Written by Scott Craig|Posted on July 21, 2022
In recent years, Latin America, referred to as LatAm in business circles, has emerged as one of the top global regions for outsourcing. LatAm consists of around 30 different countries, including Argentina, Mexico, Chile, Peru, and Brazil, and has several advantages over traditional Asian outsourcing hotspots, such as India and China.
The IT industry in particular has favored Latin America as the top outsourcing destination for software development and QA. North American companies prefer Latin American talent for software development, whose proximity has given rise to the term ‘nearshore’ (as opposed to offshore) outsourcing.
For North American companies in the US and Canada, the biggest advantage of collaboration with Latin American developers is a closely aligned time zone. Using Chinese or Indian developers means dealing with a large time zone difference of over twelve hours, which can result in a significant disruption to communications. Conversely, the minimal time zone difference with nearshore outsourcing companies in Latin America is much more convenient to work with.
A nearshore development team in Latin America is much easier to communicate with, provides faster responses, and operates within your regular business hours. Any IT emergencies that occur can be resolved quickly without having to wait twelve hours or more! Face-to-face meetings are easier to arrange, and business trips are cheaper, with flights between major cities frequent across North, Central, and South America.
Much like the US and Canada, the Latin American countries have a shared history in their foundation as European colonial projects. This means that they share many cultural commonalities compared to say, a Chinese or Vietnamese offshore company. The business and consumer markets are more linked between all the nations of the Americas, leading to a greater level of understanding and cooperation.
Most countries in Latin America share Spanish as a common first language, except for Brazil where Portuguese is dominant. But, thanks to closer ties to the US, Latin American countries can also boast high rates of English proficiency. The English language is a priority for the young and educated who have an eye on upward mobility, participating in the global economy, and potentially emigrating. Latin American governments have also invested money into English language education, which has resulted in the region becoming the location of choice for outsourcing IT professionals.
Latin American countries have done much to elevate their educational infrastructure in the last decade or so, especially as they’ve aimed to transition from a traditional economy (agriculture and manufacturing) to a high-tech one (providing specialized services). The level of education provided at Latin American Universities is generally of a high standard. Young people seeking to better their lives are motivated to study computer science and programming and, as a result, Latin America contains many highly skilled IT professionals in web development, QA, blockchain, AI, and game asset development. Even large multinationals, such as Microsoft, have no issues satisfying their nearshore outsourcing IT needs in Latin American countries.
The main advantage of hiring developers in Latin America is to save expenses. A qualified developer in the United States could command from around $80 to $150 per hour. In comparison, in Latin American developers cost $40 to $70 per hour. Thanks to the lower cost of living in Latin America, this is still a highly desirable rate for the developers, which keeps the industry competitive.
There are two potential risks ones should consider when outsourcing to Latin America, but both can be easily managed if anticipated. The first is the difficulty in selecting candidates and vetting them thoroughly for expertise and professionalism. With tens of thousands of potential candidates in the region, it can be difficult to assess them from a distance. Secondly, the different countries in the region all have different tax systems and treaties, and a business needs clarity on how to interact with these systems (i.e. if they will be taxed as if they had a branch in the country, or pay indirect taxes).
The best way to easily manage these two issues is not to hire developers as individuals, but to hire a nearshore software development staffing agency, which employs personnel with a proven track record, and can sort out the bureaucratic procedure for you.
AccelOne is one such agency, with a nearshore software development team that has proven experience developing software solutions for industry-leading businesses. To learn more about how we can help you meet your IT and software development needs, contact us online or call 1.800.863.6814.
Kirkland, WA, USA