Prior to his political career, former President of Mexico Vicente Fox was CEO of Coca-Cola Latin America. Since leaving public office, he has dedicated himself to the economic and cultural advancement of Mexico, including pushing for a larger and more successful business services industry. He was the first Mexican opposition leader elected in more than 80 years and has earned a notable place in the history of democracy.
I had the recent honor of catching up with former President Fox to ask him his perspective on the sourcing industry today and how Mexico is playing a role.
ESTEBAN HERRERA: Mexico has established itself as a globally competitive manufacturing powerhouse. Business services, and outsourcing in particular, have lagged a bit behind. What needs to happen for Mexico to enjoy the same success in IT and business process outsourcing as it has in manufacturing?
PRESIDENT VICENTE FOX: Well, we want to ratify that, yes. Mexico is a great manufacturing destination, and I should say the most competitive in the world with access to the U.S. market, which is the largest market in the world. So that’s something that Mexico has today. And I would say this manufacturing structure is as large as all of Latin America put together. And it is based on a trade balance, on NAFTA, between Mexico and United States, approaching a trillion U.S. dollars a year, the largest trade balance in the world together with China. So that’s granted. This is Mexico today.
Now, all economies usually grow step by step, usually starting with the basics, growing materials, agriculture, food products, oil, minerals, as it is today in Latin American economies. Then you move to manufacturing, which Mexico has already done. The next step, a mandatory next step, is to move into the knowledge economy, to nourish the manufacturing economy. There is no way you can keep expanding your manufacturing capability and structure if you don’t have full access to technology, and specifically information technology. This is what is going on in Mexico today.
You see Monterrey, the largest industrial manufacturing city in Mexico, is now very strong on IT services and solutions. You see the city of Guadalajara , the second largest city in Mexico, which has a strong cluster [of information technology activity]. It is technology and it is information technology. So Guadalajara, a city of 6 million inhabitants, is already very strong in IT services and solutions. And, of course, Mexico City and now Guanajuato in the Bajio region. They’re also moving at a fast pace into the knowledge economy.
So I think that what Mexico needs, responding to your question, is to keep paying attention to this knowledge sector in the economy, to keep government interested in incentivizing and motivating, and to keep making partnerships and associations between the Mexican technology and IT corporations and the global corporations like we have done here in Guanajuato with Centro Fox and UST-Global.
HERRERA: That’s a perfect lead-in to my next question. You’ve spent the years since your presidency advocating for the cultural and economic development of Mexico, often through public-private sector partnerships. How can this kind of partnership work for the outsourcing industry?
FOX: Well, it’s a half and half answer. When you speak about manufacturing, investment is a key factor. It’s very intense, very heavy on financial investment, capital investment. When you talk about IT services and solutions, then it’s not that much capital investment, and it is much more of a human talent, a human resource need to keep it expanding and moving ahead. So what you need is to invest in education, to invest in universities, to invest in centers of knowledge, to invest in all kinds of promotion, talent, startups, to bring dedicated people to technology. And this is what we do at Centro Fox, together with UST-Global. We take action as much as possible and as much as needed to move faster into this next phase for the Mexican economy.
HERRERA: One of the challenges of competing with countries like India is simply scale. Personally, I have thought a pan-Hispanic outsourcing alliance that would face the world as a unit could be more successful. Can this be achieved? And would you agree that a regional approach would be more competitive than a strictly national one?
FOX: Okay. It’s happening. It is accelerating. Of course, India showed the way and the path to make this sector a very successful economic sector for its exports. But today, we have found very important and strategic competitive advantages.
Number one, language is no longer a clear advantage of India over Mexico or Latin America. We have expanded our capabilities in English, which had been a disadvantage in the past. Number two, the output of talent from universities. Today, Mexico is concentrating more and more on technological universities and is generating many more engineers either in software, in technology, or any other kind of engineering. Mexico has begun to have plenty of this talent. We have to keep working intensively on that. And the third advantage is our time zone, which is the same time zone as a lot of the United States and the large global U.S. corporations. Traveling to Mexico from United States takes you two to three hours. Traveling to India takes you 18 to 20 hours. The cost of traveling to Mexico is $1,500 U.S. dollars. Traveling to India costs $15,000 to $20,000.
So all these clear competitive advantages will move Mexico and parts of Latin America, but more so Mexico, into a very competitive position to master IT services and solutions.
Look for part II of my interview with President Fox about the implications of the U.S. presidential election on the future of global trade and business.