80% of North American businesses are actively considering nearshoring – and for good reason.
With a shortage of 85.2 million developers predicted by 2030, nearshore technology outsourcing is a smart choice to fill your teams in the long term. What’s more, nearshoring has the potential to maximize outcomes, including product quality, innovation and time-to-market.
Even so, getting started with nearshoring to Latin America can be intimidating. Knowing where and what companies to partner with can feel like a labyrinth of decision-making. For example, it’s not uncommon for companies to consider Colombia vs. Mexico for nearshore technology outsourcing.
Both Mexico and Colombia are prominent nearshoring destinations with revving IT ecosystems, top talent and affordable rates. Yet, each has its unique advantages to offer your business.
Here we’ll undertake an in-depth analysis of nearshoring to Colombia vs. Mexico, so you can make an informed choice.
Content Overview
Why LatAm Nearshore Technology Outsourcing?
Latin America is a fast-growing powerhouse for technology outsourcing. In the last decade, it’s seen booming growth, estimated to reach $27 billion in revenue by 2029.
LatAm stands out from other regions due to the following characteristics.
Advanced IT Ecosystems
To start, the IT ecosystems in these countries have seen impressive maturation. Startup cultures, technology investment and developer communities are at full force here, creating innovative tech scenes.
World-Class Talent
LatAm tech talent is truly world-class, with developers who are highly educated, skilled and career-driven.
Here you’ll find professionals with a wide range of specialized programming skills and experience levels, who are well-versed in U.S. culture and remote work. In fact, this region is known for its:
- Record numbers of tech graduates
- Elite rankings in developer skills tests and reports
- Top software engineer job satisfaction rates
- High English proficiency rankings
High-Value Cost Savings
LatAm salaries strike that middle ground of affordability. Developer salaries here are 40-50% less than the U.S., but still indicate high-quality talent.
Convenient Teaming Logistics
Finally, LatAm is ideal for U.S. companies looking to undergo agile processes. This region has aligned time zones and close cultural proximity. In other words, developers are well-equipped for real-time, efficient collaboration.
Colombia for Nearshore Technology Outsourcing
Here we’ll take a closer look into nearshoring Colombia, so you better understand Colombia vs. Mexico for nearshore technology outsourcing. In sum, this country is a fast-growing market with exciting new talent and nearshoring potential.
Overview of Outsourcing Climate
Colombia’s economy has been steadily rising in recent years, with:
- A business climate score of A4
- An ease of doing business score of 67/190
- Regulations such as the ICT Sector Modernization Law, which boosts access to ICT services beyond Colombia’s borders.
Key downsides of nearshoring Colombia include public safety. Although some regions of Colombia are listed as “Do Not Travel,” the government has made strides in improving security in major cities.
Another area of concern is cybersecurity, as Colombia is ranked 6th globally for the most ransomware attacks.
Current State of the Technology Sector
Colombia has a fast-growing technology market, which saw a 14.6% increase in 2022. Most impressively, it’s set to reach $690 million in revenue in 2024.
Top tech hubs include Bogotá and Medellín. In particular, Medellín is considered the “Silicon Valley of Latin America” and hosts the famous Ruta N.
In these cities, you’ll find innovative communities with lots of startups, tech parks, hackathons and more. In fact, Bogotá was ranked 3rd in LatAm on the 2023 Global Startup Ecosystem Index.
Analysis of the Tech Workforce
(Source: 2023 Global Skills Report)
Colombia today has a small by mighty workforce that includes:
- 62,000+ developers
- 11,100+ software companies
- 350+ IT providers listed on Clutch
Most importantly, nearshore Colombian developers are some of the best in LatAm. It’s regionally ranked #2 in tertiary engineering graduates (second only to Mexico) and listed 6th globally in technology skills by Coursera.
Key Government Tech Initiatives
The Colombian government is heavily involved in the technology market, fostering programs and investments to grow the sector. Key initiatives involve:
- MinTIC (Colombia’s IT Ministry)
- INNpulsa tech grants
- New tech parks
- $2.5 million investment in tech education
Overall, businesses can count on a supportive stance from the Colombian government.
Insights into Business Practices & Logistics
Colombia offers advantages when it comes to nearshore outsourcing. There’s a reason why it’s listed as 13th globally on the Kearney Global Services Location Index.
Colombia is located in GMT-5, which is the same as EST, streamlining potential partnerships with U.S. companies.
Additionally, it has a strong track record of outsourcing, with 33% of IT exports going to the U.S.
Get the full scoop on nearshoring Colombia in our expert report.
Mexico for Nearshore Technology Outsourcing
Get a detailed overview of nearshoring in Mexico below. We’ll highlight this country’s advantages, so you’re aware of Colombia vs. Mexico for nearshore technology outsourcing.
Overall, this country is a trusted option with an impressive talent pool and a vast IT ecosystem that neighbors the U.S.
Overview of Outsourcing Climate
Mexico has a stable economy defined by:
- #2 largest GDP in Latin America
- A business climate score of A4
- An ease of doing business score of 60/190
- Attractive trade agreements with the U.S. and Canada, easing taxes and red tape Digital Trade Chapter agreement with North America, boosting cybersecurity at GDPR-like levels
That said, many regions of Mexico are flagged as “Do Not Travel” zones, which could impact your nearshore partnership. Mexico’s democracy is also ranked at 5.1/10, which is lower than other nearshore destinations such as Uruguay, Costa Rica and Colombia.
Current State of the Technology Sector
Mexico has a large IT outsourcing market, projected to reach $6.18 billion in revenue in 2024. It also has sure but steady growth at about 5.5% yearly.
Moreover, Mexico has a vast tech ecosystem that includes a robust developer community. For example, there are 20+ tech parks, mainly in Mexico City, Monterrey and Guadalajara.
The startup and developer scene is also highly active and involves innovative nearshore technology companies in Mexico. Mexico City is even ranked #2 in LatAm on the 2023 Global Startup Ecosystem Index.
Analysis of the Tech Workforce
(Source: 2023 Global Skills Report)
Mexico has an impressive talent pool characterized by:
- Between 225,000 and 700,000 developers
- 450+ startups
- 400+ IT outsourcing companies on Clutch130,000+ engineers graduating every year
In fact, Mexico has the highest rate of tertiary engineering graduates in Latin America at 25%. Developers here are considered some of the best educated and prepared for the workforce.
Most importantly, Mexico is ranked 4th globally for technology skills by Coursera. It also appears on other rankings, including #2 in the world for best developers by the 2022 Pentalog report. In Python and C/C++ programming, it achieved the #1 ranking worldwide.
Key Government Tech Initiatives
Mexico is actively nurturing its tech sector through top investments and programs such as:
- 120 tuition-free tech universities to encourage STEM education
- Key funding groups, including the Fondo Nacional Emprendedor and 500 Startups LatAm
As a whole, businesses can expect a favorable voice from the Mexican government.
Insights into Business Practices & Logistics
Nearshoring in Mexico is ranked 11th globally on the Kearney Global Services Location Index.
It’s an ideal location for nearshore technology outsourcing for the U.S. Not only does it share three overlapping time zones (GMT-5, GMT-6 & GMT-7), but it’s also geographically accessible for in-person visits.
At the same time, Mexican developers are well aware of U.S. workplace culture as it’s literally at their doorstep.
Plus, they have experience with U.S. companies, as the majority of IT outsourcing revenue comes from the United States.
Discover the intricacies of Mexico’s software development market in our report.
Comparing Colombia vs. Mexico for Nearshore Technology Outsourcing
To be clear, both Colombia and Mexico are top-ranked nearshore outsourcing destinations.
Although the right choice of Colombia vs. Mexico for nearshore technology outsourcing will depend on your needs, you really can’t go wrong with either. These countries emphasize:
- Strong IT Ecosystems. Both have active communities, startup scenes, government programs and pro-business policies.
- Quality of Talent. Both have highly educated and skilled talent that appears at the top of global lists.
- Alignment With North American & European Markets. Both locations offer convenient time zones, savvy cultural proximity and English proficiency.
- Affordable Rates Focused on Value. Both countries provide top value with excellent talent at 40-50% the cost of U.S. developers. (See our breakdown of salaries below!)
Main Differences of Colombia vs. Mexico
Of course, it’s important to be aware of some key differentiators between Colombia vs. Mexico for nearshore technology outsourcing.
Mexico is the tried-and-true option for nearshoring.
Pros
- A large-sized market. This means you’ll have more options for talent and partners.
- Top cultural proximity & cybersecurity. Given its shared border with the U.S., it’s also a bit more battle-tested for these in-demand U.S. requirements.
- World-class education & skills tests. If we’re splitting hairs, Mexico scores slightly higher on engineering education and skills tests.
Cons
- Low security. Nearshoring in Mexico may involve serious issues with security and political instability. While Colombia also has some “Do Not Travel” zones, Mexico has a more rampant security problem.
- Political instability. Mexico’s political climate is also ranked lower than Colombia’s, which may be a factor for long-term partnership.
- Slow-growing IT outsourcing economy. This may be a sign that Mexico isn’t as innovative as other LatAm countries.
Colombia is an exciting up-and-comer in technology outsourcing.
Pros
- Booming IT market. Compared to Mexico, Colombia is seeing incredible growth (14.6% in 2022).
- Impressive options. Even though it’s smaller than Mexico, it has a wealth of software companies, startups and more.
- State-of-the-art facilities. Medellín has been dubbed the “Silicon Valley of Latin America” and has truly cutting-edge buildings and programs. (A notable example is the innovative Ruta N.)
- Elite skills rankings. Colombia also ranks higher in certain technology areas, such as software engineering.
Cons
- Some security issues. On the downside, nearshoring Colombia may entail some security problems country-wide.
- Low cybersecurity. It’s also ranked high for cybersecurity attacks. Before choosing Colombia, you’ll want to do your due diligence and ask about security protocols.
Average Nearshore Outsourcing Rates
Last but not least, it’s important to calculate the cost of nearshoring to Colombia vs. Mexico. Typically, talent costs are the largest budget item of nearshoring.
As you can see, both locations offer significant cost savings compared to the U.S. The exact amount differs according to technology, which you can estimate using the chart above or our comprehensive pricing tool.
Choose the Ideal Nearshore Locale for Your Business
Now that you have a sense of Colombia vs. Mexico for nearshore technology outsourcing, you can kick off your partner selection process.
It can be challenging to pinpoint the right nearshore locale and partner. Start by considering your unique project needs and business objectives. These factors will then determine your project size, tech stack and required expertise.
And remember, software development companies vary widely even within the same country, so you’ll want to research options carefully.
Whether you’re interested in Colombia, Mexico or another LatAm country, we’ve got it all at TECLA. Our impressive talent pool is sourced from 18+ Latin American countries, making it easy to discover best-fit developers for your next project.
Reach out to our nearshore specialists today!
LatAm Making?
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