The tech talent gap is here to stay: 64% of companies lament underskilled candidates, and 56% express concerns about overall talent shortage, says MIT Technology Review Insights. Meanwhile, businesses are trying to map talent in other locations, opting for offshore software development in Mexico, Argentina, Colombia, or Eastern Europe. Is that a sign to start doing the same?
I’m Dmytro Ovcharenko, Alcor’s CEO with 15 years of experience in tech. My team and I connect US and European companies (Dotmatics, Ledger, Grammarly, and others) with top-tier talent in Latin America and Eastern Europe.
In this article, you’ll learn about the vibrant Guadalajara: why it’s considered Silicon Valley in Mexico, its history, local business incentives for R&D center development, and whether or not software developers staffing in Mexico is worth the effort. For this and much more, keep reading!
5 Reasons Guadalajara is a Silicon Valley of Mexico
The Mexican government directly participates in fostering local and regional startup growth through such initiatives as Startup Mexico and the Fintech Law. The former offers programs for startups, small and medium businesses, and corporations with the final goal of bringing innovation to new heights. The latter aims to provide more clarity in financial legal matters by regulating FTIs — electronic financial technology institutions, which comprise crowdfunding companies and e-money organizations.
Bright-Minded Tech Ocean
The state of Jalisco makes up 40% of the Mexican IT industry, adding more than 10,000 tech graduates to the overall country’s 700,000 talent pool every year. Moreover, the region is home to top educational institutions — ITESO, Tec de Monterrey, Universidad de Guadalajara, and Universidad Autónoma de Guadalajara. As for their reputability, Tec de Monterrey University, with its campus in the state of Jalisco, is ranked #1 in Mexico and #4 in LatAm, according to the Times Higher Education Ranking 2023. To boot, Adalberto Florez, founder & CEO of the soonicorn Fintech platform Kueski, is also convinced it’s a city with the best software engineering talent.
Competitive Cost Edge
A software engineer in Guadalajara earns about $40K a year, while their US counterparts make around $105K. According to more Glassdoor estimates, programmers in European countries receive an average salary of $56K, with Norway and Germany paying the highest wages — $70K and $73K, respectively. As you can see, when saving on coders’ salaries, Guadalajara is a place like no other.
Furthermore, Mexico has lower corporate income tax rates in comparison to the US, given the fact that it imposes no additional state-level rates. For the US and Canada, there is no double taxation when cooperating with Mexico. In contrast to the Mexican 44.9% to 60% social security tax rate, Western European taxation is less favorable, at times reaching up to 65-68%, based on the Trading Economics information as of 2022.
One more significant difference for tech companies in the country is the role of the government. It promotes tax incentives for research and development, such as a 30% tax credit for R&D expenses according to the Mexican Income Tax Law. Lastly, Mexico made it to Kearney’s Global Services Location Index top 10 for its financially attractive and business-friendly environment.
Setting up an R&D office in a foreign location can help you cut costs while collaborating with top-notch software developers. One of Alcor’s clients, a US online fraud detection company, Sift, reaped all the benefits of this model. Our 10 IT researchers, 3 tech recruiters, and an account manager helped the client to hire 30 developers in 1 year while the legal team handled legal and compliance matters. Ultimately, Sift got a fully furnished and transparent software R&D branch in a foreign location.
One of the chief advantages of the Mexican Silicon Valley is its location. Being geographically close to Dallas, Los Angeles, and San Francisco, the city in Jalisco is a gem for assembling a remote team. It’s 2 hours behind New York and 1 hour ahead of Los Angeles, so you’ll keep in touch with your team throughout the whole working day. Another perk of such geographical proximity is work ethics and cultural exchange with the US. Work practices are much the same, with a stronger emphasis on networking and relationship-building. Finally, while English proficiency is not the highest in Latin America, its proximity to the US contributes to the nation becoming bilingual.
Brief history of Guadalajara
The Silicon Valley of Mexico has emerged relatively recently. The 1960s laid economic foundations for the region, as giants IBM, Hewlett-Packard, Kodak, Siemens, and Motorola established manufacturing operations there. By the 1980s, Guadalajara had developed a cluster of tech companies, which skyrocketed its tech manufacturing sphere. More programmers flocked to the area, while corporations partnered with universities to expand their tech-related curricula.
During the 2000s, however, the rise of the city was stalled by the Asian market. Despite losing numerous tech jobs, the city persevered in perfecting its education and attracting funding. From 1999 to 2023, for example, Jalisco accumulated $705B in foreign direct investment. Famous corporations have contributed to its further growth:
- IBM opened a plant.
- HP invested in data.
- Intel stimulated design and R&D by setting up an office in Zapopan, an urban municipality in Guadalajara.
The economy of the country’s tech center keeps growing, as city officials are keen on attracting entrepreneurs and investors. One more initiative led by The Federal Government is Guadalajara Creative City, aimed at becoming the digital media hub of the region. As a result, Jalisco is expected to become the LatAm leader in audiovisual content, technological development, and innovation by 2030, according to the initiativeʼs official website.
Guadalajara as a Tech Hub
Accounting for more than one-third of the IT sector in the country, the city is set for success as a tech hub. For starters, Technological Park Guadalajara has a well-educated population with an average age of 25 years with access to 16 technology institutes and 12 universities.
Following the Trump administration’s moves to restrict bringing foreign talent to the US, Artistóteles Sandoval, governor of Jalisco state, seized the opportunity to personally promote the area to high-tech companies in California. This strategy only reinforced Guadalajara’s growth and advanced nearshore outsourcing to Mexico.
Now, it’s the 5th most digitized city in LatAm. According to the Startup Global Ecosystem Report, as a top city in Mexico, Guadalajara is outpaced only by Monterrey and the capital, Mexico City. Indeed, the major Jalisco city shines in Fintech, producing such robust companies as Voxfeed, WePow, Yotepresto, Ooyala, and Kueski. Most well-known tech giants — Apple, Google, Meta, Netflix, and LinkedIn — have already expanded to Guadalajara. But they’re not the only ones!
Tech Companies in Guadalajara
The region appeals to well-established companies in the automotive, electronic, tech, and health industries. Currently, the following renowned corporations operate in Guadalajara Technology Park in Mexico:
- IT & Software: Amazon, Cognizant, HCL, Luxoft, Wizeline, IBM, Oracle, Wipro, Gameloft
- Automotive: Toshiba, Honda
- Electronics: Bosch, Foxconn, Sanmina, NXP Semiconductors, Freescale, HP, Dell, Intel, Jabil, Cisco, Microsoft
- Health: AstraZeneca
In addition, the startup-rich city environment spurs further growth of accelerators in the area. The most widely known are Agave Lab, Guadalajara Investor Network, Redwood Ventures, and Wizeline.
Developers Salaries in Guadalajara
Let’s take a look at middle-level programmers’ salaries in Guadalajara in contrast to the US salaries for similar positions:
|Position||Gross Annual Salary, USD|
|Front End Developer||43,000||119,000|
|Back End Developer||39,500||105,000|
|Mobile App Developer||48,500||101,000|
Thus, the highest software developer salary in Mexico, that of a Mobile Developer, is 58% lower than the considerable Front End Developer remuneration in the US. Even if we compare it to the lowest Web Developer salary, in Mexico, you’ll pay up to 45% less.
Hire Remote Developers in Guadalajara with Alcor
Alcor is a leader in nearshore R&D services and full-cycle IT recruitment across Latin America and Eastern Europe. Our services cover employer branding, IT recruitment, office lease, equipment procurement, IT infrastructure setup, payroll & accounting, and other operational support. In Latin America, Alcor recruits in Mexico, Argentina, Colombia, and Chile.
With us, you can make a giant leap in no time: on average, we hire a team of 5 devs in 1 month. Quality is our strong suit: 98,6% of the candidates we hire successfully pass the probation period. What’s more, there are tangible guarantees: we not only hire the rest of the team at no charge to you if we don’t meet the deadlines but also commit to a 3-month warranty for replacing a candidate for free.
Intrigued? Just reach out, we’ll do the rest!