3 Reasons Mexico is Closing the Software Talent Gap

Technology powers everything. Whether you’re using your iPhone or driving your car, advanced code keeps everyone connected and engaged. And in today’s economy, every business is a software company. Businesses of all sizes, in every industry rely on software to meet growing customer demands, analyze user behavior, process data, and connect to the cloud.

So it isn’t surprising that the demand for software engineers is higher than ever. According to the Bureau of Labor Statistics, the employment market for software developers is expected to jump 22% by 2022, a speed much faster than the average for all other positions. If you’re looking to outsource development talent, you’re probably well aware of the shortage of local talent.

Every year this undeniable truth becomes more of a challenge for North American businesses. Why? There’s a growing talent gap in the United States for STEM (science, technology, engineering and mathematics) education. While development talent in the states is becoming more challenging to hire and afford every year, the talent pool in is burgeoning in Mexico.

The Domestic Talent Market is Evolving

According to the U.S. Department of Education, the United States’ leading edge in technology is in jeopardy: “The United States has become a global leader, in large part, through the genius and hard work of its scientists, engineers and innovators. Yet today, that position is threatened as comparatively few American students pursue expertise in the STEM fields – and by an inadequate pipeline of teachers skilled in those subjects.” Just 16 percent of high school seniors in the United States are interested in careers in STEM and proficient in mathematics. Only half of American students who pursue a college degree in a STEM field decide to work in a related career.

Meanwhile, the United States is seeing a rapid decrease in the domestic unemployment rate in all of the Science, Technology, Engineering and Mathematics areas. Software developers with undergraduate degrees earn a current average, annual salary of $97,990, with positive employment demand and growth currently positioned at 17%.

In the last few years, the growing economy is producing more demand for software talent than ever before. As published in U.S. News and World Report, the unemployment rate for software developers in January of 2017 was only 2%. And, according to the National Association of Colleges and Employers, in 2017, graduating engineers were rewarded with the highest starting salary of any profession at $64,891, with the median salary listed at $98,260.

Talent is Growing (South of the Border)

With more domestic talent barriers in the United States, more businesses are exploring other options. Thanks to the Mexican government’s growing investment in education and infrastructure, more software talent is growing there at more moderate salaries than their American counterparts. STEM professionals in second-tier U.S.-based cities who don’t even have a degree earn four times more than their Mexican counterparts who have graduated.

Meanwhile the Mexican economy is still driving fewer jobs than it is Development graduates. That means more limited competition between local recruiters and American employers or outsourcing partners.

Gartner Inc. ranked Mexican IT in the top 3 globally in a recent assessment of offshoring options in the tech industry. The review cites Mexico’s rapid expansion at 3x the global average.

But why is outsourcing moving to Mexico?

An average of 130,000 engineers and technicians have graduated from Mexican universities and specialized high schools annually over the last five years. This sum outnumbers students graduating in the same areas in countries like Germany, Canada, and even Brazil, which has almost double Mexico’s population.

In recent years, engineers jumped from 1.1 million to 1.3 million in recent years. In 2015, there were nearly 29,576 science graduates in Mexico, with a total enrollment of 193,243.

But while Mexico’s higher education is quickly increasing, the local job market isn’t pacing with the growing talent. Mexico presents businesses in the U.S. with a reliable, educated and structured talent pool without the competitive increases in wages in Canada and the United States.

Mexican President, Enrique Pena Nieto, made investing in education a major government focus. Since 2012, the administration invested $2.75 billion or 50 billion pesos in Public Education and Infrastructure.

The growing momentum in Mexico is noteworthy even when comparing it with talent growth in United States. According to the President’s Council of Advisors on Science and Technology, the American economy will generate demand for one million more STEM professionals than it is can produce over the coming decade.

Most of the related programs proposed by the previous White House administration weren’t passed through the U.S. Congress. The resulting fallout is a growing challenge for Technology, IT, and other industries cornered in innovation.

Overhead is Growing, Budgets Aren’t

According to Mexico’s Department of Labor and Social Welfare, on average, university graduates in aviation, engineering and marine transportation have the highest annual starting salaries at $14,370 (or 15,944 pesos monthly).

A 2013 study shows STEM workers in tier-two U.S. cities who do not have a bachelor’s degree still earn up to 4x more than graduates in the equivalent fields in Mexico.

Average starting salaries for entry level STEM jobs for candidates without bachelor’s degrees in the United States start around $47,856.

According to data from Burning Glass Technologies, for positions requiring a bachelor’s degree or higher, this starting salary jumps to $66,123, almost 5x the amount of the most competitive starting salaries for STEM graduates in Mexico. The highest paid STEM jobs in Mexico start well under the average in the United States.

Forbes notes that technicians and engineers fluent in design, robotics and mechatronics earn about 30,000 pesos monthly ($27,074 annually) after graduating. Their salaries rise to 100,000 pesos monthly ($90,247 annually) after two decades of industry experience. Software designers start around 25,000 pesos per month ($22,562 annually), jumping to 80,000 plus bonuses ($72,197+ a year) after acquiring 15 years of experience in the industry.

Looking for a Nearshore Partner?

The benefits of Nearshore development for outsourcing software development are unmatched and provide a stable, secure and economical solution.

More businesses in North America look to Mexico every year, especially those in highly regulated industries like Healthcare, Finance, and Technology. But as the market continues to explode, it’s becoming tougher to find the right partner that aligns with your company’s goals.

When comparing outsourcing development in India, China, Central America and Eastern Europe to Nearshoring to Mexico, the variations are remarkable. Our outsourcing services are provided from Tiempo offices in Guadalajara, Hermosillo, and Monterrey.

These three cities have strong ICT infrastructures, rich cultures, and growing advancements in education. The cultures are in synchronicity with the United States time zones are in perfect alignment.

English fluency enables multiple points of contact, and there is low attrition. Finally, our team members are vetted thoroughly with comprehensive background checks and employment verification.

Let’s Talk

Click here to schedule a meeting with our team and learn how we support you to keep your innovation moving faster.

About Tiempo Development

At Tiempo, we are making the business of software development easier and more affordable with a unique combination of a Nearshore business model, agile methodology, and advanced talent management. Our Development teams engineer powerful technologies that align with the goals and strategies of our customers for both their internal and public-facing development initiatives. Tiempo’s proprietary agile product-lifecycle management framework called Tiempo Quality System or TQS, is composed of principals and best practices that ensure productive client and team interactions. The result is efficient software development that enables Tiempo to support companies in launching software releases sooner – without draining important resources.

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