Mexico’s tech sector is thriving with numerous startups and tech giants, creating a vibrant ecosystem. The country’s skilled talent pool, bolstered by a strong university network, is particularly strong in software development. Mexico’s cost-competitive advantage and strategic location near the US and Latin America offer significant opportunities for expansion and collaboration.

Market Overview

Market Appeal	The tech industry is growing quickly, which is producing a lot of work opportunities. Expanding the pool of highly qualified IT workers. Reduced living and company operating costs in comparison to many developed nations. An advantageous location to cater to the US market.
Most Common Roles	Software Developers Data Scientists Cybersecurity Experts IT Support Specialists Project Managers
Skill Density	Every year, more than 110,000 engineers graduate. Strong demand for experts in the field. There is a talent deficit in some fields.
Cost Advantage	Reduced living expenses when compared to the US. Salary expectations are competitive when compared to other wealthy nations.
Ease of Hire	There are numerous avenues for hiring (website job boards, professional associations, agencies, etc.). While it’s improving, not everyone speaks English well. It’s essential to comprehend legal and cultural nuances for a successful hiring process.
Time Zone Overlap	Significant overlap during business hours, facilitating communication and collaboration.
Working Week	40 hours a week. While they may be widespread, extended work hours are not necessarily necessary.
Holidays	There are seven recognized national holidays annually. Long weekends could result from bridge days.
Hiring Methods	Online Job Boards (Indeed, Glassdoor, LinkedIn). Professional Networking (LinkedIn). Recruitment Agencies. University Career Fairs. Employee Referrals.
Payment Methods	SWIFT PayPal Wise Payoneer
Cultural Compatibility	Put connections and respect first. Indirect communication style (may vary from US directness). Work-life balance is important, yet occasionally long hours are required.
English Proficiency	540 (Moderate proficiency). Variations exist across regions and individual profiles.
Retention Rates	Although there is little information available, average retention rates vary depending on industry, remuneration, and business culture.
Global Brands Hiring	IBM, Amazon, Google, Microsoft, Apple, Ford, General Motors, Nissan, Tesla, Unilever, Nestlé, JPMorgan Chase, Citibank, HSBC, etc.
Talent Market Capacity	Vast and expanding talent pool. There is still a talent shortage in several fields.
Taxation	From employee salaries, employers are required to withhold and file income tax, social security contributions, and housing expenses. Businesses must pay a corporate income tax of 30% of their worldwide turnover.

Mexico Tech Ecosystem:

International Companies with Offices in Mexico:

• Tech Giants: IBM, Amazon, Google, Microsoft, Apple 
• Other Notable Companies: Ford, General Motors, Nissan, Tesla,  Unilever, Nestlé, JPMorgan Chase, Citibank, HSBC

For more information, read AN OVERVIEW OF STARTUPS IN MEXICO by pwc. 

Mexican Incubators and Accelerators: 

• Startup México:  An initiative supported by the government that provides links and information. For more information, visit their website. 
• 500 Startups Mexico: International accelerator with a Mexico City branch. For more information, visit their website. 
• Startup Weekend Mexico: Organize regular gatherings throughout the nation to promote ideation through Startup Weekend Mexico. For more information, visit their website. 
• NUMA México: Highlights early-stage ventures across multiple industries. For more information, visit their website. 
• Impact Hub: Encourages initiatives with a focus on social effect. For more information, visit their website.  

Local Unicorns (Companies valued over $1 Billion): 

Fintech: 

• Kavak: Used car marketplace and the first Mexican unicorn
• Konfío: SME lending
• Clip: Mobile payments

E-commerce: 

• Jüsto: Grocery delivery
• Clara: Personal finance
• GAIA: Fashion

Healthtech: 

• Doctoralia: Online appointments
• Mediktor: Telemedicine
• Farmacias Benavides: Online pharmacy

Edtech: 

• Platzi: Online programming school
• Crehana: Creative skills online platform
• Softek: IT solutions and training

For more information, see The Startup Ecosystem of Mexico.  

Government Initiatives and Programs:

• Programa Nacional de Emprendimiento (National Entrepreneurship Program): Offers financial support, education, and mentorship.
• Fondo Nacional del Emprendedor (National Entrepreneurship Fund): Invests in potential enterprises
• Innovación Abierta (Open Innovation): Encourages cooperation between the government and start-ups.
• Ley Fintech (Fintech Law): Offers financial technology companies a regulatory framework.

Investment Trends and Funding Availability:

• Compared to 2022, venture capital investment increased by 83% in 2023, totaling $5.8 billion.
• With an increasing number of angel networks and investors, angel investment is also important.
• International investors and government initiatives are becoming more and more significant.

For more information, read Mexico Business News. 

Summary: 

Mexico’s tech ecosystem is experiencing rapid growth, attracting international attention and fostering innovation. Key international companies with offices in Mexico include Ford, General Motors, Nissan, Tesla, IBM, Amazon, Google, Microsoft, Apple, JPMorgan Chase, Citibank, HSBC, Unilever, Nestlé, Procter & Gamble, and AT&T, Verizon, and Telefónica. Mexican incubators and accelerators include Startup México, 500 Startups Mexico, Startup Weekend Mexico, NUMA México, and Impact Hub Guadalajara. Key players in the startup scene include Fintech companies Kavak, Konfío, Jüsto, Clara, GAIA, Doctoralia, Mediktor, Farmacias Benavides, Platzi, Crehana, and Softek. Investment trends and funding availability have grown by 83% in 2023, reaching $5.8 billion.

Mexico Tech Infrastructure:

Digital Infrastructure:

Speed: 

In 2022, fiber optic projects drove an increase in average fixed broadband speeds to 39.5 Mbps (still below the OECD average). 80% of people are covered by mobile 4G, and 5G expansion is proceeding.

Data Center Availability: 

Mexico has more than 40 data centers, most of which are centered in the country’s largest cities, such as Monterrey and Mexico City. Global firms are offering top-notch services, such as CyrusOne and Equinix.

Government Efforts: 

The National Digital Strategy seeks to encourage the establishment of data centers, increase internet access, and advance digital literacy. Underserved areas are intended to be connected through projects such as Red COMPARTIR.

Power Infrastructure:

Reliability: 

Outages of electricity are a worry, especially in rural areas. Variations in frequency and length affect enterprises and productivity.

Costs: 

Data centers and tech enterprises are under pressure due to greater electricity costs than in many developed economies.

Summary: 

Mexico’s tech infrastructure is improving, with improved internet speeds and data center availability. The country has over 40 data centers, with international players like Equinix and CyrusOne offering high-level services. The National Digital Strategy aims to expand broadband access, promote digital literacy, and incentivize data center development. However, power infrastructure remains a challenge, with power outages impacting productivity and businesses in rural areas. Higher electricity costs also put pressure on tech companies and data centers. For more information, see the World Bank Report on Mexican Access to Electricity. 

Tech Talent Market Capacity:

Demand vs. Supply:

High Demand: 

The technology industry is expanding quickly, which is generating a large number of job opportunities for a variety of roles (developers, data scientists, cybersecurity experts, etc.).

Talent Shortage: 

A talent gap results from the present pool’s inability to satisfy demand, although over 110,000 engineers graduate each year. According to studies, there would be a 79% talent deficit by 2024. For more information, read Tech Talent Shortage Poses Challenges for Mexico’s IT Sector. 

Salary Expectations:

Average Salaries: 

Here’s a rough overview (as of 2024 in Glassdoor) of salaries, which vary depending on experience, region, and specialized roles:

• Junior Software Developer: USD 20,000–USD 30,000 annually
• USD 35,000 to USD 50,000 per year for a mid-level software engineer
• USD 55,000 to USD 75,000 per year for a senior software engineer 

Competitive Landscape: 

Top talent might be attracted to companies that offer competitive salaries and appealing benefit packages. The lack of talent and growing expense of living, however, is driving up compensation demands.

Summary: 

The Mexican tech talent market is experiencing a boom in demand, with numerous job openings across various roles. However, despite graduating over 110,000 engineers annually, the current pool cannot meet the demand, leading to a 79% talent shortage projected for 2024. Salary expectations for software engineers range from USD 20,000 to USD 75,000 per year. To bridge the talent gap, companies, educational institutions, and the government must continue to attract, retain, and upskill the workforce.

Mexico Leave Policies & Common Benefits:

Paid Vacation: 

Depending on the number of years of employment, employees can earn vacation time.

• 6 days after a year
• Rises to a maximum of 12 days per year by 2 days.
• After six years of service, additional increases of two days every five years

Sick Leave: 

With a doctor’s note, employees can apply for paid sick leave through the Mexican Social Security Institute (IMSS). The length of time varies based on the condition and the doctor’s advice, but it can go up to 52 weeks (with IMSS covering the final 7 days).

• Maternity Leave: 

IMSS is responsible for paying mothers for six weeks of paid leave before and six weeks after giving birth. With the consent of the doctor, extensions are permitted.

• Paternity Leave: 

IMSS will pay for five days of paid paternity leave for fathers following the birth of their kids.

• Other Leaves: 

Other leaves include permission to be absent owing to force majeure (unforeseen occurrences), bereavement leave (3 days for a close relative), and marriage leave (5 days).

For more information, see Mexican Labor Law Changes for 2023.

Common Benefits:

• Social Security: 

Provides payments for disability, maternity and paternity leave, and medical costs.

• Retirement Savings:

Employers fund their employees’ retirement accounts with a percentage of their salaries.

• Housing Support: 

A few businesses provide loans or housing allowances.

• Transportation Subsidies: 

Employers may provide cheap transit passes or stipends for travel.

• Food Vouchers: 

A few employers offer their staff food vouchers.

Summary: 

Mexican employees are entitled to various leave policies and benefits regulated by the Federal Labor Law. Common leave types include paid vacation, sick leave, maternal leave, paternity leave, marriage leave, bereavement leave, and permission for absence due to force majeure. Benefits include social security, retirement savings, housing support, transportation subsidies, and meal vouchers. Employees can accrue vacation time based on their years of service, request paid sick leave, and receive additional leave for maternity leave, paternity leave, marriage leave, bereavement leave, and unforeseen events.

Holiday Schedule in Mexico2024:

Official Holidays: Mexico celebrates seven official holidays annually.

• New Year’s Day: 1, January 1
• Constitution Day: 5, February
• Labor Day: 1, May
• Independence Day: 16, September 
• Revolution Day: 20, November 
• Guadalupe-Virgin of Guadalupe Day: 12, December
• Christmas Day: 25, December 

Bridge Days: 

Mexico’s official holidays fall on Mondays or Fridays, creating “bridge days” by shifting the rest day to Tuesday or Thursday, creating long weekends in 2024. 

For more information, visit 2024 Holidays: Holidays, Long Weekends, and Vacations in Mexico. 

Summary: Mexico celebrates seven official holidays annually, including New Year’s Day, Constitution Day, Labor Day, Independence Day, Revolution Day, Guadalupe-Virgin of Guadalupe Day, and Christmas Day. In 2024, bridge days are created by shifting the rest day to Tuesday or Thursday.

Mexico Talent Hubs:

Guadalajara (Jalisco):

The “Silicon Valley of Mexico” is Guadalajara, in the state of Jalisco. home to significant tech firms with a heavy emphasis on software development and IT services, including IBM, Oracle, and Intel.

• Good Educational Institutions: 

A constant supply of IT talent comes from prestigious universities like the University of Guadalajara (UDG).

• Economical Location: 

Guadalajara has a cheaper cost of living and business operations than other large cities.

• Thriving Tech Ecosystem: 

A thriving innovation scene is supported by a large number of startups, incubators, and accelerators.

Monterrey (Nuevo León):

• Industrial Powerhouse: 

Especially robust in the manufacturing and automotive industries, drawing businesses such as Johnson & Johnson and Pratt & Whitney.

• Highly Competent Workforce: 

Renowned for having a large pool of technical and engineering skills.

• Well-developed Infrastructure: 

Has a strong network of transportation and cutting-edge communication systems.

• Strategic Location: 

Its proximity to the US makes it easy for talent and businesses from around the world to get there.

Mexico City (Ciudad de México):

• Largest Talent Pool: 

Serves a variety of IT areas and has the nation’s highest concentration of highly qualified workers.

• Wide-Ranging University Network: 

A large reservoir of talent is contributed by prestigious universities like the National Autonomous University of Mexico (UNAM).

• Strong Government Support: 

This is the home of the federal government of Mexico, which supports tech-related policy projects.

• Cultural Hub: 

Provides employees with a wide range of housing options and a thriving cultural scene.

For more information, read Top Mexican Cities for Developers & Software Engineering Talent. 

Beyond These Key Cities: 

With benefits including lower living expenses and concentrated industry capabilities, other towns like Puebla, Tijuana, Querétaro, and Mérida are also gaining traction as potential hubs for the tech sector.

Selecting a Hub for Talent: 

The ideal hub for your business will rely on your budget, industry emphasis, and unique requirements. When making your choice, take into account aspects like the availability of talent, the infrastructure, the cost of living, and cultural fit.

Summary: 

Guadalajara, known as the “Silicon Valley of Mexico,” is a hub for tech firms, with a strong emphasis on software development and IT services. Its prestigious universities and economic location provide a constant supply of IT talent. Monterey, a manufacturing powerhouse, has a highly competent workforce and well-developed infrastructure. Mexico City, with its large talent pool and strong government support, is a strategic location for talent and businesses. Other cities like Puebla, Tijuana, Querétaro, and Mérida are also gaining traction as tech hubs. The ideal hub for a business depends on factors like talent availability, infrastructure, cost of living, and cultural fit.

Payment Methods:

Payroll Processes:

• Payment Methods: 

Although cash payments are less popular but still permissible in some situations, salaries are usually paid through bank transfers directly to employees’ bank accounts. For more information, read this article by the Bank of Mexico. 

• Frequency: 

Bi-weekly payments are the conventional procedure, though some businesses may offer monthly payments. 

Taxation:

For Employers:

Employers are required to deduct income tax, social security contributions, and housing costs from employee salaries and submit them to the Mexican tax authorities (SAT) to pay payroll taxes.

Corporate Income Tax: 

Businesses must pay 30% of their global revenue in corporate income tax.

For Employees:

• Income Tax: Workers’ entire income is subject to progressive income tax rates, which range from 1.92% to 35%.
• Social Security: Workers make a 4.75% wage contribution to Social Security.
• Housing Contribution: Workers give the National Housing Fund (Infonavit) 0.5% of their take-home pay. 

For more information, read Understanding Mexico Labor Law and Mexico Payroll. 

Summary: 

Mexico’s payroll process involves bi-weekly or monthly payments, with employers deducting income tax, social security contributions, and housing costs from employee salaries. Employees contribute 4.75% to Social Security and 0.5% to the National Housing Fund. Employers must pay 30% of their global revenue in corporate income tax. For more information, read Understanding Mexico Labor Law and Mexico Payroll.

Talent Acquisition:

Recruitment Channels:

• Internet job boards: 

Well-known sites like Indeed, Glassdoor, LinkedIn, Bumeran, and OCC Mundial are still important sources of information. To reach a larger talent pool, CloudDevs can also make use of its vast network of qualified individuals and customized advertising on various platforms.

• Professional networking sites: 

Professionals in Mexico use LinkedIn extensively since it provides excellent chances for establishing relationships and conducting targeted hiring. CloudDevs is well-represented on LinkedIn, where it regularly interacts with users and posts job openings.

• Recruitment Agencies: 

Using specialized agencies can provide knowledge of how to navigate the local market, particularly for senior or niche professions. Usually, these organizations charge for the services they provide.

• University Career Fairs: 

You can establish connections with a pool of young talent by interacting with institutions and going to career fairs.

• Employee Referrals: 

Encouraging current employees to recommend potential candidates from their networks can be an efficient and dependable way to locate competent people.

Visa Considerations: 

A work visa is necessary for foreign workers who want to work in Mexico. Companies that want to sponsor employees for Temporary Resident Visas (TM), the most popular choice for foreign tech experts, can get help from the Mexican Immigration website in understanding the many types of visas and how to go about the process.

Summary: 

Individuals can utilize various recruitment channels, including Internet job boards, professional networking sites, specialized agencies, university career fairs, employee referrals, and visa considerations. These channels provide information on the local market, allowing companies to reach a larger talent pool. Professionals in Mexico, such as CloudDevs, frequently use LinkedIn for networking and targeted hiring. Additionally, specialized agencies can provide knowledge on local market navigating, while university career fairs can connect with young talent.

Mexico Work Culture:

Communication Style:

• Indirect: 

Prioritizing relationship-building over confrontation and depending on context and subtle indications, Mexicans frequently prefer indirect communication. Those who are used to direct communication techniques may misunderstand this as a lack of transparency.

• Respectful: 

Communication places a strong emphasis on showing deference to superiors and coworkers. It is customary to address superiors with proper titles and to use formal language, particularly during first contact.

• Relationship-Oriented: 

In Mexican work culture, establishing personal ties is essential. Colleagues who take the time to get to know one another personally are more likely to collaborate and build trust. 

For more information, see Understanding Mexican Workplace Culture. 

Hierarchy:

• Hierarchical: 

Mexican workplaces usually have distinct authority levels and a hierarchical organizational structure. It is required of employees to respect and obey decisions made by supervisors.

• Collaborative: 

Although hierarchical, teamwork is highly regarded. Teams are frequently created for particular projects, and workers may be required to contribute their knowledge even if it is not directly related to their job duties.

For more information, read  Work Culture In Mexico. 

Work-Life Balance:

Extended Work Hours: Although it’s not always required, some employees might put in more time than the typical workday to fulfill deadlines or demonstrate their commitment.

Vacation Time: A minimum of 6 days of paid vacation per year, increasing with seniority, is required by Mexican law. Furthermore, workers have access to a variety of paid leaves, such as paid time off for illness, maternity and paternity leave, and other reasons.

Focus on Culture: Maintaining a healthy work-life balance is highly valued in Mexican society, even with the possibility of extended workdays. Employees may emphasize personal duties and take vacations because they value their family and personal time.

Summary: 

Mexican work culture prioritizes relationship-building over confrontation, with indirect communication being preferred. Respectful communication is emphasized, with proper titles and formal language used. Personal ties are essential, and collaboration is built. Hierarchical workplaces have distinct authority levels, and teamwork is highly valued. Mexicans have extended work hours and a minimum of 6 days of paid vacation per year, increasing with seniority. A healthy work-life balance is highly valued, and employees may prioritize personal duties and vacations due to their family and personal time values.

Employment Termination:

Notice Periods:

The minimum notice periods for termination are set down in the Federal Labor Law (Ley Federal del Trabajo, or LFT), and they vary depending on the kind of termination and the seniority of the employee.

Employer-Initiated Termination (without Justification):

• Less than two years of service: three months of severance pay and seven days of notice.
• 20 days’ notice and one year’s income as severance pay (limited at two minimum wages each day multiplied by the number of years worked) are awarded to employees with two years or more of service. 

When an employee decides to terminate their employment, whether for cause or not, they are required to give their employer at least 15 days written notice. Unless otherwise specified in the specific employment contract, there is no requirement for severance pay.

Termination Initiated by Either Party (With Justified Cause): There is no need for a set notice period, but the party wishing to terminate must have a legitimate reason for doing so (such as misconduct or subpar performance). Depending on the individual circumstances and the justification, severance compensation may or may not be needed. 

Severance Pay:

Minimum Requirements: Based on the kind of termination and seniority, the LFT determines the minimum amount of severance compensation that must be paid. However, depending on business regulations or in their employment contracts, organizations might provide more sizable severance benefits.

Common Practices:

• Some businesses, particularly in the technology industry, may provide perks over and above the minimum wage required by law, such as accumulated vacation time, bonuses, and healthcare coverage for a predetermined amount of time.
• Severance package negotiations are customary and sometimes entail legal counsel, particularly where there has been an unjustified termination. 

Summary: Mexican labor laws dictate minimum notice periods and severance pay for terminations. Employers must provide 7 days’ notice and 3 months’ severance pay for less than 2 years of service, while employees must provide at least 15 days’ written notice. If termination is initiated by either party, no specific notice period is required, but valid legal justification for termination is required. Companies may offer more generous severance packages, including accrued vacation days, bonuses, and healthcare benefits. Negotiating severance packages, especially in cases of termination without justified cause, may involve legal representation. It is essential to consult legal counsel and maintain detailed records of all communication and agreements related to the termination process. For more information, see an article by Fragomen. 

Frequently Asked Questions

1. What opportunities and constraints exist in the Mexican tech talent market?

• Problem: Skill deficit –Despite a large number of engineering graduates, there is a large supply and demand discrepancy for tech experts.
• Chance: Increasing demand: The tech sector in Mexico is expanding quickly, resulting in a wide range of career prospects. This creates the perfect atmosphere for businesses trying to grow as well as job seekers.

2. What are the various methods in Mexico for identifying and hiring talent?

• Online Job Boards: Employers and job seekers alike frequently utilize well-known sites like Indeed, Glassdoor, LinkedIn, Bumeran, and OCC Mundial.
• Professional Networking Sites: LinkedIn is a useful tool for connecting with potential candidates in Mexico and conducting focused recruitment.
• Recruitment Agencies: Using specialized agencies, particularly for senior positions or niche tasks, can give knowledge in navigating the local market.
• University Career Fairs: You can get in touch with a pool of young talent by interacting with universities and going to career fairs.

3. What are the key considerations for foreign companies looking to set up operations in Mexico?

• Visa Considerations: Work visas are necessary for international workers, and the most popular choice for foreign IT workers is the Temporary Resident Visa (TM).
• Recognizing the regulatory and legal environment: To make sure that employment contracts, pay, and termination procedures are in line with local labor laws and regulations, legal counsel should be consulted.
• Cultural sensitivity: Gaining an understanding of Mexican work culture, which places a strong emphasis on developing relationships, showing respect, and using indirect communication, can make the workplace more enjoyable and effective for both domestic and foreign workers.

4. What are the main benefits of hiring tech talent in Mexico?

• Access to a talented labor pool: Mexico is home to an increasing number of talented IT workers, especially in the fields of software development and IT services.
• Competitive cost of living: In general, living and running a business in Mexico are less expensive than in many wealthy nations.
• Closeness to the US market: Businesses wishing to cater to the US market find Mexico appealing due to its advantageous location.

5. What are some of the emerging trends in Mexico’s tech ecosystem?

• Increasing investment: Mexico’s tech sector is seeing a sharp increase in venture capital investment, which is indicative of strong investor confidence and is driving future expansion.
• Emphasis on innovation: With many incubators and accelerators assisting in the creation of new enterprises and technology, there is an increasing emphasis on startups and innovation.
• Government initiatives: With several programs, like the National Digital Strategy and the National Entrepreneurship Program, the Mexican government is aggressively fostering the growth of the digital industry.