Overview of the IT Sector in Mexico
The Information and Communications Technology (ICT) sector in Mexico experienced its lowest annual growth rate of 2.5% in the first quarter of 2025, according to data from consulting firm Select. This represents a significant drop from 4.9% in the same period of 2024 and 6.3% in 2023.
This deceleration reflects a combination of economic, political, and trade factors affecting both the supply and demand for technology in the Mexican market.
Financial Performance
The total revenue of the ICT sector from January to March reached 357 billion pesos (approximately 17 billion USD), but its expansion is being compromised by internal and external uncertainty.
Domestic Factors
National reforms, the extinction of autonomous bodies, and a 23% cut in federal budget for 2025 compared to the previous year have paralyzed investments, stalled projects, and deteriorated market optimism.
International Factors
US trade policies and imposed tariffs have increased uncertainty among export-oriented companies, particularly in manufacturing, auto parts, and automotive sectors.
Distribution Channels
Distribution channels, including wholesalers, resellers, and VARs, grew by 5.1% in the quarter, with a turnover of nearly 62 billion pesos. This growth is attributed to the completion of key projects in cloud, cybersecurity, and TIC services, as well as a rebound in traditionally active sectors like finance, healthcare, private education, and hospitality.
However, the performance of distribution channels was mixed. While some companies reported double-digit growth, others failed to meet their targets due to economic uncertainty, lack of public investment, and logistical delays caused by tariff policies.
Wholesalers experienced growth primarily driven by cloud, software, and peripherals but faced contractions in servers and storage.
TIC Services
TIC service companies showed a growth of 7.4% in Q1, with a turnover of 52 billion pesos. Although the figure appears solid, it represents a deceleration compared to the same period in 2024.
These companies reported high caution from their clients, who have halted projects, reduced discretionary spending, and opted for shorter renewal terms, especially in manufacturing, automotive, and metalworking industries.
Cloud computing remains the primary growth driver among TIC services. Infrastructure and platform-as-a-service grew by 26.2%, and software-as-a-service advanced by 17.7%, partly driven by interest in generative AI.
Other segments like consulting (8.7%), integration (4.9%), and support (4.6%) also contributed to growth, albeit to a lesser extent.
Underspending of the Budget
Another factor worsening the ICT sector’s outlook is public spending behavior. In 2024, the federal government only spent 84% of the technology budget allocated to it, despite a more than 30% growth from 2023. For 2025, the budget has been cut by 23%, and there’s uncertainty about its full execution.
Of the 36,939 billion pesos spent by the government on ICT in 2024, equipment (62%) and software (52%) were the hardest hit. In contrast, TIC services reached a 99% budget usage, and consumables even exceeded their allocated ceiling by 10%.
This underspending translates to fewer projects, fewer opportunities for suppliers, and an overall slowdown in the sector.
Growth expectations for the rest of the year are not encouraging. Select’s monthly survey shows that, although May’s optimism rose to 74.7 points, the quarterly indicator fell below the expansion threshold of 50 points. This suggests a possible contraction if the trend continues in upcoming quarters.
