Mexico, A Top Nearshoring Destination for Software DevelopmentBy Jan Hogewoning | Wed, 12/09/2020 - 05:00
Q: What part of Dextra Technologies’ operations are in Mexico?
A: We have three on-demand software development centers. They are in Monterrey, Guadalajara and Aguascalientes. We work for clients in a variety of sectors. The biggest are in automotive, where we have some very large global companies as clients. Clients in other sectors include Texas Instruments, Cirrus Logic, Square, Fitbit, JJ Keller, HPE and Intel. Approximately 93 percent of our revenue comes from US clients. The remainder of our sales are to Mexican corporations
Q: What type of software do you build for automotive clients?
A: We have created many software solutions related to vehicle safety and comfort features. For example, we developed a system that prevents your hand from being hurt by a closing window. We also developed solutions that interact with multiple vehicle sensors for proximity, light, tire pressure to name a few. Today, everything in a car is software-run. We also do telematics. This can be applied to real-time analytics of vehicle performance, driving habits and compliance through IoT and mobile devices. We also want to move into software for automated driver assistance.
Q: What do your design projects for digital transformation entail?
A: To provide an example, we did a project where we completely redesigned the customer experience for clients of an insurance company. The company in question is one of the largest car insurance company in Mexico. We created an application for the client and the insurance adjuster. With this, the client does not have to call the insurer. The adjuster goes to the client much like an Uber. This helps to reduce the anxiety of individuals in the case of an incident. The application runs on algorithms that ensure that the adjuster assigned is the one who arrives fastest. Adjusters can access all the information about the client from their tablet so there is no loss of time. The whole process can be completed on the platform.
Q: Who and where is primary competition?
A: We compete with companies based in Mexico, US, India and China. Examples are Tata Consulting, Softtek, Neoris, Cognizant and WiproTech . Nonetheless, Mexico has a great pool of engineers. For many years, the country has been producing more IT engineers than the US. Very large companies like Oracle, IBM and HP have migrated software operations to Mexico. If a Mexican engineer is well-trained, he can be just as effective as an engineer anywhere else. We are constantly investing in talent and processes. We migrated heavily to a managed services model. This adds more value. The managed service model is based on productivity and delivery. It is an outcome-based form of outsourcing.
Q: How can Mexico strengthen the capabilities of its software engineers?
A: You have to work with universities. One area where I believe there is a lack of investment is embedded software engineering. The country has many front- and back-end engineers, but few graduates focused on this area. Tecnológico de Monterrey, for example, has invested a great deal in software for automotive applications. This includes artificial intelligence and machine learning, which is going to be a central part of the coming revolution of automated driver assistance.
Another aspect is government support, like India had at some point. This is necessary to encourage Mexican software companies to continue training engineers. Also, it would help to increase the exposure of the Mexican brand in the US. The Indian brand is already very established there.
Q: Would the Mexican government be interested in investing in proprietary tech development over outsourcing industries?
A: If you look at the salaries that are paid for the kind of outsourced job, this is a very attractive industry. Higher salaries translate to more revenue for the government and a higher standard of living. Just look at the wealth the tech industry has created for India. Many companies eventually diversify into product development, as well. They can invest in startups that are product-oriented and can solve a problem in the marketplace.
Q: What are the advantages of outsourcing to Mexico, instead of India or China?
A: I think our culture shares a greater similarity with that of the US. We watch their programs; we follow their sports. Many of our students are educated there, too.
Agility is important as well. The industry requires faster interactions, with constant updates between teams. Mexico, which shares the same time zones as the US, provides a great benefit to US companies in this area. Ultimately, this provides cost benefits. An Indian or a Chinese company may provide a lower price but in the end, it comes down to the total cost of ownership. Working with a Mexico-based company ensures efficiencies and on-time deliveries. Furthermore, USMCA makes it easier for Mexicans to travel back and forth for work purposes. They can easily work at a site location of a company in the US for a while. Travel conditions are not as painstaking as having to get an H-1B visa.
Q: Do you see these benefits leading to more nearshoring investments?
A: I think so, especially with the ongoing geopolitical and health problems. Right now, traveling to India or China is a difficult enterprise. We are seeing a trend toward nearshoring. We just acquired three new US based clientes that were comparing the risks between offshoring and nearshoring. Apart from US companies, Europe is also increasing its presence in Mexico. India is hedging its risk too, investing in its own software companies, which are establishing a foothold in Mexico as well.
Dextra Technologies is an on-demand software development company with operations in Monterrey, Guadalajara and Aguascalientes. Its main clients are based in the US