Here’s Why Development Talent is Growing Faster in Mexico

Looking to outsource software development talent? Then you are probably already aware of the talent gap in STEM (science, technology, engineering and mathematics) here in the United States, right?

The Local Talent Market is Changing

According to the U.S. Department of Education site: “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.”

“Only 16 percent of American high school seniors are proficient in mathematics and interested in a STEM career. Even among those who do go on to pursue a college major in the STEM fields, only about half choose to work in a related career.”

Currently, the United States is seeing a decline in the national unemployment rate in STEM areas. According to the Bureau of Labor Statistics, the average software developer with an undergraduate degree earned an annual salary of $97,990, with positive employment demand and growth at 17%.

From January 2014 to December 2015, the unemployment rate for engineers fell to 3.6%. And just last year, graduating engineers enjoyed the highest starting salary of any discipline at $64,891, according to the National Association of Colleges and Employers.

Mexico is Closing the Talent Gap

With the local talent gap, more businesses are looking close by. Thanks to the investment of the Mexican government and growing infrastructure, more development talent is emerging in Mexico at lower salary rates than their American counterparts. In fact, graduates in Mexico earn four times less than STEM professionals in second-tier United States based cities who don’t even have a degree.

And currently, the Mexican economy is still generating fewer jobs than it is Development graduates. That means there is limited competition between local recruiters and American employers or outsourcing partners.

In fact, Gartner Inc. recently ranked Mexican IT at number 3 globally for offshoring options with the tech industry there expanding at 3x the global average. Why is the outsourcing market moving nearshore, and more specifically to Mexico?

Over the last five years, an average of 130,000 engineers and technicians have graduated each year from Mexican universities and specialized high schools. This total eclipses students graduating in the same areas in Canada, Germany, and even Brazil, which has almost twice Mexico’s population.

Engineers increased from 1.1 million to just 1.3 million in recent years. There were nearly 29,576 science graduates in Mexico in 2015, with a total enrollment of 193,243.

However, while higher education is quickly increasing in Mexico, the job market remains stagnant. Mexico offers a stable, structured, and well-educated talent pool in need of employment, without the constant pressures of wage inflation businesses are experiencing in the U.S. and Canada.

Mexican President, Enrique Pena Nieto, is continuing the previous administration’s focus on education. The administration has invested 50 billion pesos ($2.75 billion) in Public Education and Infrastructure since 2012.

Mexico’s momentum is significant even when compared with the United States. Over the next decade the U.S. economy will demand approximately one million more STEM professionals than it is currently producing each year according to the President’s Council of Advisors on Science and Technology.

The majority of relevant programs proposed by the previous White House administration did not pass through the U.S. Congress. The fallout is a growing obstacle for IT, Technology, and other industries cornered in innovation.

Price Matters

A study by Mexico’s Department of Labor and Social Welfare showed that, on average, university graduates in marine transportation, aviation and engineering have the highest starting salaries at 15,944 pesos per month (that’s just US $14,370 a year).

Mexican physicists start on 15,609 pesos per month ($14,068 a year). Graduates in biomedicine start on 12,228 pesos per month ($11,021 a year), while math graduates make just 11,743 pesos a month ($10,584 a year).

In fact, a 2013 study by the Brookings Institute showed that STEM workers in tier-two U.S. cities who do not have a bachelor’s degree can still expect to earn up to 4x more than graduates in the equivalent fields in Mexico. For example, the average STEM worker without a bachelor’s degree earns $62,092 in Bridgeport, Connecticut; $48,353 in Wichita, Kansas; and $44,851 in Tulsa, Oklahoma.

Across the United States, the average starting salary for entry level STEM jobs for candidates without bachelor’s degrees is $47,856. According to data from Burning Glass Technologies, for jobs requiring a bachelor’s degree or higher, this rises to $66,123, that’s almost 5x the most competitive starting salaries for Mexico’s STEM graduates.

US companies looking to import talent from Mexico would have to cover visa costs at the times and offer a more competitive salary. However, the wage gap between the United States and Mexico leaves plenty of room for flexibility. Even Mexico’s highest paid STEM jobs start well below the average in the United States.

In a study of Mexico’s most profitable careers, Forbes notes that engineers and technicians specialized in design, robotics and mechatronics earn about 30,000 pesos monthly ($27,074 annually) upon graduating, with their salaries rising up to 100,000 pesos monthly ($90,247 annually) after working in the industry for two decades. And software designers start around 25,000 pesos per month ($22,562 annually), rising to 80,000 plus bonuses ($72,197+ a year) after 15 years of industry experience.

Choosing a Nearshore Partner?

The advantages of nearshore development are unparalleled for outsourcing development projects. Working with an outsourcing partner in Mexico offers a secure, reliable and affordable solution. Each year, more North American businesses are turning to Mexico, especially those in highly regulated industries such as Finance, Healthcare and Technology. However as the market continues to boom, it can become more challenging to find the right partner that aligns with all of your company’s criteria.

When comparing outsourcing development in China, India, Central America and Eastern Europe to nearshoring to Mexico, the differences are undeniable. Outsourcing services can be provided from established locations like the ones where Tiempo is based, such as Guadalajara, Hermosillo, and Monterrey.

These are three cities with strong ICT infrastructures, vivid cultures, and growing education. The cultures are in alignment with those across the United States and North America. The time zones are in perfect synchronicity. Expanding language fluency empowers multiple points of contact, and professionals (in a less competitive local market) are loyal, with low turnover. And of course, all of our team members are thoroughly vetted through a comprehensive background check.

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

About Tiempo Development

At Tiempo Development, 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. Tiempo’s proprietary agile product lifecycle management framework called Tiempo Quality System (TQS) is composed of principles and best practices that ensure productive client and team interactions and as a result, efficient software development.

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