Nearshore Software Development in Mexico: Benefits and Challenges

Even though the tech industry has seen layoffs and slower hiring in 2023, competition for top developer talent remains high. This is especially true as hiring budgets have gotten squeezed and companies are being asked to do more with less. Many technology leaders are looking for help outside the U.S. but don’t know where to start. Let’s explore the benefits and challenges of nearshore software development in Mexico, a Latin American hotspot for hiring software engineers.

Benefits of Nearshore Software Development in Mexico

Deep Pool of Top Developer Candidates 

Simply put, there are a lot of talented developers available for hire. As measured by Candidates Per Open Role (CPOR), Mexico is 3x less competitive for hiring engineers than the U.S.  The U.S. has 7.8 candidates per open role, whereas Mexico has 25.7 developer candidates per open role. That means more talent is available for your roles!

Plus, the engineering talent is top tier. Mexico has made significant investments in the technology ecosystem, both in its startup community and its computer science focused institutions. Tech cities in Mexico like Mexico City and Guadalajara – the Silicon Valley of Mexico – boast top notch colleges and universities like National Autonomous University of Mexico (UNAM) and Universidad de Guadalajara (UdeG). Top tech companies like Amazon, Intel, Oracle, HP, and IBM, and top startups like Clip, NuBank, and Uber, are snapping this talent up – 30% of CS grads from top universities are hired by U.S. companies. And Mexico consistently receives the most venture capital (VC) investment in startups behind only Brazil.

Cost-effective Full-time and Contract Engineers

These top engineers also are significantly cheaper than hiring domestically in the U.S.  On average, for full-time hires, you can see a savings of 35% on average for hiring in in Latin America:

Mexico’s typical software developer salaries for Level 3 through Level 5 (L3 – L5) software engineers range between $70.5k to 147.3k USD, orders of magnitude cheaper than U.S. software engineers.

Time Zone Aligned for Easy Collaboration

One of the key advantages of nearshore software development in Mexico is the alignment of time zones with the United States. This synchronicity lays a solid foundation for seamless collaboration between development teams. With overlapping working hours and near real-time communication, barriers are significantly reduced. This means that businesses in the U.S. can maintain a close connection with their nearshore teams in Mexico, without the delays often associated with offshore development. The result is a more agile and efficient development process.

Cultural Compatibility

Mexico’s cultural affinity with the United States is a compelling factor for businesses seeking nearshore software development solutions. Shared values and a similar work ethic mean teams in Mexico are often attuned to U.S. business practices, making it easier to integrate them into existing workflows and processes. This cultural compatibility enhances collaboration and helps in understanding the broader context of projects and ensures teams mesh despite not being co-located.

Proximity to US for Convenient Travel

Mexico offers a practical advantage in terms of proximity. With convenient travel options and relatively short distances, businesses in the U.S. can easily visit their nearshore teams in Mexico when necessary. Remote teams still crave in-person interaction, so many distributed teams choose to meet quarterly for strategy work and good old-fashioned team building. Cheap airfare and accessibility to the U.S. makes that possible.

Challenges with Nearshore Software Development in Mexico

Dev Shops Are Mercenaries, Not Missionaries

Many software development companies in Mexico offer contract development teams. Known as dev shops, these engagements are useful for short-term projects and engagements. However, tech product companies – SaaS tools, marketplaces, cybersecurity, etc. – need developers who are invested in the long-term and can help develop and iterate solutions over a long period of time. For that reason, full-time employment or long-term contractors are a better solution.

English as a Second Language

English, while widely spoken and many developers have a high-degree of English proficiency, is still a second language for most Mexican developers. This can occasionally lead to misunderstandings or miscommunications, particularly in complex technical discussions.

To address this challenge, it’s crucial to understand the level of English proficiency for the Mexican developers you engage with. Many engineers have previously worked for U.S.-based companies and are already fully proficient. You can often spot the differences in reviewing a candidate’s work experience.

Legal and Regulatory Considerations

Hiring in any international context always presents legal and compliance items to check off. Mexico is no different, but has relatively straightforward regulatory requirements. Still, it’s important to understand the specifics of what hiring and contracting in Mexico requires.

Infrastructure Gap in Certain Mexican Locations

While major Mexican cities often boast modern and reliable technological infrastructure, there can be variations in connectivity and resources in more remote or underserved areas. This infrastructure gap may present challenges in terms of internet speed and reliability, which are crucial for seamless collaboration in software development. 

How Terminal Helps with Hiring Developers in Mexico

Here at Terminal, we’re big believers in software developer talent in Mexico. Unlike dev shops, we offer both full-time and contract developers for hire.  And we focus on only offering elite talent – we approve only the top 7% of candidates based on skills and English proficiency. 

We screen every candidate – and share those video screens with you! – to fully understand each candidate’s experience and communication skills. This ensures you’re only considering top candidates who can communicate fluidly with your U.S.-based team.

For both full-time and contract, our in-market experts help manage legal and compliance with your team so you don’t have to be experts on the ins and outs of Mexican employment.
Learn more about hiring Mexican engineers and Latin American developers. Or get instant access to browse Mexican developers or contact us!