How the Outsourcing Ban Impacts BPOs and Contact Centers in Mexico
Mexico’s 2021 outsourcing reform shook the foundations of many industries—none more so than Business Process Outsourcing (BPO) and contact centers. Once favored for their flexible hiring and cost efficiency, these models are now under intense scrutiny.
If you’re a foreign company operating or hiring through a BPO in Mexico, this article will help you understand how the outsourcing ban changes the legal landscape, and what you can (and cannot) do moving forward.
What Did the Outsourcing Ban Change?
In April 2021, Mexico reformed several labor and tax laws to prohibit outsourcing of core business activities. Previously, companies could contract third parties to supply labor—even for essential roles. Now, that’s illegal unless the outsourced services are “specialized” and not part of the company’s main business purpose.
Key legal updates included:
- Amendments to the Federal Labor Law, Social Security Law, and Income Tax Law
- The creation of the REPSE registry for specialized service providers
- Severe penalties for illegal outsourcing, including contract nullity, fines, and disqualification from tax deductions
Impact on BPOs and Contact Centers
Contact centers and BPOs in Mexico often provide services such as:
- Customer support
- Sales and telemarketing
- IT helpdesk
- Back-office processing
These are often core functions for companies, especially in telecom, fintech, retail, and SaaS. Under the new law, such services cannot be subcontracted unless they qualify as specialized and the BPO is registered in REPSE.
What’s No Longer Permitted:
❌ Using BPOs to hire your own call center agents under a third-party name
❌ Relying on shell companies to manage payroll, taxes, or employment
❌ Classifying essential staff as “external consultants” to avoid obligations
What Is Still Allowed?
✅ Specialized outsourcing — If the BPO provides services not related to your core corporate purpose (e.g., tech support for a retail company), and is REPSE-registered
✅ Shared services within a corporate group — With certain limitations and registration requirements
✅ Employer of Record (EOR) structures — As long as the EOR becomes the legal employer and assumes full labor responsibility, not merely administrative functions
Operational Challenges for BPOs
BPO firms operating in Mexico now face:
- Reregistration and compliance audits with REPSE
- Client churn, as businesses internalize roles to avoid regulatory risk
- Higher labor costs, due to obligations for full employment, benefits, and severance
- Scrutiny from tax and labor authorities ensuring proper employer identification
This has pushed some BPOs to pivot their business model—offering specialized services, transitioning to EOR structures, or partnering with foreign clients only in non-core functions.
How Foreign Companies Should Adapt
If you’re a U.S., Canadian, or European company contracting a contact center in Mexico, you need to:
- Review your service agreements: Are your outsourced teams performing a core function?
- Ensure REPSE compliance: Your BPO partner must be listed in Mexico’s registry.
- Avoid co-employment structures: You cannot control or supervise personnel not on your own payroll.
- Consider an EOR model: If direct hiring is too complex, an EOR can legally employ the talent on your behalf.
- Consult local labor counsel: Even a well-meaning setup can result in fines if improperly classified.
BPO Alternatives: Can an EOR Help?
Yes. A compliant Employer of Record (EOR) assumes full employer responsibility in Mexico—managing contracts, payroll, taxes, and benefits. This helps foreign companies:
- Stay compliant with outsourcing and labor regulations
- Avoid establishing a full legal entity in Mexico
- Continue operating call centers or support teams without legal exposure
An EOR is not a workaround—it is a fully legal structure aligned with Mexican labor law.
Final Thoughts
The outsourcing ban in Mexico is not a death sentence for BPOs—but it is a wake-up call. It forces companies to rethink how they manage remote or distributed teams, particularly in labor-intensive industries like contact centers.
To operate legally and sustainably, companies must either internalize critical roles, work with REPSE-certified specialized providers, or rely on an EOR partner that ensures full compliance with Mexican labor law.
