Mexico IT-BPM Industry: Maintaining Competitiveness Amidst Uncertainty
The proposed withdrawal of the United States from NAFTA and implementation of Border Adjustment Tax (or outsourcing tax) is likely to negatively impact the IT-BP industry in Mexico in the short-term. Operating costs for IT-BP services from Mexico may increase by 10-30% and Mexico may lose favorable access to the United Sates market.
Despite negative short-term impact of NAFTA and implementation of outsourcing tax on IT-BP services industry in Mexico, there have been no knee-jerk reactions from the leading multinationals. The medium- to long-term outlook continues to remain positive for Mexico given country’s strong proposition for IT-BP services. In this viewpoint, we have examined the facts concerning the current situation and have presented Everest Group’s perspectives on the impact of political events on Mexico’s IT-BPM industry through two different scenarios:
- The United States does not withdraw; all parties agree for a renegotiated NAFTA agreement
- The United States withdraws from NAFTA
We have also explored the favorability of alternative locations in Latin America (LATAM) to Mexico that can be leveraged for the global services industry.
This report is available to members.