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Mexico sells itself as 'nearshore' outsourcing hub for US
Venga! Venga!

By Michael Kanellos

Published: Thursday 18 May 2006

While Europe looks to India as its offshoring destination of choice, Mexico has launched an initiative to promote itself to the US as a 'nearshoring' destination that's so close to home it's often within commuting distance.

And the benefits of proximity add up, says Eduardo Ruiz Esparza Flores, president of Canieti, a Mexican IT trade group working with the Mexican government to promote the country as an outsourcing destination. He is also CEO of RFID Native, which builds radio frequency identification systems.

During an interview at the Gartner Symposium ITxpo, Flores noted that there are more than 300 flights per day between the US and Mexico. Bandwidth costs on software projects also add up, so the closer your programmers are to corporate headquarters, the better.

He said: "We are looking for complex and network-needed projects with high response requirements."

The language barrier is easily overcome, according to Flores, and in many areas, US executives can stay in the US and commute down to work.

Three years ago, the Mexican government launched a programme, called Prosoft, to promote the country's tech industry. The goal is to increase the size of the Mexican IT industry to $15bn annually by 2013. Two weeks ago, the government launched an advertising and recruiting campaign for Prosoft.

Mexico, however, isn't cheap compared with the larger Asian nations when it comes to outsourcing. Mexico's contract-manufacturing industry was hit hard when China ramped up as a manufacturing powerhouse.

Still, Mexican labour is cheaper than American labour. Newly minted Mexican engineers make around $1,200 per month, Flores said - about a third of what young engineers earn in the US. Intel has about 1,000 employees in Mexico, he added. Freescale also has development operations.

Technology also remains a popular subject with students in the country. Mexico has around 400,000 students studying IT-related subjects in universities and technical schools. Roughly 60,000 of them graduate from these programmes annually. The Monterrey Institute of Technology, which used Massachusetts Institute of Technology as its model, remains the country's premier technical university.

Michael Kanellos writes for CNET News.com