What is Outsourcing in general?
Outsourcing combines the terms outside, resource and using and means the use of external resources or sources. The term defines a corporate strategy that outsources individual tasks, subareas or even entire business processes to third parties.
This strategy is based on the idea that productive units should focus on the activities that have a greater advantage for them. The activities which have no advantage for them, but are necessary for the execution of production processes should be outsourced.
- Cost savings
Outsourcing to Mexico allows work to be done at lower cost and sometimes with better quality service providers. Circumstances such as idle times are the responsibility of the service provider and do not burden your own company.
- Concentration on the core business
Outsourcing frees the day-to-day business of trivial matters. This makes it possible to concentrate all available resources and energies on the core business.
- Access to expertise
There is no longer any need to invest in recruiting and training expensive professionals to cover areas that are not core to the business.
- Dependence on the service provider
You have to expect deficiencies in quality, failure to meet deadlines or IT outages at the service provider.
- Communication problems
- Risk of sensitive data
If departments are outsourced, they run the risk of passing on sensitive data to third parties.
Outsourcing to Mexico
Outsourcing is an efficient management tool that facilitates the administration of a company’s tasks which has become more and more popular in Mexico. This results in tremendous advantages for foreign operating businesses as it offers them not only the possibility to perform more specific processes and activities, but also significant cost reductions and access to expertise.
Traditionally, outsourcing to Mexico was seen as a strategy only accessible to big companies, however the accelerating pace in which technology advances nowadays has made it possible for small and medium sized businesses to make use of the powerful tool and its positive impact on productivity and growth.
Outsourcing of human resources
When it comes to outsourcing of personnel in Mexico it is important to note a corresponding change in the law in 2012, which states certain conditions under which hiring employees through a service company is possible:
- Not all employees can be outsourced.
- The position must require a specialized activity.
- Outsourced employees may not do the same work as internal employees.
Business Process Outsourcing
BPO describes the externalization of business processes. In contrast to common outsourcing which focuses on supportive processes, BPO means outsourcing primary value chains. BPO has two main characteristics:
- The BPO service providers oriented towards strategic goals of their customer.
- Services are customized and good business relationships are a priority (“one-to-one approach”).
There are several reasons in favor of BPO, for example:
- Focus on core activities
- Save costs
- Increase quality
- Access to specialized knowledge
- External innovation impulses
- Transfer of business risks to a BPO service provider
Even though there is a possibility of saving money, sometimes BPO is not worth it because of:
- Dependence on outsourcing partners
- Loss of control due to shifting of business processes to external parties
- 50% of IT projects fail
- Project selection, project management and project monitoring are ineffective
In general, standardized processes which are the same or at least very similar in every company qualify well for outsourcing.
How to outsource successfully
- The market and its costs and quality
- Expertise in negotiation in order to determine requirements, evaluations and elaboration of proposals
- Good judgement about the provider’s quality
Especially in a foreign country BPO often represents an easy way to comply with local norms and legislation without expensive training.
Contact us about outsourcing to Mexico!
We serve our clients, who represent different industries, with over 100 employees at our offices in Queretaro, Mexico City, Puebla, Stuttgart (Germany), and Greenville (S.C., USA).
WMP Mexico Advisors
Pabellón Santa Fe
Anillo Vial Junípero Serra 2601 Office 201
Residencial Juriquilla Santa Fe
76230 Querétaro, Querétaro Mexiko
T: +52 (442) 209 6870
Discover the most attractive economic regions located in Mexico
- Automotive and aerospace industries in the Bajío region
- Puebla – Automotive mecca since the early days
- Metalworking industry at the US border
- Jalisco – The Mexican Silicon Valley
- Headquarters and the chemical industry in the capital region
- Baja California – The gateway to the Pacific Ocean
Automotive and aerospace industries in the Bajío region
Located in the center of the country, the states of Aguascalientes, Guanajuato, Querétaro, and San Luis Potosi are among the most popular regions when it comes to the location of automobile manufacturers. The new BMW and Daimler plants, which will open in 2019 and 2020 respectively, will also ensure an additional demand for suppliers. For the aviation industry, a strong growth potential is predicted for the coming years, which will consequently attract more FDI.
The Canadian company Bombardier has a strong presence in Querétaro, and a specialized Aviation University is located there. Overall, Mexico is one of the six most important suppliers in the U.S. aviation sector.
Puebla – Automotive mecca since the early days
Since the mid-sixties, the Volkswagen Group has been producing individual models in Puebla. Meanwhile, the German car manufacturer Audi has established facilities in the same state, more precisely in the village of San José Chiapa. In 2016 the new production plant, which includes an education center, was inaugurated.
Metalworking industry at the US border
Years ago, the metal industry was established close to the US border, in the Mexican state of Nuevo León, especially around its capital Monterrey. An advantage of this location is its proximity to the US market, as 84% (2017) of exports go to the neighboring country.
Jalisco – The Mexican Silicon Valley
IT companies have settled mainly in the state of Jalisco, which is located on the west coast of Mexico on the Pacific Ocean.
The region around Guadalajara is known as the Silicon Valley of Latin America, where you can find more than 700 high-tech companies such as Oracle, HP, Motorola, and IBM. Jalisco currently has the fifth-highest number of companies with FDI in Mexico. Approximately 50 percent of all foreign investment comes from the United States and Canada, with another 25 percent from Europe.
Headquarters and the chemical industry in the capital region
The location in and around the Mexican capital has been chosen by many companies for their Mexican headquarters. It is not only the central location and the well-developed infrastructure that speak for this region, but also its proximity to the economically strong regions of Puebla and the Bajío. The capital region has attracted companies from the chemical industry such as BASF and Bayer.
Baja California – The gateway to the Pacific Ocean
Baja California is an excellent opportunity for suppliers in all sectors due to its privileged geographical location and proximity to the United States. In recent years, medical technology is the main type of company to be established in this region; these companies work closely with manufacturers in San Diego.
The port of Ensenada, one of the five seaports in Baja California, is one of the most important ports on the Pacific Ocean.