During 2001, Mexican government declared the Software sector in the country as a strategic industry and as a potential area for the economic development of the country.

Also during 2001, considering internal market IT gap in Mexico, Ministry of Economy within the National Development Plan 2001-2006, presented its sector competitive strategy for Mexican software, named PROSOFT (Development of Software Industry Program) , which main participants are private and academic sectors, industrial and services organizations, Federal and State governments.

Main goals of this program are:

• Increase the average level of IT investment from the GDP share in order to meet average rates form other OECD countries.
• Achieve a local production of USD 5,000 million annually by 2010.
• To convert Mexico into the Latin American leader in It developing services

Launched in October 2002, PROSOFT is meant to raise competitiveness by strengthening Mexican IT sector.
Initially it focused on software industry, but since 2004 it covers the whole IT sector. PROSOFT is part of the general policy to move away form intensive labor assembling towards high value added services. According to an evaluation done to the Program in 2005,1 90% of tailored IT services is domestically supplied.

To increase domestic capabilities and tackle importdependence policy focuses on:

• Strengthening domestic market
• Strengthening software export industry including assistance to technology parks through provision of low cost connectivity, facilities, etc.

The PROSOFT fund became operational in 2004 with government funding of 12.8 million USD. This figure increased in 2005 to 17.7 million USD and the Federal budget allocation increased to 42 USD million in 2006.

The State of Nuevo Leon had the largest number of projects and requested the highest funds amounts, the State of Jalisco received a larger percentage of the total funds share (27%) and Nuevo Leon received 13% of that share.

Production of software is an economic activity that generates a high added value and adds products and essential services for its modernizing to the economy. This industry is based in knowledge.

Besides being located next to the United States, and because of its demographical profile Mexico’s software industry is boasted as a potential booming industry according to the Ministry of Economy. Strategies to achieve these goals are:

• Taking advantage of the great size of external market oriented to software industry growth towards exports.
• Create competitive companies
• Attract leading software companies
• Assist existing companies and bring solution to the problems that block their operations within the internal market .
• Assist efforts in the existing capacities for the software development.
• Assist innovation software process.
  

In order to achieve these goals, different sectors in Mexico are involved and it includes State and national participants and entities, as well as Universities and software related institutions. Altogether seven strategies were established:

• Promotion of exports an investments in the sector.
• Education and training of competent staff in the development of software, as well as the required amount and quality.
• Appropriate legal framework for the industry promotion.
• Development of IT domestic market
• Strengthening of local industry
• Achievement of international standards of capacity process
• Promotion of cluster development throughout Mexico.

The fund is meant to support a variety of activities such as education and development of human resources, technological innovation and development , processes capacity and quality, productive projects, as well as promotion and marketing among others.

Incentives awarded may account for up to 50 % of the total expenses specified on a project. State governments usually provide additional incentives or supplement those given by the Federal Government.

These companies willing to establish IT services in Mexico are, likewise eligible for these incentives, which may be used to lessen initial investment.
Operation rules were expedited with the purpose to account with mechanism that ensures efficient application of assigned public resources.
PROSOFT established a mechanism of supervision in which all operation process of the companies are considered in order to receive support from the program. Two agents of the program have been identified :

• Executive Branch: Operation and execution of PROSOFT is under Ministry of Economy management, which provides support preferably through the Promoting Organisms, Federal entities, Private entities and the Ministry itself.
• Regulatory Branch: It is formed by the Direction Board, which is in charge of determining the eligible projects to be supported by PROSOFT, having accomplished the requisites and obligations under the Promoting Organisms and their benefits.

PROSOFT Operation agents have well defined functions that allow the execution of the project. PROSOFT operates seeking the impulse, growth and development of the IT companies through trilateral investments:

• Federal Government
• State government
• Private sector

The program had an extended diffusion among chambers, companies and local governments that a growth in the number of promoting organisms grew from 13 in 2004 to 30 in 2006. 26 out of those 30 are federal entities, covering then 81% of the states in the country.

According to a survey conducted by Ministry of Economy in conjunction with the National University if Mexico (UNAM), Promotional Organisms are satisfied about the program, and also state that it allows the micro enterprises turn into a small one, and the small to a medium one. Following the results of the same survey an aspect that resulted to be less efficient was the resources distribution.