Investment Opportunities In The Mexican Information Technology Sector
Mexico, as an established middle-income developing country, is looking to expand its knowledge intensive operations as it takes the steps towards attaining the requisite levels of infrastructure, human capital and income equality need to boost productivity and thus reach the upper echelons of development. Existing market conditions plus a government desire to spur future growth make the Information Technology (IT) industry a very attractive prospect, in terms of both market-seeking (domestically underdeveloped thus massive potential) and cost-seeking foreign direct investment (for export to geographical and cultural neighbours).
This report will assess the current investment opportunities offered by the sector with focus on Offshore Software Development (OSD), illustrating how Mexico can use its proximity to major markets to overcome other production factors that make competitors such as India cost-leaders in the field.
Domestic Mexican IT Market Overview
GOVERNMENT POLICY
Economic liberalisation and NAFTA accession predictably increased investment and lowered prices through increased competition in all sectors, including IT, however the sector suffered from a lack of governmental commitment to improvement until Mexico’s National Development Plan of 2001, which contained the “e-Mexico” programme. This aimed to develop the domestic IT market, form an optimal regulatory environment and proliferate IT through government, business and the general population over a twenty-five year period.
Relevant objectives include: improving IT infrastructure and penetration; developing a national software industry; integrating IT into the education system; digitising the he ...