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Outsourcing: Software Development Migrating South

It used to be that the best place to be for software development was the Northeast corridor centered on a Boston hub. Anyone who thought of him/herself as a rising star in technology would put down roots in the Northeast in the hope of landing with that next big company that would produce the software development stars of the future. Now it appears the glory days of Boston and the Northeast are over. With the rise of outsourcing – and particularly outsourced nearshore software development – America’s technology seems to be migrating south.


How significant is this migration? Significant enough that Nearshore Americas has produced a 23-page report detailing migration trends and the reasons behind them. The report clearly shows the migration of technology from the Northeast to Southern locations like South Carolina and Texas, and now down into Mexico. That report also makes a very strong case that Mexico could become the dominant player in nearshore software development in the very near future.

GP - Outsourcing Software Development

What Used to Be Is No Longer


The appeal of the Northeast as a technology hub three decades ago was primarily the result of access to educational opportunities and investment funding. There were not a lot of universities and colleges outside the Northeast corridor offering reputable technology programs young students were interested in attending. And where the college graduates are, investment funding tends to follow. Investors were looking to put as much money into the Northeast as possible while ignoring other opportunities in the south.


Unfortunately, political and business leaders in the Northeast did not keep up with the times. Even while they enjoyed a booming technology sector, they failed to make sure that business and tax policies continued to be attractive enough to keep tech businesses in town. That is where states like South Carolina and Texas beat them.


What used to be is no longer because so many southern states offer a much friendlier business environment for tech companies. And when you are talking about nearshore software development, startups need as friendly a business environment as they can possibly muster. That is the appeal of both the southern states and Mexico alike.


Mexico’s Three Primary Ingredients


Nearshore Americas makes a very strong case for Mexico as a dominant nearshore software development provider based on three primary ingredients. These three factors provide tech companies something they cannot find in the Northeast, the Silicon Valley, or even the tech savvy Pacific Northwest:


  1. A Ready Workforce – The available supply of young technology workers in Mexico is astounding. From software developers to systems administrators, there is an abundant supply of workers ready to fill out the staff of any nearshore tech firm. What’s more, companies can hire 3 to 4 Mexican workers for the same cost as one American.


  1. A Cooperative Government – The Mexican economy used to be dominated by manufacturing companies whose ability to produce large volumes of exports gave them influence to control political decisions that affect economics. With manufacturing decline, this is no longer the case. Now the government is much more cooperative in supporting technology companies and other innovators.


  1. Strong Test Market – Lastly, Mexico represents a developing technology market in many ways. As such, it is a strong test market for new products. Software developers can release their products in Mexico, for testing purposes, before they go global.


Nearshore software development in Mexico is a reality American tech companies cannot deny. And as long as software development continues migrating south, our neighbor will only grow stronger as a dominant market player. They will long have a say in nearshore software development.