How to Outsource Software Development to Mexico: 5 Useful Tips For Tech Startups

Optimizing your project, saving time and money, coding in all the functions your target audience wants to see, and taking care of the HR hassles…sounds like something outsourcing and outstaffing markets can do for you.

Many countries provide such services. One of the many in-demand options is offshore development in Mexico. The market is expected to reach $3.92 billion this year, according to Statista, continuing its growth at least until 2027.

This sounds very promising, so we decided to research the topic and see. Is it really that beneficial to outsource software to Mexico?

We at ProCoders don’t want your collaboration to turn into a disaster, so here’s an extensive guide with numbers, an honest professional opinion, and potential alternatives. We’re also an outstaffing company, so we know best how to choose the right offshore partner for your project.

Key takeaways:

• Mexico has a booming IT sector with a talent pool of over 700,000 people.
• Mexican labor laws are what may make your collaboration more difficult to start. You can only work with companies from an official registry.
• The pros of tech outsource in Mexico include a huge pool of talent, a high level of intellectual property protection, and no cultural issues due to a shared border with the US (applies to US companies). The cons, however, include a high level of bureaucracy, additional costs due to taxes, and a longer onboarding process.
• To find the right outsourced web development company in Mexico, choose reliable search channels, work with businesses from an official registry, always sign NDAs, and interview developers.
• Hiring a web development outsourced specialist from Mexico may cost you over $3200 a month. This is an estimate of the monthly wage, but there’s also a 25% tax and potential upfront payments.

Mexico Today: Tech Talents and Products

The Mexican government has been working hard on the state’s education and infrastructure industries. This offers more opportunities and tools for young people to study new skills and improve existing ones.

The talent pool of developers counts over 700,000 people, with 130,000 engineers graduating every year!

Over 350 outsourcing companies operate in Mexico. The country has developed a whole IT sector, a powerful one, that was almost non-existent some two decades ago. Due to the progress, a lot of world-renowned companies open offices in Mexico, including Amazon.

All this makes outsourcing tech to Mexico very appealing.

We’ve gone as far as researching the market of Mexico software development outsourcing to provide you with some figures so that you can make an informed decision.

Outsourcing Software Development Market in Mexico

To manage an offshore software development team effectively, it’s crucial to study the intricacies of the industry in the country you want to hire from. In the case of Mexico, the market looks pretty decent.

• The market should have a steady CAGR of 7.35% up to 2027.
• A large part of the revenue is generated in the US due to close location and time zones
• A combination of affordable pricing and a high quality of skills make Mexico tech outsourcing profitable for all parties.
• By 2027, the revenue volume may reach almost $4 billion.

So, one can say Mexico is one of the best countries for offshore software development in South America.

But what about the laws of offshore software outsourcing from Mexico? How legal is it to look for engineers there to work with a staff augmentation model? Are the laws strict? And what about the alternatives? ProCoders has figured out all the answers, so you can find out  this and more further in the guide.

Outsourcing Laws in Mexico: Are They Strict?

The legal question should always be on your checklist when seeking opportunities for software outsourcing in Mexico or any other country. We at ProCoders always take it seriously, which is reflected in the clarity of our contracts and other documentation.

As for Mexico, in 2021, the federal labor law found that 5 million people evaded paying taxes due to a technicality. Neither the freelancers nor the companies that hired them paid taxes, which impacted the state. As a result, Mexico now has a new law concerning subcontractors.

You have the right to outsource software development in Mexico only through businesses from an official registry. Additionally, you’ll be responsible for social security taxes. And firing an employee becomes much more difficult as you’ll have to pay 3 months’ worth of wages and vacation bonuses.

So, what are the pros and cons of software development outsourcing in Mexico? To make the right decision, you need all facts, both good and potentially bad. We’ve prepared an overview of both for you.

Pros and Cons of Outsourcing Software Development in Mexico

Outsourcing and outstaffing models have a lot of advantages and potential risks if you choose the wrong partner. This is also true about the Mexico IT outsourcing market. 

Pros

Here are the main offshore software development benefits if you choose Mexico.

No cultural issues

If we’re talking about the United States, the fact that it and Mexico share a border says a lot. The relationships between the two countries allow for preventing cultural clashes and minimizing miscommunication.

Not all the neighboring countries share such an understanding, unfortunately, but in this case, this is true.

High level of intellectual property protection

Mexico, the US, and Canada have the CUSMA agreement that implies an exceptional level of intellectual property protection. So, during your collaboration, you can share the sensitive data necessary for the design and development of your app.

Vast pool of talent

Mexican offshore development is also popular due to the vast pool of high-quality talent that won’t destroy your wallet. Engineers of different levels can take up projects of various complexity.

Besides, people looking for a cheaper cost of life often come to Mexico, enlarging the pool of talent even more. During the last couple of years, the diversity of developers and workers in other industries has increased tenfold.

Cons

Here are the disadvantages of Mexican IT outsourcing that may make you want to consider alternatives.

Bureaucracy

While Mexico shows tremendous progress in the IT sector, the government lacks digitalization in the documentation sector. So, chances are you’ll need someone who lives in Mexico to help you handle the paperwork.

Law compliance aka additional costs

Studying Mexican labor laws is essential before you hire outsourced developers. This may take a long time, and failing to comply with those laws may result in large fines for your company.

Longer onboarding

The two aforementioned cons impact the starting speed of your development. For example, with ProCoders you can expect to begin the development in 2 weeks or even less if we have the right staff on board.

If time and money are both your key values, you can choose an alternative in, say, Central Europe. The talent pool is equally rich if not better, and the legislation is more hospitable for offshore collaboration.

5 Tips to Finding Good Software Developers in Mexico

By using these recommendations, you’ll be able to find offshore development services in Mexico or any other country:

1. Make sure you have a specific goal.
   This will help you find the right partner who has the developers you require for the project and is ready to take on the capacity.
   
2. Use verified sources to look for the partner.
   You can do it through networking or review platforms like Clutch. Looking online also works, but make sure you research each company, read testimonials, and ask for former clients’ contact info to get recommendations.
   
3. Interview developers.
   While trust is very important, to be sure you have found the right staff for the project, it makes sense to interview them alone or with a technical leader of your team.
   
4. Prepare to sign NDAs.
   Always sign official non-disclosure agreements to protect your data, no matter how trustworthy the developers seem. Mention this during the research, and you’ll find a reliable web development outsourcing ally in Mexico.
   
5. Keep control.
   Even if you’re hiring a dedicated team with its own project manager, establish communication and always keep your hand on the pulse of the development process.

So, what else is important in the search for a perfect engineering partner? Surely, the topic of money.

Hiring Software Developers from Mexico: Rates and Fees

Offshore software development rates vary greatly by:

• The level of expertise (junior, middle, senior)
• By the company you choose to work with
• By the urgency of the project, and more.

According to Glassdoor, you can hire a developer from Mexico with 1-3 years of experience for MX$60,500 a month (MX$27,500 base pay, the rest is additional pay). That’s about $3200.

Also, don’t forget about the 25% tax to the Social Security, Housing, and Retirement Fund. Income taxes are on the employee, however, which is good news for you.

The costs of hiring an outsourcing tech specialist from Mexico may vary because companies often have additional fees, upfront payments, etc. On the other hand, working with such partners may save you money on in-house employees.

You also shouldn’t forget about the taxes and other additional payments. If you want to avoid those, consider hiring offshore software development in Central Europe. This region has a vast pool of talent and a huge choice of outsourcing and outstaffing companies. No redundant taxes and hidden payments, only professional, English-proficient staff and amazing results.

How ProCoders Can Help You Outsource Software Development?

ProCoders is a staff augmentation company with over 120+ skilled engineers from Central Europe already on board! Many of these people have been working with us for 7 years, turning clients’ ideas into life in mobile and web applications.

We can:

• Help you assess and clarify your technical needs, understand your business requirements, and come up with estimates as to the time and cost of the project, along with the number of engineers you need.
• Provide you with those engineers, QA specialists, and designers as a fully dedicated team or separate staff members you can add to an existing team. Our employees become yours, but without vacation pay and other spendings you usually have to include into the budget if you want to hire an in-house specialist.

ProCoders’ two main values are the skills and experience of our developers and our collaboration culture. The latter implies full transparency of all processes, honest communication with each client, and building a relationship instead of making quick money.

We’re focused on long-term commitments and look deeply into the needs of each project. That’s why the results turn out so efficient and unique. You can get familiar with our cases here, as well as with Clutch reviews. Moreover, we can provide you with contacts of some of our former customers who can tell you everything about their experience of working with ProCoders!

Conclusion

Outsourcing software to Mexico has a lot of advantages such as affordable rates, tight connection with the US (when talking about US businesses), suitable time zone, and a vast pool of skilled professionals.

There are also cons like a rather complicated law system when it comes to outsourcing and other concerns.

The Mexican IT market grows, so it’s definitely a decent option when you need a combination of quality and affordability. However, you may also look into alternatives. For example, Central Europe has a lot of high-level developers, and, depending on the country, there are no harsh laws.

Consult ProCoders today to see how many people your project needs and start working on it in less than 2 weeks!