Mexico’s IT association Canieti will take strides to inject venture capital into the local IT sector, as well as improve the industry’s competitiveness on a global scale, Canieti president Santiago Gutiérrez Fernández told BNamericas.

In spite of a string of investments during recent years from giants such as IBM (NYSE: IBM), Indian IT firm Infosys (Nasdaq: INFY) and Indian IT services firm Tata Consultancy Services (TCS), Mexico is far from reaching its IT potential.

Gutiérrez said Mexico has seen outsourcing growth to the tune of 20% during the past few years, but the country is still hemorrhaging contracts to one of its long-time competitors, India. Mexico has made significant advances in terms of quality of service, but now must focus on labor reforms to rein in costs.

Meanwhile, a nationwide education system that treads lightly in the area of technology represents another Achilles’ heel.

“What are the causes of Mexico’s lack of competitiveness? There are two factors. The first factor has to do in part with an education system that does not meet the country’s needs,” Gutiérrez said. “The other factor has to do with labor laws that we currently have. In many senses, they are anachronistic and are no longer apt for competition on the world stage.”

On the other hand, Gutiérrez argued that his country still has a leg-up on Central American neighbors such as Guatemala and El Salvador, which have increasingly tried to position themselves as cheap outsourcing alternatives to Mexico.

“We do not have relevant statistical evidence that indicates that we are losing business due to competition from Central American countries,” he said.

VENTURE CAPITAL

Gutiérrez, who was elected late last month as Canieti president for the period 2010-11, noted that the Mexican government has created innovation funds, which have yielded positive results in the IT industry. Still, the public sector needs to diversify their financing sources to include more funds from international organizations and venture capital funds, he argued.

“In Mexico, the development of venture capital funds does not exist,” he said. “It is hardly being discussed.”

Gutiérrez argued that such financing is most applicable to companies that develop different types of software.

“Venture capital can be applied, for example, to software development companies… which satisfy both domestic market needs and international market needs,” he said. “Another type of project is embedded software, which is applicable to almost all industries, including automotive, electronics and aerospace.”

Gutiérrez also called for the creation of funds to increase broadband use nationwide.

INDUSTRY FIGURES

Canieti divides its coverage into three main areas: IT, electronics and telecommunications. Gutiérrez said all three sectors combined will pull in an estimated US$100bn this year, representing roughly 9% of Mexico’s GDP.

Electronics revenues will surpass US$50bn, while telecommunications services sales will reach US$25bn. IT will reach US$13bn-14bn, while the subdivision of technology and equipment sales will bring in an additional US$5bn-6bn.

Gutiérrez said each sector will see roughly 10% growth in comparison to 2009.

Canieti increased its membership by 10% last year, surpassing 1,200 companies. The organization saw the largest membership growth in states including Sonora and Sinaloa.

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