Mexico’s Tech Startups Look To Overcome Barriers To Growth

In the past decade, Mexico’s tech industry has flourished, growing three times faster than the global average. Most of that growth has been fueled by demand from the United States. But as Mexico’s startups strive to make it in foreign markets, they say they need more engineers and ways to finance their growth.

Softtek, Mexico’s biggest technology services company, spans four continents and provides software support to a client base that includes Fortune 500 companies. The business sector is growing rapidly in Mexico, thanks in large part to the country’s proximity to the United States.

“I think it’s safe to say that without the U.S., the Mexico market would not be doing very well,” says Morgan Yeates, an analyst with the IT consulting firm Gartner.

A Focus On The U.S. Market

Yeates says three-quarters of Mexico’s tech services are focused on the U.S. and large, global companies — such as Wal-Mart or Coca-Cola — that need help managing massive computer databases. For years, India and China have been the main providers, but that’s changing.

“More and more partnerships are happening between the U.S. and Mexico,” Yeates says.

U.S. companies tend to mesh better with Mexican providers. Time zones are more compatible, and Mexico is better able to serve a growing Hispanic market within the United States.

But it’s not all about IT support and services. It’s also about creating original software. Publish 88 is one of many tech startups popping up across Mexico. The company licenses software to print publishers seeking a multimedia presence.

“Our first office, 16 years ago, was a table in an apartment of a friend,” says co-founder Enrique Lima.

Now, its office is a rented house located in a quiet, residential neighborhood in Monterrey, Mexico’s northern industrial hub. After only a year, Publish 88 already has the Mexican versions of National Geographic and Cosmopolitan magazines as clients.

“Publish 88 is an incredible example of what you can do if you set yourself to your goals and you plan, and you work hard,” says Emilio Arriaga, the company’s chief financial officer.

A Need For Engineers And Capital

But while big Mexican companies like Softtek are doing business with big corporations worldwide, it’s a lot tougher for smaller startups like Publish 88 to score foreign clients. There’s no version of Silicon Valley in Mexico — at least, not yet. The country still thirsts for innovation, and no one knows that better than Guillermo Safa, a 40-year veteran of the industry here.

“We are driving with our hand brake on,” says Safa, who directs an IT business alliance in Monterrey.

Safa says Mexico has important challenges to overcome. “Human capital is one challenge,” he says. Most engineering graduates in Mexico end up in the manufacturing sector. The other challenge, he says, is financing. Mexico’s banks are not small-business friendly. However, a bill meant to reform the banking system is currently making its way through the Mexican Congress.

Meanwhile, Mexican universities are nurturing the country’s future entrepreneurs. At the Tec de Monterrey’s interactive study center, bright colors, foosball tables and trampolines are all part of an atmosphere meant to stimulate ideas. It works for freshman Rodrigo Medina.

“I’m working on an app that helps you to find objects that you don’t remember where you left them,” including car keys, wallets and cellphones, Medina says, adding that he hopes to start his own business when he graduates.

Medina’s success will be determined, in part, by how much support he gets from his own country.

Mónica Ortiz Uribe is a correspondent for Fronteras, a collaboration of seven public radio stations focusing on the U.S. Southwestern border with Mexico and changing demographics.

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