Tech-Mex - an outsourcing alternative

Bambi Francisco Roizen · May 22, 2008 · Short URL:

As development costs in India rises, advantages to offshoring to that country diminish. This creates a window of opportunity for developers in Mexico, like Nearsoft. Based in northern Mexico, Nearsoft is one of the top 10 nearsourcing companies in Latin America, according to Global Services. The main advantage to nearsourcing to Mexico is that the developers operate in the same time zone, said Nearsoft CEO Matt Perez, who came in for an interview with me. The other advantage is that there is less of a cultural divide, thereby reducing the hours of rework that can often be the result of misunderstandings between U.S. companies and their developers in Asia or Eastern Europe, he said. 

The downside is that Nearsoft's services are not competitive on price compared to offshore alternatives. This is mostly due to the higher cost of living, says Matt. Additionally, there is a smaller pool of qualified workers. The half a million IT workers that enter the workforce in India each year equates to the total IT workforce in Mexico. Matt says that his developers cost as much as $45 an hour, which is much higher than offshore services. In India, an average annual salary for an IT worker is $7,779. That's a lot lower than $75,000, for a U.S. IT worker. But it's still lower than the average salary of an IT worker in Mexico, which is $17,899, according to Business Week

From a cost basis, it's unclear whether the advantages to outsource to India will ever really decline or even disappear in five or 10 years. But whatever the case may be, it's good to have alternatives.

Tech-Mex, anyone?

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Bambi Francisco Roizen

Founder and CEO of Vator, a media and research firm for entrepreneurs and investors; Managing Director of Vator Health Fund; Co-Founder of Invent Health; Author and award-winning journalist.

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