Latin America is the next Frontier for Technology Outsourcing

By Cam Velasco

CEO & Co-Founder
Published: Mar 4, 2024
Latin America is becoming a favorite spot for IT outsourcing because it has a lot of skilled workers, shares similar ways of working with North America, and doesn't cost as much. In this guide we'll take a closer look at some of the top places for tech talent in the region.
Silhouette of a business professional giving a presentation with graphics representing outsourcing services.

Looking to cut costs and boost efficiency in your tech projects? Technology outsourcing to Latin America might be the answer you’re seeking. Here’s why:

  • Proximity and Time Zones: Close to the US with minimal time differences, making real-time collaboration easy.
  • Cost Savings: Tech talent in Latin America is skilled yet more affordable, offering significant cost reductions.
  • Cultural Compatibility: Shared values and increasing English proficiency mean smoother teamwork.
  • Skilled Workforce: A growing pool of tech professionals adept in modern technologies.

From Mexico to Chile, countries in Latin America are becoming hotspots for tech outsourcing, thanks to their talented workforce, cost competitiveness, and cultural alignment with North American businesses. Whether it’s developing new software or launching innovative platforms, companies are finding success and savings by partnering with Latin American tech talent. Here’s a closer look at what makes this region so appealing for technology outsourcing and how to navigate potential challenges for a successful partnership.

Challenges with Technology Outsourcing with Traditional Hubs

Older places where companies used to get tech help, like Asia and Eastern Europe, have some problems:

  • High costs – It’s getting expensive. For example, hiring a developer in India can cost $18-25 every hour. Plus, you have to spend more on travel and dealing with the time difference.
  • Language barriers – Sometimes, it’s hard to work together because not everyone speaks English well.
  • Cultural mismatches – The way people work can be very different from what companies in the US or Canada are used to. This can make it hard to get along and work well together.
  • Inefficient timelines – If there’s a big time difference, like 8 hours or more, it can take longer to fix problems or finish projects.

These issues mean companies are looking for new places to outsource that don’t have these problems.

Increasing Demand for Optimized Technology Outsourcing Solutions

As the old options get more expensive and less efficient, companies want new outsourcing partners that offer:

  • Shared time zones or just a small time difference – This makes it easier to work together in real-time and get things done faster.
  • English language skills – This helps everyone communicate clearly and understand each other.
  • Cultural alignment – When work cultures match better, teams can work together more smoothly.
  • High-quality talent – Companies are looking for skilled professionals who don’t charge too much.
  • Savings on travel and communication – Working with partners closer to home can help save money.

With these benefits, companies are looking for new places to outsource that can give them good talent and a better fit without costing a lot. Latin America, with its nearshore advantages, skilled IT professionals, and cultural similarities, is becoming an attractive option for many businesses.

The Latin America Advantage for Technology Outsourcing

Latin America has a lot going for it that makes it a great choice for companies looking to outsource tech work:

Proximity and Shared Time Zones
  • Countries like Mexico, Brazil, and Argentina are close to the US and Canada and work on similar schedules. This means teams can talk and work together without waiting for someone to wake up or stay late.
  • Being in the same or close time zones lets teams fix problems and finish work faster because they can talk in real-time.
Cultural Compatibility
  • Latin America and places like North America and Europe share a lot of common ground in how they work and what they value. This makes it easier for teams to get along and work well together.
  • People here are getting better at English and are used to working with teams from other countries.
Cost Competitiveness
  • Tech workers in Latin America usually earn between $25,000 and $45,000 a year, which is a lot less than the $110,000 average salary in the US.
  • Companies can save a lot of money, around 40-60%, when they choose Latin America over places like Asia or Eastern Europe for tech work.
Favorable Business Environment
  • Countries like Chile, Mexico, Uruguay, and Costa Rica are easy to do business with and have good support for tech companies.
  • These places often offer benefits like tax breaks to attract tech businesses from other countries.
  • It’s also easy and cheap to travel to many Latin American cities from the US and Canada.
Breadth of Skilled Talent
  • Latin America is quickly becoming a place full of skilled people who know about the latest tech like cloud computing, AI, data analysis, and more.
  • There’s a big push in education and training for tech skills, leading to a growing number of qualified workers.
  • By 2025, it’s expected that there will be over 5 million professional developers in Latin America, making it a big pool of talent to choose from.

Analyzing Key Talent Hubs

Latin America is becoming a favorite spot for IT outsourcing because it has a lot of skilled workers, shares similar ways of working with North America, and doesn’t cost as much. Let’s take a closer look at some of the top places for tech talent in the region.

Brazil

Brazil is packed with tech talent, having more than 700,000 professional developers.

  • Cities like Sao Paulo and Rio de Janeiro are buzzing with tech activity, hosting both small startups and big international companies. The government is also helping by offering incentives to attract foreign companies.
  • The cost to hire developers here is much lower than in the US, with savings of 30-50%. You’ll find experts in Java, .NET, PHP, Ruby, and more.
  • Brazil is recognized for its strong tech scene and digital skills, making it a solid choice for companies looking to outsource.
Mexico

Mexico is a great match for US companies because of its closeness, similar work hours, and cultural compatibility.

  • With over 500,000 developers, Mexico has a wide range of tech experts at more affordable rates.
  • Big cities like Mexico City, Guadalajara, and Monterrey are full of tech communities. Many big international companies have set up shop here.
  • Developers in Mexico earn a lot less than those in the US, offering cost savings of 40-60%. You’ll find plenty of Java, .NET, Python, and JavaScript experts here.
  • Mexico’s stable economy, strong trade relationships, and easy travel make it a friendly place for tech partnerships.
Argentina

Argentina is known for its excellent engineering talent, good English skills, and lower costs.

  • With around 300,000 developers, Argentina’s tech talent is among the best in Latin America. The startup scene here is also very active.
  • Developers here are up-to-date with the latest tech and have strong skills in full-stack development and data science.
  • The cost to hire talent here is about 40% less than in the US. Plus, many people speak English well, which helps with communication.
  • Argentina’s government is making it easier for tech companies to do business here, with good policies, financial perks, and better infrastructure.
Chile

Chile stands out for its stability, digital setup, incentives, and lots of tech talent.

  • With more than 200,000 developers, Chile is quickly growing its pool of tech experts.
  • Santiago is home to a lively startup scene. Big international companies also have development centers here to use the local skills.
  • Paying tech workers here can be 10-30% cheaper than the regional average. There’s a wide range of expertise in web, cloud, data analytics, and more.
  • Chile’s supportive business environment, leadership in cybersecurity, and trade agreements make it a top choice for digital businesses in Latin America.

Overcoming Potential Challenges with Technology Outsourcing

When working with tech partners in Latin America, it’s important to be ready for any political changes and to make sure there’s good internet and other tech stuff. Here’s how to deal with these issues in a smart way.

Mitigating Political Instability

Sometimes, politics can change quickly and affect tech businesses. Here’s what you can do:

  • Keep an eye on political news and see how it might impact your work.
  • Spread your team out across different countries so you’re not all in one place if something goes wrong.
  • Have a backup plan to move work around if needed.
  • Look for special deals or areas where the government makes it easier for tech companies.
Bridging Infrastructural Gaps

Some places might not have the best internet or other tech setups. Here’s how to handle that:

  • Check how good the tech setup is before you decide to work with someone.
  • Help your partners get better tech if they need it.
  • Think about moving work temporarily to places with better tech setups.
  • Use more than one internet company to make sure you always have a backup.

By planning ahead and working together, companies can create strong tech teams in Latin America. The talent is worth it, despite these challenges.

Technology Outsourcing Success Stories

Here are a few stories of US companies that found great tech help in Latin America, saving money and getting their projects done well:

Financial Services Company Saves Over 50% on Development Costs

A big US company that deals with money needed a new app for better customer service. They picked a team from Chile because they were good at making apps for phones and didn’t cost a lot. The CTO said:

Choosing a team from Chile cut our costs by more than half compared to what we would have paid in the US. The team was skilled, talked to us clearly, and made a great app on time. Working with Chile was a smart move.

What they got out of it:

  • Saved more than 50% on costs
  • Finished the app quickly and met all the needs
  • Easy talks because the team spoke English well
Retail Company Expands Omnichannel Capabilities with Mexico Partner

A US store chain wanted to make shopping easier for customers online, on mobile, and in stores. They worked with a Mexican team that knew a lot about connecting all these shopping ways. The VP of Digital Transformation said:

Our tech friends in Mexico made our online shop better, added cool mobile stuff, and linked it all with our physical stores really fast. They helped make our big plan work.

What they got out of it:

  • Spent 40% less than with US teams
  • Got the project done quicker
  • Worked well together because of similar work cultures
Startup Launches Innovative Cloud Platform with Argentinian Developers

A new US company making a cloud service for real estate needed a team that could build their idea fast without spending too much. They found developers in Argentina. The CEO said:

The team from Argentina got what we wanted quickly and made a working version of our service in just three months. They kept making it better as we grew. We couldn’t have moved this fast with just US developers.

What they got out of it:

  • Costs were 50% lower than in the US
  • Found expert skills that were hard to get locally
  • Brought their product to market faster

These stories show that tech teams in Latin America can do a great job for US companies, helping them save money and get things done well. As more companies see these benefits, Latin America is becoming a top choice for IT help.

Future Outlook of Technology Outsourcing

The future is looking really good for Latin America as a top place for tech outsourcing. There are a few big reasons why businesses in North America and Europe will keep teaming up with talented folks in Latin America.

Continued Investment in Tech Infrastructure

Latin American countries are spending a lot of money to make their technology better. For example:

  • Brazil wants to make sure 98% of its people can access the internet by 2023. They’re working with private companies to make this happen.
  • Mexico is putting more than $10 billion into projects to bring fast internet to more places and teach people digital skills. This makes Mexico even better for outsourcing.
  • Chile already has a lot of people using the internet and plans to spend $2 billion to make broadband even faster.

As the internet and technology get better across Latin America, it will be easier to outsource tech work there.

Ongoing Cultivation of Tech Talent

Latin American countries are also focusing a lot on teaching science, technology, engineering, and math (STEM) to create a skilled workforce. For example:

  • Brazil is working on having over 48,000 engineers graduate every year by 2024.
  • Mexico is giving out scholarships for tech degrees to more than 100,000 students every year.
  • Peru plans to have three times more students enrolled in tech university programs by 2026.

With more skilled workers available, businesses will have lots of options for outsourcing in Latin America.

Supportive Government Policies

Governments in Latin America are making it easier and more attractive for foreign companies to set up shop. They’re doing things like:

  • Giving tax breaks to companies from other countries that come to work in places like Uruguay, Panama, and Costa Rica.
  • Creating special areas where businesses can enjoy tax benefits and good infrastructure in Colombia and the Dominican Republic.
  • Making agreements between countries, like Chile and Canada, that help tech talent move more easily.

These government actions make outsourcing to Latin America simpler and more appealing.

Cultural Bonds Strengthening

The cultural connections between Latin America and other big markets are getting stronger through things like trade deals, student exchanges, and the spread of technology. For example:

  • The trade agreement between the US, Mexico, and Canada makes it easier to work across these countries.
  • Many Latin American students go to Europe and North America for school, which helps build cultural ties.
  • The way people in Latin America use streaming services and social media is a lot like in Western countries.

As these cultural connections grow, working with tech teams in Latin America becomes smoother for companies looking for outsourcing help.

With all these positive changes, Latin America’s role as a key place for finding top-notch tech talent for outsourcing will likely keep growing. More businesses will see the benefits of a good cultural match, cost savings, skilled workers, and supportive government policies for tech projects.

Recommendations for Successful Latin American Outsourcing

Here’s how to make sure your tech outsourcing in Latin America goes smoothly:

  • Look into partners carefully. Check their skills, what other clients say about them, how well they talk about tech stuff, and if they get what your business needs.
  • Be clear about what you want and when you want it. Talk about what you expect from them right at the start to avoid confusion later.
  • Try to meet them in person if you can. Seeing each other face-to-face can help you work better together.
  • Write down everything important in a contract. Include what needs to be done, how you’ll check the quality, security rules, how you’ll handle payments and any changes, and so on.
  • Talk often and give feedback. Quick daily updates, weekly check-ins, open chats, and helpful feedback can keep things moving smoothly.
  • Help them help you. If they need training, information, better tools, or advice, make sure they get it. This makes your team stronger.
  • Respect the differences. Be okay with cultural differences, patient if there are language issues, and open to new ideas.

By preparing well, keeping in touch, and working together as a team, companies can create strong ties with their tech partners in Latin America. This can help meet your tech needs effectively.

Related Posts

Cam Velasco

CEO & Co-Founder

Unlock your marketing potential with Floowi

Share This