Latin America Market Entry via Mexico, Without Committing First
Most companies compare Mexico and Brazil and choose Mexico. But two remote sales people rarely produces a pipeline. There is a better first step.
Open a local presence and your follow global customers into Mexico or develop first a local pipeline before committing to a large operation.
Mexico or Brazil: how companies choose their Latin America headquarter
For Tech Companies expanding into Latin America, the decision of where to open its LATAM Headquarters usually comes down to Brazil or Mexico. These are the two largest economies in the region, so the pattern is to establish one office and expand outward from it.
While Brazil offers its unique advantages, such as being the largest economy in South America. But it is also, in practice, its own region: Portuguese-speaking, with business regulations that do not carry across the rest of Latin America. Entering Brazil gets you Brazil. Mexico is Spanish-speaking, as almost every other country in the region is, and has a more similar culture.
Companies with North America focus get two benefits from one operation: an entry point to Latin America, and a nearshore delivery base for North America. Microsoft GEO Expansion Whitepaper for Partners reaches the same conclusion.
Mexico overlaps with U.S. business hours, flights are comparable to domestic travel, and the engineering and commercial talent sits in a handful of established hubs: Monterrey, Guadalajara, Mexico City, Tijuana and Hermosillo. More importantly, Mexico is the United States’ top trading partner, ahead of Canada and China, and sits inside the North American trade bloc.
How to test the Latin America market before committing
Pilot. Add Mexico’s operational capabilities in days, not months: a local presence, the ability to deliver proposals and quote locally, and someone on the ground. You pay only for the people you use, on shared infrastructure.
Adjust. Build a pipeline and find out what the market actually responds to, before the cost structure is fixed. Avoid the learning curve by working with Everscale’s local IT industry know-how and network.
Scale. The operation scales following revenue, not before it. The model is efficient from day one, with the option of opening a stand-alone operation when it reaches its own efficiency threshold.
This is the Subsidiary-as-a-Service model, the IT equivalent of the shelter model that manufacturing has used in Mexico for decades.
Different options, depending on how far along you are
Pipeline development is the usual starting point for companies testing the market. It is not the only way in. Some arrive with the plan already settled and open a sales office or a regional hub directly.
- Pipeline Development: Sales executive with temporary offices for local presence and initial pipeline executive. Adding Marketing Lead (sales collaterals localization), Business Development Representatives (BDR’s), Inside Sales Executive (ISEs), and presales roles as it grows. Support for RFP submission and nearshore/local pricing proposals.
- Sales Office: Full Sales team, with permanent offices and leadership positions. Creation of a Legal Entity for signing local customers. Feedback on quotas, seasonality, and benefits packages according to local market. Mix of permanent/temporary delivery team.
- Region development: A full Sales Team for acquiring initial customers in the region, is needed to develop local resellers/channels. Feedback on companies to Network and Industry/Customers to target. Legal entity and engineering support team for the region.
- Regional Hub: Sales, Engineering, and Customer Support (CX) for the region, with permanent offices with company brand and legal entity.
All scenarios can scale in size, cities, hiring type, and offices as needed. Including implementing recent grads bootcamps and relocation of foreign personnel.
Because of Everscale industry expertise in the enterprise software ecosystem, the turnkey subsidiary incorporates best practices and built-in capabilities that will assist foreign companies in bypassing the initial learning curve of the local market and enhance the likelihood of success of local strategies.
Customer Examples
IT services company
IT Services Company with potential customers in the region, was uncertain of entering the Market due to the associated costs and uncertainties.
To overcome this, utilized Everscale SUBaaS, which allowed them to support their first sales engagements in Mexico while building a local pipeline with a temporary team. Once the pipeline matured, it set up a local entity and grew the team, while still benefiting from an agile operation.
HCM and RPA provider
Global Digital Transformation Company, with offices in APAC, the Middle East, and the Americas.
Their global customers require support in Mexico, so instead of subcontracting local tech companies that could become future competitors, are evaluating expansion options into Latin America.
Choosed the SUBaaS option to avoid setup costs and start supporting their customers locally in weeks, while taking their time in deciding where to open their own branded offices and the right configuration of their team to hire, gradually increasing in size.
Do you need a legal entity to enter the Mexican market?
Not to start. You can have people working, quoting and building a pipeline in Mexico before any entity exists, which is the point of testing first.
Some enterprise software companies, can also start selling with local resellers, building local partners to develop new customers in the region.
You will need one when a local customer requires a Mexican counterparty on the contract, for which you can create the legal entity for commercial paperwork, while you continue your small and flexible operations under the as-a-Service model, leveraging the infrastructure already built.
Until then the entity is a cost with no revenue attached to it. Most companies open one in year two, after the market has answered.
Which Mexican city for your Latin America base
With a Population of 130 Million, Mexico has a clear advantage over other LATAM Countries that attract foreign investment, such as Costa Rica (5M) and Panama (4M), with cities larger than other countries.
Guadalajara
Start-up’s and Tech hub Capital and also as the Mexican Silicon Valley.
Delivery capability matters as much as sales presence.
Monterrey
The business capital and closest major hub to Texas. Strong for industrial and enterprise accounts, and for teams that will also serve North America.
Mexico City. Largest market in the country, where most multinationals and enterprise buyers are headquartered, and the usual base for a Latin America headquarters.
Latin America market entry consulting for technology companies
Need to answer an RFP or build local presence for a global customer?
The SUBaaS framework supports testing the region and customers response before fully committing to a large operation.
Tell us the scenario and we will tell you what it takes.
COMMON QUESTIONS
Frequently asked questions about Latin America market entry
Q01 Should we enter Latin America through Mexico or Brazil?
Most tech companies choose Mexico. Brazil is the larger economy but is effectively its own region: Portuguese-speaking, with business norms that do not carry across the rest of Latin America. Mexico is Spanish-speaking, as almost every other country in the region is, so one operation reaches most of the market. Companies with United States plans also get a second use from a Mexican operation as a nearshore delivery base for North America.
Q02Can we enter Latin America without building a local sales office?
You do need someone locally that can show that it has local support to scale appropriately. A sales executive working from home would not gain trust and rarely produces a pipeline. Local companies do not open up to an unfamiliar foreign vendor with no presence in the country.
The alternative is a local presence from day one, with a pilot team that can show local presence, with flexibility for adjusting, before the cost structure is fixed.
Q03Which Mexican city is best for a Latin America base?
Mexico City is the default location for multinational companies. The largest market in the country, enterprise buyers are headquartered there. Monterrey is the business capital and closest major hub to the U.S., strong for industrial and enterprise accounts. Guadalajara has a large software talent pool, and is the right answer when delivery capability matters as much as sales presence.
Q04What does market entry consulting in Latin America usually cover?
We work with our customers providing industry research and custom studies. In addition to helping build the right compensation package and who to recruit, we provide local presence from day one, support on RFP submissions and local pricing feedback, guidance on compensation, quotas and seasonality against local norms, and direction on which companies to approach and which to network through.