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News Article

What Could the California Tech Exodus Mean for Mexico?

By Rodrigo Brugada | Thu, 04/22/2021 - 14:04

The state of California has bid farewell to several companies in the last few years. This trend has several reasons behind it, chief among them taxes and regulations. While companies have deflected to several destinations, Texas has been a popular choice because of laxer regulations, as reported by CNBC. This relocation toward US border states might just mean new-found opportunities for Mexico’s northern states.

 

Several US companies have invested in Mexico while still trying to remain close to their home country, as seen in cities like Ciudad Juarez or Tijuana, where dozens of companies have established themselves, as reported by NPR. This relocation is sparking opportunities for Mexican startups at the border that may seek to provide novelty services to these newcomers or to facilitate their transition, like in the case of startups like TechnologyHub or The Bridge Accelerator, as stated by the El Paso Herald. “This is a zone with a bilingual, bicultural and binational labor force that can take advantage of the best of both worlds,” said by Omar Saucedo, Spokesman for The Bridge Accelerator, in an interview with the San Diego Tribune, talking about US and Mexico border states.

 

There have also been specific changes in the human resources area in Silicon Valley, as exemplified by the crackdown on special occupations visas, which raised the bar on qualifying requirements and will force companies to pay much higher salaries to foreigners, according to the WSJ. This might have an impact on the availability of highly educated workforce and migration dynamics. Mexico could stand to benefit from this, as it has been traditionally plagued by human capital flight, as explored by Latin American Post. The country has several conditions to its favor, with both a surplus in sometimes underfunded Mexican talent and recent changes in tax regulations for the bordering states. With these conditions in place and workplace changes in tech brought by COVID-19, Mexico could stand to gain more traction as a tech hub.

 

Global eyes are already set on Mexico as it grows to become Latin America’s leading tech hub, as Stanford Business reports. While the country still lags behind other OECD members in terms of tech spending, this novel shift at the border will enhance Mexico’s tech scene.

The data used in this article was sourced from:  
CNBC, Connect Americas, NPR, El Paso Herald, San Diego Tribune, WSJ, Latin American Post, Ozy, KPMG, BBC, Stanford, OECD, Coderslink, Entrepreneur
Photo by:   Chris Ried, Unsplash
Rodrigo Brugada Rodrigo Brugada Journalist & Industry Analyst