularly in the fields of AI and software development.
By consolidating talent in these centers, companies can tap into a pool of expertise and knowledge that helps streamline processes and improve overall productivity. The concentration of skilled professionals also facilitates collaboration and knowledge sharing, leading to innovation and continuous improvement. Furthermore, these centers of excellence allow companies to leverage the local talent pool, which often includes individuals with advanced technical skills and industry-specific expertise.
In fact, Monterrey is home to over 100 multinational companies that have established such centers, making it a hub for innovation in Latin America. This enables businesses to access a diverse range of capabilities and competencies that contribute to their operational success.
Examples of companies that have built a center of excellence in Mexico.
- IBM: Established a CoE in Guadalajara for software development, IT services, and innovation.
- Dell Technologies: Operates a CoE in Mexico City focused on IT services, customer support, and business process outsourcing.
- HP (Hewlett-Packard): Has a CoE in Guadalajara specializing in software, hardware, and IT services.
- Oracle: Runs a CoE in Mexico City concentrating on cloud computing, software development, and digital transformation.
- General Electric (GE): Operates a CoE in Querétaro for engineering and manufacturing, particularly in aerospace.
- PepsiCo: Established a Global Business Services CoE in Monterrey focusing on finance, HR, and supply chain management.
Expanding into Mexico: Boosting operations and global presence.
With its strategic location and close proximity to the United States, Mexico provides easy access to both North and South American markets. Mexico is the 15th largest economy in the world, with a GDP of over $1.3 trillion as of 2023, according to the World Bank.
Furthermore, Mexico's growing economy and stable political environment make it an attractive destination for foreign investment. The World Bank’s Ease of Doing Business Index ranks Mexico 60th globally, highlighting its conducive environment for business operations. Expanding into Mexico not only boosts business operations but also enhances global competitiveness and enables companies to thrive in the American and Latin American markets.
Unlocking success in Latin America
As Latin America continues to emerge as a global powerhouse, unlocking success through Expanding a Team in Latam becomes a must for businesses seeking growth and operational efficiency. The region's tech sector is projected to grow by 10% annually through 2026, according to the Inter-American Development Bank. Tapping into Latin America's talent pool offers strategic advantages, from diverse skill sets to cultural familiarity.
Leveraging lower wages in Mexico presents cost savings opportunities that can significantly impact a company's bottom line. The concentration of Centers of Excellence in Mexico further drives operational efficiency and excellence. Expanding into Mexico not only boosts business operations but also positions companies for global success. However, challenges like language barriers and cultural differences should be carefully managed to fully realize the region’s potential, according to a 2024 report by PwC. With the right strategies and mindset, these challenges can be overcome, paving the way for unprecedented success in this region.
At Codifin, we specialize in helping businesses leverage the advantages of outsourcing in Mexico. Whether you're looking to expand your tech team or streamline your operations, our extensive expertise and robust local presence enable us to guide you through every phase. Partner with us to fully harness outsourcing's potential and drive your business to new heights.
