Mexico software development outsourcing: The complete guide

Software development outsourcing emerged as a game-changer when the global outsourcing market surged to an astounding 92.5 billion US dollars in 2019. And when it comes to finding the perfect balance between quality, cost, and culture, a hidden gem stands tall: Mexico. 

In this blog, we’ll equip you with the essential knowledge to navigate the intricacies of Mexico software development outsourcing. With this guide, you’ll be well-prepared to unlock the immense potential waiting for you south of the border. Let’s explore!

• What is software development outsourcing?
• Software development outsourcing market in Mexico
• Why is Mexico a good place to outsource software development?
• How much does it cost to outsource software development to Mexico?
• Common models for Mexico software development outsourcing
• 5 steps to Mexico software development outsourcing
  • Step 1: Clearly define the project goals and requirements
  • Step 2: Search for verified outsourcing partners
  • Step 3: Offer and sign the contract
  • Step 4: Sign the NDA
  • Step 5: Maintain control and communication
• Tips to find the best Mexican outsourcing partner
• Top software development outsourcing companies in Mexico
  • ClickIT DevOps & Software Development
  • GoNet
  • Divelement Web Services
  • Teravision Technologies
  • ETEAM
  • Alset
• The challenges of Mexico software development outsourcing
  Conclusion

What is software development outsourcing?

Software development outsourcing is the practice of allocating software development tasks and projects to external third-party companies. Businesses outsource the work to external partners rather than handling all software development processes in-house. These partners are typically located in different geographical regions.

Outsourcing software development offers several advantages to businesses in terms of cost-effectiveness, expertise, flexibility, and final outcome. However, it is important to note that software development outsourcing also comes with challenges. 

Outsourcing has become popular for companies looking to enhance their software capabilities and stay competitive in the market. And they can outsource software development to any country in the world. 

Software development outsourcing market in Mexico

Mexico has emerged as a standout choice in the competitive landscape of software development outsourcing. The country is distinguished by its exceptional talent pool and strategic location.

To manage an outsourced software development team, delving into the industry’s nuances within the desired country is essential. In the case of Mexico, the market has very promising prospects:

• With a projected steady compound annual growth rate (CAGR) of 7.35% until 2027, the Mexican outsourcing market exhibits resilience and long-term potential.
• Much of the revenue stems from the United States, owing to Mexico’s proximity and aligned time zones. This has facilitated seamless collaboration.
• Mexico offers an enticing combination of competitive pricing and high-quality skill sets, making it a profitable choice for all parties involved.
• By 2027, the revenue volume is expected to soar to nearly $4 billion. This showcases the country’s upward trajectory in the software development outsourcing realm.

Therefore, Mexico is one of the premier destinations for offshore software development in South America. 

The Mexican government has also made commendable efforts to bolster the education and infrastructure sectors. This aims to create a fertile ground for young individuals to acquire new and enhance existing skills.

With over 350 outsourcing companies operating in Mexico, the country has witnessed the remarkable development of a robust IT sector. This is considered a feat that seemed almost unimaginable just two decades ago. 

As a result, renowned global enterprises, including Amazon, have established offices in Mexico. This is a testament to the appealing position of Mexico as an attractive outsourcing destination.

Therefore, Mexico is one of the premier destinations for offshore software development in South America.

Why is Mexico a good place to outsource software development?

A vast pool of tech talents

In the wake of a significant educational drive, Mexico has achieved a remarkable milestone, producing nearly as many STEM graduates as the United States in just a few years.

According to the 2022 STEM Education Report, the country experienced a notable surge in student interest in STEM fields, rising from 25% to 35% between 2010 and 2021.

Mexico’s prowess in computer sciences is particularly noteworthy, as it ranks among the top countries globally, churning out over 130,000 graduates annually. This places Mexico in a position of pride alongside other technology-leading nations within the Organization for Economic Co-operation and Development (OECD).

Mexico’s dedication to building a robust talent pipeline is evident, starting from early education and extending throughout the academic journey. This concerted effort aims to foster a strong and diverse tech sector that meets the demands of technology partners, clients, and employers.

By nurturing a skilled workforce, Mexico is a valuable resource for the global technology industry.

A perfect cultural fit

One important aspect of software development outsourcing is finding a cultural match between the hiring company and the development partner. Teams with a closer cultural alignment tend to outperform those from vastly different countries.

With its proximity to the US, Mexico is deeply familiar with American culture. Mexicans and Americans share similar cultural tastes, political views, and customs. Moreover, both countries have comparable approaches to work and business, establishing a strong foundation for collaboration.

As if these cultural similarities weren’t advantageous enough, the proximity between the US and Mexico eliminates language barriers. Mexican professionals, particularly in the IT sector, have a high level of proficiency in English or are even bilingual. US companies can rest assured, as potential communication issues stemming from cultural or linguistic differences are significantly minimized.

Cost-effective solution

When considering the benefits of software development outsourcing to Mexico, it is impossible to overlook the allure of cost savings.

In Mexico, the average annual salary of a software engineer typically amounts to around MXN 1,290,972 (USD 67,716). In contrast, the average salary for a US developer reaches USD 146,665, highlighting a noticeable cost disparity for comparable skill sets.

Besides, the overall expenditure involved in coordinating projects with Mexican teams is significantly cheaper than in other regions. With near real-time collaboration, the risk of misunderstandings or mistakes stemming from delayed or inadequate delivery of change requests is notably reduced.

State-of-the-art infrastructures

Private developers and the Mexican government have recently increasingly invested in the technology sector. This has helped drive noteworthy advancements across various domains.

As the demand for talent rises, the number of business and technology parks in the country continues to expand. This growth has captured the attention of numerous large-scale companies worldwide, recognizing the value of outsourcing to Mexico. These organizations are expected to further expand their operations and tap into the abundant talent pool available in the country in the coming years.

Additionally, Mexico’s connectivity landscape is witnessing significant improvements. Notably, a company has invested a substantial sum of three billion dollars to extend high-speed internet services nationwide.

This development contributes to the connectivity infrastructure, enabling smoother communication and seamless execution of technology-related endeavors.

Knowledge of best practices

Mexico’s talent pool is well-versed in contemporary methodologies, such as agile development, which enjoys widespread adoption. By outsourcing to Mexico, you gain access to developers who deeply understand industry best practices. This shared knowledge is pivotal in fostering alignment and cohesion among team members throughout development.

Consequently, it often leads to superior outcomes. Research conducted by the Standish Group also proved that agile projects have three times higher chances of success than conventional approaches.

Convenient timezone

When a US company collaborates with a development team in a significantly different time zone, overlapping working hours become minimal. This creates challenges when scheduling meetings or addressing last-minute issues as the US team works while the overseas team sleeps, and vice versa.

However, US businesses can effortlessly circumvent these challenges by engaging a software development company in Mexico. Mexico shares the same time zone as the US, resulting in synchronized workday hours. Consequently, time zones no longer hinder productivity and efficient collaboration.

In addition, Mexico’s proximity to the US offers an additional advantage – the opportunity for more frequent in-person meetings. With both countries located adjacent to each other, organizing face-to-face gatherings simply requires a direct flight.

Professional delivery of high-quality services

Mexico has transformed its image as a reliable and mature outsourcing partner, particularly in technology. While it may not have the same established reputation as Canada, India, or China, Mexico is increasingly recognized as a preferred destination for American businesses.

Although it was previously associated with cheap labor investments and outsourcing in certain industries, Mexico now offers a level of professionalism. When engaging outsourcing companies in Mexico, it is crucial to establish clear expectations regarding timescales, deliverables, and processes.

Simple collaboration

Because of the shared border between the U.S. and Mexico, the time zones of these two countries align. Consequently, developers from Mexico are more likely to work on the same schedule as your internal team.

This synchronization enables real-time collaboration, allowing for timely feedback and regular updates to be exchanged during your team’s working hours.

How much does it cost to outsource software development to Mexico?

For entry-level engineers, the cost can range from $900 per month, while you may expect to pay more than $3,500 and $5,000 per month to senior and architect-level specialists.

In terms of the most commonly used technologies in Mexico, mid-level developers specializing in Front-End JavaScript, Python, Android, and iOS typically earn between $2,000 and $2,500 per month.

According to Glassdoor, a developer in Mexico with 1-3 years of experience can be hired for a monthly rate of MX$60,500 (including base pay of MX$27,500 and additional pay). This amounts to approximately $3,200.

Monterrey offers the highest salaries among Mexican cities, with an average monthly wage of around $3,700. Mexico City closely follows, with engineers earning an average of $3,600 monthly.

On the other hand, Guadalajara and Tijuana are relatively more affordable, where mid-level engineers with an average level of experience receive approximately $1,800 per month.

Mexico software development outsourcing costs can vary, as companies often have additional fees and upfront payments. However, partnering with professionals from Mexico can offer cost savings compared to maintaining in-house employees.

Common models for Mexico software development outsourcing

There are two main outsourcing models for Mexcico software development outsourcing. They are:

Hiring in-house developers

Normally, when hiring an in-house developer, you need to abide by the Mexican Federal Labor Law. According to this law, the developer needs to work 48h/week maximum, 8h/day while also having 8 national holidays per year.

You can hire an in-house developer by looking at popular job boards such as Bumeran, OCCMundial, and CompuTrabajo. These job boards can help you connect with potential candidates and facilitate your hiring process.

Hiring contractual developers

Unlike in-house employees, individual contractors don’t have the benefits and social security mandated by law. One thing to keep in mind is that hiring a contractual developer may charge a 16% VAT.

You can hire a contractual developer by working with an outsourcing company. These companies take care of the legal aspects when hiring developers and spare you the burden of finding the right ones for your business.

5 steps to Mexico software development outsourcing

Finding reliable software developers for outsourcing can be challenging. However, the success of any project relies on following these essential steps when outsourcing software development projects to Mexico.

Step 1: Clearly define the project goals and requirements

Before selecting a software vendor, being specific about the objectives you aim to achieve is crucial. Paying attention to the company’s target market is also essential.

Various factors can influence the outcome, including unforeseen expenses, the types of technology involved, communication challenges, and the need for extensive supervision.

When undertaking Mexico software development outsourcing, it is vital to communicate your expectations, and limitations (particularly regarding budget). Special requirements, and the unique aspects of your business and project to yourself and your chosen vendors also need to be considered.

When considering offshore outsourcing to Mexico, the client must precisely understand the project’s scope. Providing comprehensive documentation and specifications is highly beneficial.

Before approaching the vendor, conducting thorough research regarding the intended projects is essential. This includes considering the potential tech stack, the software’s purpose and usage, and the business challenges.

Step 2: Search for verified outsourcing partners

There is a wide array of software development outsourcing companies in Mexico to choose from, but it is essential to find the right company that suits your needs.

While ensuring the company is safe to work with, legally registered, and possesses a physical office, it is equally crucial to consider other factors. These include their business practices, values, process vision, ethics, and cultural compatibility. It is vital to be aligned and have sufficient synergy for a successful partnership.

• The following tips can assist in selecting the appropriate team when outsourcing to Mexico or any other country:
• Seek recommendations from your professional network if they have prior experience working with vendors in Mexico.
• Explore different ranking and review platforms like Clutch, Goodfirms, or Tech Reviewer to identify the most reliable partners.
• Connect with previous clients who can provide insights about Mexican developers or tech companies.
• Utilize LinkedIn to gather additional information about software developers or software development companies.

Step 3: Offer and sign the contract

Once you’ve decided on a Mexican outsourcing partner, it’s time to finalize the deal. This entails presenting them with a detailed proposal outlining the project scope, deliverables, dates, and financial terms. To minimize misunderstandings, it is crucial to be clear and comprehensive.

When you are satisfied with the terms and conditions of the contract, it is time to sign the agreement. This can be completed online or physically, depending on your preference and the procedures of the outsourcing partner. To make the contract legally binding, ensure that all authorized representatives from both sides sign it.

Step 4: Sign the NDA

Certain procedures should be followed regardless of whether you choose to outsource to Mexico or any other country. While a Non-Disclosure Agreement (NDA) is not mandatory in the software development outsourcing process, it is advisable to have one in place.

This agreement protects against potential threats that could compromise a company’s trade secrets, business practices, plans, and sensitive financial or HR data.

The following list provides further guidance on how to prepare an NDA for outsourcing:

• Include the names of both parties involved.
• Clearly define what constitutes essential and confidential information.
• Specify the duration or length of the agreement.
• Establish penalties or liability for financial damages.
• Clarify any exceptions to confidentiality.

Step 5: Maintain control and communication

Maintain constant communication and stay involved in the development process, even when hiring a dedicated team with a project manager.

Effective communication is a vital aspect, regardless of the geographical location of your development team. It is crucial to clearly understand the preferred communication channels to be used.

Additionally, both parties must acknowledge and address any potential time zone differences. Efficient communication encompasses both the means of communication and the style and approach employed by both parties.

When communication is effectively established, it leads to positive outcomes for all involved, including:

• Enhanced employee morale
• Improved productivity with high-quality output
• Attainment of satisfactory results
• Increased engagement

Tips to find the best Mexican outsourcing partner

Take a look at their experience
When you look for an outsourcing partner, their overall experience in the field should be considered.

The level of seniority for your software development team is a decision in your hands. A proven approach is to hire a highly experienced tech lead who can design the architecture and strategy. Meanwhile, the mid-level and junior engineers implement the solution under their guidance.

Here are the key factors to consider when selecting potential developers for your Mexico software development outsourcing:

• Skill sets aligned with project needs
• Experience working with the latest technological frameworks and tools
• Problem-solving experiences
• Basic understanding of your business
• High-quality programming skills and SDLC understanding

Keep in mind their development process
To ensure successful collaboration with your vendor, it is vital to clearly understand their operations and communicate your expectations effectively. It is important to grasp the level of effort their dedicated software development team invests in organizing their work.

Here are some essential questions to ask your vendors before starting to work with them:

• What project management methodology do they employ?
• How do they handle changing requirements throughout the project?
• Are their project managers both technically skilled and PMI-certified?
• Do they deliver tangible results at the end of each sprint?
• How do they typically address technical debt that may arise during development?
• How do they organize and provide project reporting?

Consider market credibility
Web platforms like Clutch play a significant role in this aspect. These platforms enable companies to validate the credibility of outsourcing companies through the feedback provided by their previous clients.

When a company presents a portfolio, it is advisable to verify the authenticity of those projects. Additionally, it is recommended to assess the presence of media articles and social media mentions related to the outsourcing company as indicators of its reputation and visibility.

Top software development outsourcing companies in Mexico

ClickIT DevOps & Software Development

ClickIT is a trusted nearshore partner for DevOps and Software Development. The company specializes in delivering cutting-edge solutions tailored to meet the needs of startups, SaaS, and enterprise companies.

As an esteemed AWS Select Partner and a leading software outsourcing company in LATAM, ClickIT offers a wide range of comprehensive services. That includes analysis, consultancy, design, and implementation of custom cloud projects.

The company offers Software Development, Staff Augmentation, and DevOps Services. With their services, you will experience the synergy of our expertise and innovation as we drive your business forward on the path to success.

GoNet

In 2008, GoNet was established to drive technological innovation across various industries. The company delivers cutting-edge business solutions in high-performance sectors such as FinTech, SaaS Application Development, and Support.

With a global presence spanning Mexico, the United States, Puerto Rico, Colombia, and Spain, GoNet is strategically positioned to serve clients worldwide.

Our commitment to excellence drives us to provide the finest solutions while attracting exceptional talent from around the globe. At GoNet, we firmly believe that people are at the heart of our success. They are not just a part of our journey; they are the very essence of it.

Divelement Web Services

Divelement is a software engineering services consultancy that puts people at the center of everything. The company collaborates closely with businesses to elevate their digital product roadmaps, helping them confidently reach their market goals.

Divelement’s team consists of passionate individuals who are highly skilled and dedicated to their craft. Our remote work culture sets us apart, which allows Divelement to operate flexibly and honor the work-life balance needs of our valued Divelevers. With a commitment to excellence and a people-first approach, we strive to deliver exceptional results that drive success for our clients.

Teravision Technologies

Teravision Technologies is a leading Nearshore Software outsourcing company comprising more than 300 skilled professionals. With a remarkable track record spanning over 17 years, the company specializes in designing, developing, and ensuring the quality assurance of tailor-made solutions.

Teravision’s recipe for success lies in crafting innovative and daring products while adhering to deadlines. The key differentiator is their dedicated software development teams, who bring immense value to every project.

Teravision takes pride in its talented, honest, and results-driven team that thrives in an Agile environment. Their unwavering commitment ensures the realization of your goals and propels your business forward.

ETEAM

For the past decade, ETEAM has been a trusted digital product agency, driving transformative growth for a diverse range of businesses. ETEAM’s expertise spans from VC-backed startups to the largest companies globally.

The company has earned a reputation for simplifying the intricate realm of digital development into straightforward and comprehensible processes. This approach enables the company to construct superior, cost-effective applications within shorter timeframes, all while upholding uncompromising quality.

The team of talented engineers prioritizes transparency and precise planning. ETEAM consistently delivers remarkable outcomes for our clients by seamlessly transforming ideas into optimal software solutions.

Alset

Alset stands at the forefront as a premier technology solution provider, offering a comprehensive suite of services. Their services encompass custom software development, staff augmentation, and recruiting services.

Alset’s team comprises dedicated professionals with software development, architecture, data science, quality assurance, and design expertise. Their proficiency extends across diverse sectors, including fintech, events, esports, education, compliance, regulation, and retail.

Alset is the ideal partner for businesses aiming to accelerate their ROI while ensuring timely and cost-effective product launches. With Alset, you can confidently navigate the path to success.

The challenges of Mexico software development outsourcing

Although many US firms believe outsourcing to Mexico to be a good option, there are some disadvantages that you may need to consider. Here are some:

• High bureaucracy: Operating in Mexico involves navigating a significant amount of bureaucracy. The Mexican government still heavily relies on manual processes, requiring physical presence at government institutions and often leading to lengthy waiting times for decisions and permits.
• Corruption issues: Like many other countries, Mexico is not entirely immune to crime and corruption. Even at higher government levels, there are instances where bribes are involved. Therefore, seeking local individuals with a strong understanding of Mexican legislation is advisable.
• Infrastructure and technological advancements: While Mexico has made significant advancements in technology infrastructure, there may still be variations regarding access to cutting-edge technologies and infrastructure across different regions. It is important to assess the capabilities and resources of the outsourcing company to ensure they align with the project requirements.

If you are hesitant to consider these tough challenges of Mexico software development outsourcing, Mageplaza can spare you those hurdles. With nearly 10 years of experience, our team of experts can drive your business forward and help you accomplish your goals.

 

Here’s what we can offer:

• Extensive expertise: With a team of exceptionally skilled professionals, we possess in-depth knowledge and expertise in eCommerce platform features, customization options, and industry best practices. Our commitment to staying abreast of the latest technologies ensures you have complete confidence in receiving the best services.
• Competitive pricing: At an affordable rate of $15 per hour, our services offer exceptional value for your investment. We understand that every project has unique requirements, which is why we provide flexible engagement models to cater to your specific needs.
• Technical support: Our team of professionals offers continuous technical support to our clients, assisting them in resolving any potential challenges. We are equipped to troubleshoot issues, carry out necessary maintenance tasks, and ensure the seamless operation of your systems.

If you are considering outsourcing software development, don’t hesitate to contact us for more information. Why not supercharge your business with Mageplaza? Start discovering how to unlock the full potential of your e-commerce business!

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Conclusion

Needless to say, Mexico offers numerous advantages as an attractive destination for software development outsourcing. While there may be challenges, they can be overcome by partnering with the right outsourcing company.

By working with a reliable partner like Mageplaza, you don’t have to worry about pricing or security concerns. We will help you achieve your goals effectively and realize your dream of software development outsourcing.