Mexico Introduces Legislation To Ban Outsourcing

Mexico Introduces Legislation To Ban Outsourcing

Mexico’s congress is debating a bill supported by President Andrés Manuel Lopez Obrador, also known by his acronym AMLO, that would largely curtail outsourcing in the country, even though the sector is a thriving source of foreign exchange for the country, and an entry point for many into white collar professions. The proposed legislation would permit outsourcing only with special dispensation from the Mexican department of labor.

According to Mexico’s Labor Secretary Luisa Maria Alcalde, the outsourcing sector has grown from employing 1 million workers in 2003 to 4.6 million in 2018. The AMLO administration says it seeks to halt abuses of domestic employers avoiding benefits for many unskilled professions, but the bill may create serious collateral damage as a large portion of Mexico’s outsourcing sector provides professional services such as software development, customer service and technical support to multinational clients. One example would be airlines or hotel chains outsourcing their reservations and customer support to specialized firms. Many international contact centers operate in Mexico providing office employment to students and young adults that may have few other options for entering the professional workforce.

“A reform of the law like it is proposed, will endanger U.S. companies plus put millions of SMEs and workers at risk at the worst possible time,” said Larry Rubin, chairman of the American Society of Mexico, an advocacy organization representing the interests of approximately two million Americans living in Mexico along with American companies and NGOs from the United States active in the country.

“Outsourcing is a crucial instrument for entrepreneurs. It guarantees quality employment and security for workers, but also legal certainty for companies, and that is what is really at stake,” Rubin explained. “The signal that Mexico will send to the world with this reform, will be poisonous, and contrary to the spirit of free enterprise.  Mexico is in no position to send signals of this kind. It’s a terrible decision, at the worst possible time. U.S. companies have alternatives to choosing other countries over Mexico when crafting foreign investment strategies. The reality is that Mexico can’t afford to lose millions of jobs because that is what it will cost Mexico to pass the proposal.”

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