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Mexican tech sector looks to benefit from improved business scenario with US

Bnamericas Published: Saturday, June 19, 2021
Mexican tech sector looks to benefit from improved business scenario with US

Mexico's ICT sector could benefit from increased business with the US thanks to geopolitical tensions with China, cloud software demand from US corporates and scarcity of skilled professionals north of the border.

In Mexico, the industry is looking to satisfy demand for tech talent from the trillion-dollar US software market.

“What we learned in the last year and a half, with the pandemic and the new administration in the US, is that the opportunities for the industry are huge. The US economy is enormous and with Biden, that was highlighted in the visit of VP Kamala Harris, indicating a ‘reset’,” Gustavo Pares, CEO of Mexican AI solutions firm NDS Cognitive Labs, told BNamericas.

NDS started a globalization process in 2010, and according to Pares it has helped international companies set up shop in Mexico to take advantage of the bilingual technical talent in the country. 

Around that same time the company also started exporting services to the US. 

Over the course of the years NDS decided to embrace the growing cloud and AI market and pivoted to develop chatbots, cloud solutions and advanced analytics. It claims to have 20,000 technology professionals based in Mexico.

One of the major factors in the growth and adoption of tech in the US is the increasing focus on software as a service (SaaS) and broader digital transformations across industry sectors, which have accelerated due to the COVID-19 pandemic.

As global labor and supply chain shortages pose challenges to an overheating US economy, Mexico’s tech sector could benefit from providing solutions for the US, according to Pares.

And Mexico has the brains to offer.

“In addition to the need of companies of different sizes for digital transformation last year, shifting users to the digital environment, we also saw renewed interest in corporate America to start looking for Mexican talent related to IT,” Pares said.

LABOR FORCE

Despite overall scarcity of tech talent in Latin America, Pares says Mexico is well positioned to at least partially cover a deficit he estimates at around 900,000 in IT and related positions north of the border. 

Mexico graduates around 70,000-100,000 trained engineers annually, according to the CEO.

And US businesses are no longer looking exclusively to India, the Philippines and China for such talent, he says, while there’s a growing number of big tech job-makers in California, for example.

“The reality is that the US is an extremely expensive country. Labor is very expensive, and not necessarily skilled regarding some sectors,” Carmen Encarnacion, a partner at EY US said in a tax seminar hosted by the Chilean office of the professional services firm last year.

From a geopolitical perspective, the US private sector is increasingly looking to friendly countries with favorable trade treaty terms amidst a pandemic-driven global environment with increasing geopolitical tensions.

According to NDS’s Pares, Mexico offers resilient services provider ecosystems and tech labor partnerships “from a geographically close and interests-aligned country”.

In 2019, Mexico surpassed China as the United States’ top trading partner, with US$615bn in two-way trade. It was followed by Canada (US$612bn) and China (US$559bn).

Maryleana Méndez, general secretary of inter-American telecom association Asiet, told BNamericas that Harris’ trip to Mexico was “auspicious” for bilateral ties and speaks a lot about “a much closer relation between the US and its closest neighbors, in Mexico and Central America.”

Méndez said discussions on taxes on large corporations and digital taxes within the OECD have advanced and can be beneficial to countries in the region compared to the US.

"Signals matter and I believe that at this moment there is a very important space, especially for Mexico and these immediate neighbors, whose main partner is the United States."

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