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Program for the Development of the Software Industry, PROSOFT Sergio Carrera Riva Palacio Director General of Domestic Commerce and Digital Economy Ministry of the Economy Government of Mexico Mexico’s Economy Overview Total population: 104 million GDP: 625 BUSD (world’s 10th economy) U.S. second trade partner (Canada 1st) Largest FTA’s network worldwide (including NAFTA, EU, and Japan) 4th country in number of airports and 1st in daily flights to and from the U.S. 7th exporting economy Ranked 5th in per-capita foreign direct investment received Largest spanish speaking population (U.S. – 5th) Best country in Latin America in terms of technological accomplishment, according to the UN PROSOFT Mexico’s IT industry policy Goals (2013) To accomplish an IT services annual production level of 15 billion USD To reach the OECD’s average IT expenditure as an economy To position Mexico as the leading IT powerhouse in Latin America PROSOFT – Mexico’s IT industry policy Strategies 1. 2. 3. 4. 5. 6. 7. Promotion of exports and investments in the sector Enhancement of human capital capabilities Adequation of the digital economy legal framework Development of the IT domestic market Stregthening of the local industry Achievement of world class process capabilities Promote cluster development countrywide State governments participating in PROSOFT Aguascalientes Baja California Guanajuato Jalisco Morelos Nuevo León Puebla Sinaloa Sonora Yucatán Mexico’s ITES industry value offer Human capital Highest IT undergraduate level workforce in Latin America (+100,000) 30% of current undergraduate total enrollment in IT related fields Abundant non-IT undergraduate level workforce for BPO and call centers available nationwide (lawyers, BA’s, CPA’s, HR) Infrastructure Broadband services available nationwide World class telecommunications services in main cities Sectoral experience for multinationals Manufacture Financial services Government Telecommunications Mexico’s ITES industry value offer Total project cost advantage (nearshore approach) •Reduced flight cost and time compared to the Asian region •Enhanced productivity in the solution of real time problems •Smaller amount of professionals at customer’s facilities Quality and process capabilites •3 CMM-5, and +15 CMM-4 and 3 companies (+53 currently engaged in model implementation and assesment) •ISO-9000 adoption widely spread Legal framework •Electronic signature and invoice •Data protection and privacy •Intellectual property rights •In all cases, the legal framework is compatible with U.S. legislation Mexico’s ITES industry value offer Country Environment •Political stability •Low geopolitical risk •NAFTA (investment protection, IPR, visas, market access) •Preferential market access with the U.S., Canada, EU, Japan, and Latin America Cultural Affinity •Compatible business environment and legal framework •Deep knowledge of the American consumer •Direct access to the U.S. Hispanic market PROSOFT support for export oriented companies Cash grants on a 50% basis of total costs for: Manpower training and certification Software & equipment Infrastructure Process implementation and certification Standards certification Technology transfer and royalties Supplier development programs Education/training tailor-made programs with universities Additional grants from State governments apply PROSOFT incentives for foreign companies establishing ITES operations in Mexico The same type of cash grants given to export oriented companies apply Tax breaks for R&D activities Local governments incentives (availability differs from state to state): 1. Payroll & Estate tax exemption 2. Preferential rates for land acquisition or leasing. 3. Simplified red tape PROSOFT grants – Sep/Dic 04 221 Companies qualified for grants: 95 companies engaged in improving their process capabilities +1,200 IT professionals engaged in training and certifications + 200 professionals engaged in PMI training and certification 5 facilities for operations in embedded software, semiconductor & hardware design, and multimedia content development supported 69 Projects supported Cash grants worth 20 milion USD Concluding remarks 1. Mexico’s ITES value offer has advantages over other options: 2. Mexico’s workforce pool for BPO activities is abundant and readily available nationwide 3. Mexico’s IT industry has extensive experience working with U.S. based companies Nearshore approach Compatible legal framework and business environment Political stability Competitive total project cost Tailor-made programs to develop supplier capabilities Program for the Development of the Software Industry, PROSOFT Sergio Carrera Riva Palacio Director General of Domestic Commerce and Digital Economy Ministry of the Economy Government of Mexico