Nuevo León has propelled nearshoring to Monterrey, its capital, to new heights: over 30 state nearshoring projects testify to the rising demand. As American tech companies flock to the city, how can you make the most of this promising market today?
I’m David Gomez, LATAM Lead IT Recruiter at Alcor—a software R&D accelerator and a smart alternative to traditional outsourcing. We help businesses expand cost-effectively into LATAM and Eastern Europe, enabling them to build teams of up to 100 Silicon Valley-caliber tech talents within a year through our comprehensive services, including recruitment, Employer of Record (EOR), and operational support.
In this article, I will review the software development landscape in this location, compare salaries for Mexican and American developers, highlight the main pros and cons of nearshore outsourcing in Monterrey, and, for dessert, propose a more effective alternative to traditional outsourcing.
Software Development Landscape in Monterrey
As Mexico’s third-largest city, Monterrey offers impressive numbers:
- 400 tech companies;
- 120+ innovative startups;
- 14,000 tech industry jobs;
- the lowest business costs for digital services;
- the presence of global giants like Amazon, Microsoft, Google, SAP, and Apple.
Main tech industries
But that’s not all—the city is at the heart of a booming tech industry, leading the way in transportation, edtech, e-commerce, and fintech. Nuevo León shines as one of the top 6 regions for technical training in the tech sector, exemplified by the cutting-edge AI-powered learning ecosystem developed at the renowned Tecnológico de Monterrey.
Startup ecosystem
Monterrey proudly stands out with its vibrant startup ecosystem, hosting the most notable startups like Skydropx, Bind ERP, Konta, and ContaLink—each making waves in their respective fields. On top of that, the city is home to its very own unicorn, Nowports, a digital freight forwarder that’s transforming supply chain logistics and redefining the industry in 2024.
Overall, these startups have attracted over $360.81 million in total startup funding since 2017. In 2023, Monterrey ranked among emerging tech hubs, contributing to 25.5% of the 400 new VC-backed startups in Latin America. The first quarter of 2024 alone saw two new startups emerging in the city, according to the fDi Intelligence Report.
Investment magnet
Monterrey’s ecosystem is further bolstered by active accelerators and venture capital firms like Proeza Ventures and Toro Ventures, along with global investors such as Sequoia Capital, Andreessen Horowitz, and 500 Global. Remarkably, over 70% of Mexico’s total foreign direct investment related to nearshoring has been directed to Nuevo León, particularly its capital. This dynamic environment creates a thriving business hub, making IT outsourcing in Monterrey a highly viable option for tech companies.
Software Developer Salaries in Monterrey
One of the most critical factors when choosing an outsourcing location is the cost of developers. To help you make a smart choice, my team has prepared an overview of the average gross salaries for senior positions in Monterrey, along with a visual comparison to San Francisco — the heart of Silicon Valley in the United States.
| Gross Annual Income, USD | |||
| Position | Monterrey | San Francisco | |
| JavaScript Developer | 54,000 | 147,000 | |
| Python Developer | 61,200 | 165,000 | |
| .NET Developer | 60,000 | 158,400 | |
| C++ Developer | 60,000 | 158,400 | |
| AI Engineer | 72,000 | 166,000 | |
| Cloud Engineer | 68,400 | 157,200 | |
| DevOps Engineer | 68,400 | 157,200 | |
| Blockchain Developer | 75,600 | 153,000 | |
| Mobile Developer (iOS/Android/Xamarin) | 62,400 | 151,800 | |
| Full Stack Developer | 63,000 | 162,000 | |
| Product Manager | 58,800 | 144,000 | |
| Engineering Manager | 99,600 | 210,000 | |
| Average Annual Salary | 68,550 | 161,200 | |
Overall, the gross annual salary in Monterrey is approximately $68,550, which is the same as the average IT salary in Mexico. Moreover, this figure is more than twice as low as the labor costs in San Francisco, making software outsourcing in Monterrey a highly cost-effective and efficient solution for foreign tech companies.
But this is not the only advantage of this location. Scroll on to find out more!
Nearshoring to Monterrey in 2025: Pros and Cons
Pro: Competitive salaries and lower taxes
The 60% wage difference compared to the US allows you to avoid overpaying for developers with the same level of skills and expertise. Additionally, the significantly lower taxes enhance the cost-effectiveness of nearshore IT services from Mexico for your product development. In the United States, the personal income tax is both federal and state-based, with federal rates ranging from 10% to 37%, and state taxes varying from 0.25% to 13.3%. In contrast, Mexico has a simpler structure where personal income tax is only federal, ranging from 1.92% to 35%, depending on income level.
Also curious about the average salary of software developers from Guadalajara? Read more in our latest article!
Pro: Highly educated talent pool
Today, Monterey boasts a decent pool of 100,000 software developers, forming a strong foundation for the region’s tech expertise. Thanks to this robust talent base, software engineers from Mexico, and Monterrey in particular stand out for their skills in data science, mobile development, fintech, and Python, providing extensive opportunities to find your ideal tech engineer’s match and build a perfect nearshore software development team.
Pro: Top-notch STEM education
The city is home to 11 universities that rank among the top institutions in Mexico and offer over 100 programs related to the tech sector. Monterrey Institute of Technology holds the 2nd position nationwide and houses the 1st Generative Artificial Intelligence laboratory in Mexico and Latin America. Moreover, each year, universities in Monterrey produce thousands of graduates with expertise in tech and related fields. For instance, Monterrey Institute of Technology and Higher Education alone educates over 90,000 students across multiple campuses, many of whom specialize in STEM disciplines.
Pro: Geographic and time proximity to the US
The city’s strategic location offers a significant advantage for nearshore software development to Monterrey. Just 230 kilometers from the US border and its Central Standard Time (CST) zone positioning, Monterrey is only an hour ahead of New York and Washington, and two hours ahead of Los Angeles and San Francisco. Such proximity allows you to seamlessly nearshore software developers, synchronize your remote teams’ work, and ensure smooth operations across your company.
Con: Smaller tech market
Yes, Monterrey’s tech market is smaller compared to Mexico City, which is larger in size and hosts over 350,000 developers— three times more than in Monterrey. However, considering the growth of startups, which now make up 11% of all startups in the country, the influx of foreign investments, and the significant number of students pursuing STEM disciplines, it’s easy to predict that 2025 and beyond will be increasingly successful for Monterrey. This will continue to attract more attention from those looking to nearshoring software development to Monterrey.
Con: Cybersecurity risks
Unfortunately, this trend is prevalent across Latin American countries in general, and Mexico is no exception. As for the good news: Monterrey’s proximity to the US and its 3rd place in the Urban Competitiveness Index 2024 brings hope for Monterrey’s resilience and potential to combat these risks through proactive measures. Furthermore, in April 2023, Congress introduced the long-awaited National Cybersecurity Bill. This detailed and comprehensive legislative act, consisting of 92 articles and 8transitional provisions, establishes an extensive cybersecurity framework and brings hope for significant improvements in the country.
However, it’s worth keeping in mind that these disadvantages can become several times more critical for your business when choosing outsourcing software development to Monterrey as your primary nearshoring strategy to Monterrey. Ready to hear what can be your lifesaver on the way to success?
Simpler Than Nearshoring Software Development to Monterrey
And that is—establishing your own R&D center, which will safeguard you from all outsourcing risks related to IP rights, hidden costs, and lack of direct control over your team. Why is this the ideal solution for you? If you’re a growing tech company aiming to profitably build a nearshore software development team in Mexico, setting up your own research and development center could be your successful alternative.
And you’re in luck because Alcor, an experienced software R&D accelerator, knows all the nuances of IT nearshoring in Monterrey and other LATAM and Eastern European markets—our clients’ key destinations to set up their tech R&D centers.
Alcor offers the perfect blend of three key ingredients:
- Top-notch talent recruitment: Our tech recruiters in Mexico specialize in securing the top 10% of tech professionals in the region, with 80% of candidates advancing to the interview stage. Additionally, 15% of roles are filled after reviewing the first CV, contributing to a remarkable 90% retention rate among the tech talent, as seen with clients like People.ai.
- Comprehensive EOR services: Alcor expertly handles all aspects of employment, from onboarding and payroll management to employee benefits and legal compliance, freeing you to focus on scaling your business. For example, we’ve successfully managed these processes for ThredUP.
- Holistic back-office support: From arranging office space leases to providing necessary hardware, Alcor ensures a seamless operational setup.
And all this comes without the need to register a legal entity or pay any buy-out fees.
Need more proof? Here’s the case of our client, Tonic Health:
In just 3 months, we established a fully operational R&D office for them, onboarding 15 top-tier PHP engineers. Additionally, we provided 100% back-office support and a comprehensive EOR service package, ensuring smooth integration into the new tech market and efficient operations from day one.
You can have all this too by taking the first step today—schedule a call with us, where we’ll discuss your hiring needs and provide you with a ready timeline for setting up your own R&D center!
References on Nearshoring to Monterrey
- Product Distribution Strategy
- Deloitte
- Invest Monterrey
- StartupBlink
- Clutch
- Microsoft
- Global Startup Ecosystem Index 2024
- fDi Intelligence Report 2024
- Mexico Business News
- EduRank
- G.AI.L
- Urban Competitiveness Index 2024
- Carnegie Endowment for International Peace