Mexico Manufacturing Clear Advantage As Offshore Provider
Mexico Manufacturing continues to offer greater advantages for U.S. companies after a recent trip to India by Secretary of State, Hillary Clinton. Even with India’s effort to improve high tech trade between the countries, Clinton’s promise to facilitate it was ambiguous, particularly in the face of President Obama’s goal to clean up the U.S. tax code. Specifically, identifying and targeting companies that exploit the American visa process (such as some Indian firms hiring their own ex-pats at a reduced wage from their American counterparts) is part of the new agenda. Those exploiting will soon suffer visa restrictions as one such strategy. Of equal interest to India are taxes the U.S. hopes to capture, thereby increasing overall costs of outsourced operations. Given these changes, Mexico manufacturers clearly stand to gain in this new environment.
Companies like Infosys Technologies who hire nearly 9,000 employees with H-1B visas (and another 1,400 with L-1 visas) will be squeezed from a cost-of-operations perspective. And not only will India’s IT industry be affected, but the U.S. companies maneuvering business operations through them as well. While Canada may benefit from the American visa and tax-shifting taking place, Mexico manufacturing stands to gain the most given their clear advantage. The North American Free Trade Agreement (NAFTA) protects both countries by protecting intellectual property along with streamlining the trade process. Undoubtedly, Mexico will continue to shine as a near shore alternative to India’s high tech industry.