Latin America offers skilled developers for a fraction of US rates and a favorable time zone overlap. This makes the region an appealing choice for both nearshore technology outsourcing and IT staff augmentation in Latin America. Mexico and Colombia, in particular, present competitive rates for IT services compared to other countries in the region. Both countries have established stable business environments with supportive government policies and regulations and a highly educated and vast talent pool.
Let’s look at how Colombia compares to Mexico for nearshore technology outsourcing on a list of important parameters.
Time zone compatibility
Both Colombia and Mexico are geographically positioned to have perfect time zone compatibility with North America. Colombia shares the same time zone as the East Coast, while Mexico has a full working day overlap with the Midwest. It allows for easier communication and collaboration between teams based in Colombia or Mexico and their counterparts in the United States and Canada.
Tech talent pool
One of the most critical aspects for businesses that are choosing between Colombia vs Mexico for nearshore technology outsourcing is the availability of the tech talent in the chosen destination.
The Mexican technology outsourcing market is significantly larger compared to Colombia, with over 700,000 developers and 3M STEM professionals recorded in 2020-2021. The Mexican government is equally active in facilitating ICT education. In the 2010s, it opened 120 tuition-free universities that graduate over 130,000 engineers every year.
Colombia is experiencing rapid development and growth. The country has made significant investments in education and infrastructure, resulting in a doubling of the number of ICT graduates in recent years. In 2021, more than 13,000 individuals graduated with an ICT degree and joined the tech talent. This number is only going to increase in the upcoming decade.
Colombian developers specialize primarily in C# and C++. In terms of cost-effectiveness, Colombia offers competitive rates compared to other nearby destinations. On average, the hourly rate in Colombia is $10 lower than in Mexico. The country benefits from a favorable exchange rate, a thriving IT sector, and a lower cost of living, allowing Colombian companies to offer services at lower rates while maintaining high quality. This makes Colombia attractive for nearshore technology outsourcing.
The Mexican nearshore technology outsourcing market's substantial size, with a vast pool of developers and STEM professionals, gives Mexico an advantage over Colombia, however, the rates aren’t always as competitive to make it decisive.
Business climate for technology outsourcing
Mexico has a well-established reputation in the outsourcing industry. It has a large pool of skilled IT professionals and a geographical advantage. Major hubs in cities like Mexico City, Guadalajara, and Monterrey host various tech activities, including startups, software development, and hardware manufacturing. The country also attracts substantial investments for nearshore technology outsourcing, benefiting from a higher level of venture capital funding and support from international investors.
Mexico and the US have several agreements and initiatives in place that promote economic ties between the two countries and secure intellectual property rights. For example, The USMCA, which replaced NAFTA, includes provisions that promote cross-border trade in services, which is particularly relevant for outsourcing. The agreement ensures a predictable and secure environment for businesses engaged in outsourcing services between Mexico and the United States.
Read more: Nearshore software development in Mexico: market overview, key destinations, and benefits
Colombia, on the other hand, is an emerging player in the nearshore outsourcing market and has been gaining recognition for its competitive rates and skilled talent. Outsourcing is the main focus of the Colombian tech sector. While Colombia's startup scene is emerging, it is still in the early stages of development, with a particular focus on sectors such as fintech, edtech, and agritech. The government has introduced initiatives and incentives to support the growth of the tech industry, though challenges such as access to funding, infrastructure issues, and bureaucratic complexities remain.
Both Colombia and Mexico have made efforts to improve their business climates, with Colombia working on simplifying regulations and attracting investment, while Mexico benefits from well-established ties with the US. However, challenges like security concerns exist in both countries, and the choice between them would depend on specific business needs and preferences.
Read more: Software development outsourcing in Colombia: Market overview
English proficiency level and cultural proximity
Mexico's main appeal to American companies is its geographical and cultural proximity to the US, which can help in better understanding business requirements and expectations. While culture is difficult to assess objectively, it is undeniable that the American and Mexican markets have been intertwined for many years, with a strong history of cooperation between them.
Colombia has a long history of working with the United States, with a cultural alignment that facilitates smooth collaboration. The country is regularly highlighted as one of the best outsourcing locations in terms of ease of doing business and cultural alignment.
Both Colombia and Mexico show comparatively low English proficiency scoring below the global average. However, it's important to note that these scores include regions with varying levels of English proficiency, including rural areas that may not contribute significantly to the technology sector. When examining the average for IT hubs, Columbia is revealed to have a clear advantage over Mexico in English proficiency. Mexico’s best score of around 500 is comparable to Lebanon or India. Colombia’s score of 521 is somewhere between Israel and South Korea.
Wrapping up
When weighing up Colombia vs Mexico for nearshore technology outsourcing, it is important to evaluate the specific needs and preferences of your business. Mexico boasts a larger tech talent pool, with a significant number of skilled IT professionals and a well-established reputation in the outsourcing industry. On the other hand, Colombia offers competitive rates, a growing IT market, and favorable government support for foreign investments. Both countries provide advantages such as proximity to the United States, favorable time zone overlaps, and cost-effective solutions. Ultimately, the choice will depend on factors such as required skill sets, cultural alignment, and specific business requirements.
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