While tech companies in America suffered major layoffs in the past year, companies in Tijuana created a tech boom. Tijuana’s tech sector has been growing steadily since the 2010s, and the pandemic sped up the trend.
“The reason for our existence is because there is this extreme need for engineers in the U.S., and right now they are not meeting that demand,” said Omar Parra, an engineering director for ITJuana, which connects American businesses — mostly San Diego-based biotech companies — with Mexican talent.
Multiple factors are contributing to Tijuana’s current tech boom, including lack of engineers in the U.S., cheaper labor costs in Mexico, and disruptions to the global supply chain.
Another factor is the wave of tech sector layoffs in the U.S. earlier this year, according to Fernando Torres, who heads the Ensenada office of Softtek, the biggest IT nearshoring company in Mexico. Nearshoring is like offshoring but not halfway across the world.
The pandemic put a high demand on tech workers who could help companies shift to a remote-work environment and capitalize on the influx of online shopping. So companies increased their workforce. But they’ve laid off thousands of workers and have gone back to pre-pandemic staffing levels.
“Those companies are now looking for more cost-effective options,” Torres said.
Businesses in various sectors are looking for IT workers from Mexico, not just tech companies.
Sofftek’s clients include banking, transportation, retail, and health care companies, he said.
ITJuana is riding the wave of Tijuana’s tech boom. The company currently has 400 employees and expects to grow to 1,000 within the next two years. It is also expanding its client base beyond San Diego by working with companies in Northern California and the East Coast.
The company is more hands-on than a simple recruiting and staffing firm, said Parra, the engineering director. It gives American companies a Tijuana bureau of coders, developers, managers and directors that work in tandem with teams north of the border.
“We think of ourselves as part of their team,” Parra said. “It’s not like we just get assigned projects and send them back work. We create teams around their own organization and adapt to what they are already doing.”
The company operates out of a luxurious office space modeled after a Silicon Valley tech company. It features an open floor plan with collaborative workspaces, free food, a flexible work-from-home policy, and board games to keep workers entertained.
“The most popular one is Exploding Kittens,” Parra said.
The pandemic also showed companies all over the world that Mexico was a good option for workers compared to China, which struggled with supply chain issues and has a poor track record of protecting intellectual property, said David Fishman, CEO of the Sparrow Company, a boutique recruiting and staffing firm in Mexico.
“Companies woke up,” he said. “Not just the big multinationals but the smaller $50 million to $100 million companies saying, ‘hey we want to add IT staff.’ Everybody was going to Mexico.”
He said Mexico has prepared a workforce able to take these tech jobs by pushing students into college programs that are equivalent to the U.S..
“Therefore they are able to compete on our playing field,” Fishman said.
But there are also signs that Tijuana can’t keep up with the demand.
Fishman has noticed it is much harder to find talent in Tijuana than in other parts of Mexico. The city’s infrastructure is crumbling, the vacancy rate for office space is less than 1 percent. And the city’s housing costs are among the highest in Mexico.
“I see space, cost of living, and the amount of talent is pretty much at capacity,” Fishman said.
Despite these concerns, companies like ITJuana are investing in the city.
Tijuana has 35 public and private universities with more than 14,000 students in engineering programs. ITJuana is tapping into that talent pool by establishing formal partnerships with some of Tijuana’s universities.
“Students in the last year of university can apply for part-time programs with us,” Parra said. “We actually put them in real positions, real jobs, real teams and real projects.”
ITJuana also wants to bring more American companies to Mexico.
The company has what Parra calls a build-to-transfer model, which means businesses that contract with ITJuana have the option of formally absorbing the workforce.
For example, let’s say Company A has a contract for a team of 100 developers, coders and managers to work on a product. Company A likes their work so much that they decided to formally open a Tijuana office and hire that entire team.
One San Diego-based biotech company did just that with a team of 250 former ITJuana workers. Parra declined to name the company. They set up a legal entity in Mexico and are currently working in the same office building as ITJuana’s headquarters.
“What we want is in all of the buildings to have different companies from the U.S.,” Parra said. “I’m just making up names, but let’s say Johnson and Johnson, Dexcom, and so on.”
