Is Outsourcing Disappearing in Mexico?

A rumor said that Mexican government would ban outsourcing. This is inaccurate, but big changes are coming.

Critics of the measure pointed out that even more jobs would be lost, given the inability of many companies, due to the pandemic, to incorporate their workers on the payroll. They also indicated that these measures would go against the agreements that Mexico signed in the trade agreement with the United States and Canada known as T-MEC.

As on other occasions, the concerns have been caused by a mixture of misinformation and miscommunication from the Mexican government. Today the government presented the initiative that, rather than prohibiting outsourcing, seeks to regularize it.

This, far from going against the free trade agreement signed with the other two countries in the region.

Context of outsourcing in Mexico

At the end of his six-year term, Felipe Calderón sent an initiative to reform more than 600 points of the Federal Labor Law in Mexico, facilitating subcontracting for companies. With this reform, only a written document is enough and incorporate workers into social security for subcontracting.

The reform was controversial, since it removed responsibilities from the bosses, while the workers were left unprotected in many aspects. In the criticism of the current government, bad practices were highlighted such as firing workers at the end of the year to rehire them the following year, preventing them from creating seniority.

Regulating the outsourcing

The Mexican government argued that companies have abused this scheme, using it for tax fraud and preventing workers from obtaining a more dignified pension. Furthermore, the workers were never clear who the boss was.

The reform is mainly focused on three types of outsourcing, such as the subcontracting of personnel, services, and specialized works.

Will outsourcing end in Mexico?

The reform does not imply the end of outsourcing in the country, only its regularization to avoid abuses by companies. And is that some employers were using the scheme to evade responsibilities.

Serious outsourcing companies offering services to foreign companies do not have to worry about these changes. Mexico will continue to be an attractive destination for nearshoring, where small and medium-sized companies can grow.