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High-Tech Companies Look To Mexico For Qualified Talent Pool

RACHEL MARTIN, HOST:

Good news - U.S. tech companies really want to hire people. Bad news - they can't find qualified candidates. So they are getting creative. Not everyone, though, is behind the solution. Here's Stacey Vanek Smith and Constanza Gallardo of our daily economics podcast, The Indicator from Planet Money.

CONSTANZA GALLARDO, BYLINE: Jose Becerra works at Red Door Interactive. It's a digital marketing firm headquartered in San Diego about 20 minutes north of the U.S.-Mexico border. The company has about a hundred employees.

STACEY VANEK SMITH, BYLINE: And about eight months ago, Red Door opened a satellite office in Tijuana. Jose is one of just three employees there right now. And he is working there now as a web developer.

GALLARDO: Tijuana has been growing as a tech hub for Mexican startups over the last 10 years. And recently, foreign companies have begun competing for that talent and expanding satellite offices there.

JOSE BECERRA: There are a lot of people that is doing the same thing that I'm doing for American companies or French companies - stuff like that.

VANEK SMITH: U.S. manufacturing companies have been running subsidiaries in Mexico for decades. They're often called maquiladoras, and they make a wide range of goods for the American market. But now all kinds of companies are setting up shop in Mexico, including Red Door. Reid Carr, the CEO, says he kept hearing about this pool of highly skilled tech workers just a few miles south of San Diego.

REID CARR: We have this - I don't know - sibling to the south, so to speak. And so I figured we weren't really taking advantage of it.

VANEK SMITH: Dozens of American companies have set up shop in the Baja region just in the past five years. And they are specifically hiring for computer science jobs, for tech jobs. And this has been happening for several reasons.

GALLARDO: First, most things are cheaper for companies doing business in Mexico, compared with the U.S. And there's another lure - the Mexican government recently introduced tax incentives for new businesses opening up along the border with the U.S. The cost of living is a lot lower, as well.

VANEK SMITH: And that means American companies can pay their workers in Mexico a whole lot less.

CARR: This person's super talented, and they're exactly what we're looking for. And they happen to be, in this case, in that environment - less expensive. That's OK.

VANEK SMITH: The average base salary of a developer in the U.S. is about $80,000 a year. And that same job pays about $18,000 a year in Tijuana. That's according to data from Glassdoor.

GALLARDO: The second reason American companies are coming south of the border - there's a shortage of qualified high-tech workers in the U.S.

VANEK SMITH: In 2017, there were about 500,000 job openings in this industry and only about 60,000 computer science college graduates. That's according to an industry report by The App Association. Companies have to look for foreign workers to bring to the U.S. And that often involves getting a special work visa, like an H1-B visa. And that has been getting harder and harder lately.

GALLARDO: Which brings us to the third reason - immigration. The number of H1-B visas available in a given year has been capped at 85,000. And last year, there were more than 190,000 applications for those visas.

VANEK SMITH: Another big attraction for Reid was just how close Juana is to San Diego. And that is a fourth reason - the proximity. And that proximity can build a useful cultural connection, too, because people who live on the U.S.-Mexico border are often bilingual and bicultural. And that can just make them an easier fit for an American company. They can kind of walk right into the job.

GALLARDO: But not everyone's sold. Many local business owners have spoken out against the trend, saying American competition is pricing them out of the labor market. Constanza Gallardo.

VANEK SMITH: Stacey Vanek Smith, NPR News. Transcript provided by NPR, Copyright NPR.