The outsourcing of IT work isn’t new. Companies small and large have found it cost-effective to have their IT work done by people in other countries where the cost of living is dramatically lower. For pennies on the dollar of what they would have to pay American workers, businesses can outsource the work they need to have done.
Until recently, most of the outsourcing work in software development was done in countries where the tech industry was already established — Romania, India, China, and Poland for example. These regions were also known for their low labor costs.
Now, the countries of South America are stepping up to fill those roles. While these countries may not offer rates as low as the previously established sources of low-cost IT work, they’re still cheaper to hire than American software developers. They also offer some distinct advantages that the countries of Eastern Europe and Asia cannot.
Software developers in Latin America offer many benefits to companies looking to outsource. Learn about the workforce, technology, and communication benefits here.
The Benefits of Latin America Software Outsourcing
The tech industry has expanded rapidly in the countries of South America. Working remotely for American and European companies has filled a void in many of these country’s economies and created thousands of well-paying jobs by their standards. But what are the advantages for the companies that hire them?
Perhaps not as low cost as some of the countries usually associated with outsourced IT work, the software developers of Latin America will still provide quality IT work for significantly less than their North American counterparts. This is especially true for those who work freelance.
Outsourcing not only reduces the amount of money spent on salaries, but it also reduces the number of full-time employees. Traditionally, on top of paychecks, these inhouse employees would be additionally compensated with benefits, paid vacations, and other perks. Sending the work out to be done elsewhere eliminates the need for any of those things.
Similar Time Zones
One of the great disadvantages to having your work done by a country halfway around the world is trying to manage huge differences in time. The discord created by working with people on significantly different schedules can lead to work delays and missed deadlines.
This isn’t a problem when working with people in countries from Latin America. Their time zones, for the most part, are similar to those in North America.
Proximity to the United States
Even though modern technology makes it possible for people from the far reaches of the globe to interact with each other in real-time, being geographically close still has its advantages.
Even in the digital age, it’s still sometimes necessary to travel to your remote workers. The closer they are to home base, the easier the journey. Being relatively close also allows for less hassle when coordinating supply deliveries or manual upgrades.
Less Culture Clash
There are certainly some distinct cultural differences between the peoples of South America and those of the United States which need to be considered when choosing where to outsource your work. However, the similarities between the cultures of the Americas may play a role in your decision, especially if you’ve been considering countries like China or India.
The cultures of North, Central, and South America have noticeable commonalities amidst their different origins. For example, in the history of the Americas, two cultural constants one finds are the traditions of Native Americans and European settlers. As time passed and each of the countries’ cultures evolved in different ways, certain core values remained the same. These values include a strong work ethic, a firm belief in the potential of the individual to make a difference for all, and a clear understanding of the importance of a workplace hierarchy.
These cultural commonalities between North America and South American countries may make their IT professionals and companies a better fit for your team.
Less of a Language Barrier
The proximity of our countries and the crossover of North American culture into Latin America means that many of the people who live there are already fluent in the English language. It’s also helpful that many Americans have at least a passable understanding of Spanish, the most commonly spoken language in South America.
What’s more, Spanish and English have etymological commonalities which is owed to their shared influence from the Latin language. Coupled with today’s impressive array of resources for learning languages, this also makes it easier for North American English speakers to refine their communication with workers who primarily speak Spanish.
In real-time communication, there’s the unfortunate likelihood for English speakers to sometimes misunderstand what’s said by persons who primarily speak South Asian and Eastern Asian languages, even if they're fluent in English. On the other hand, the North American ear is generally better at adapting to — and understanding — accents in South American countries compared to non-Western countries. Albeit a minor point, this nonetheless helps with communication in the workplace.
Taken together, these factors make it more likely that a language barrier won’t hamper the clear distribution of information when outsourcing workers from South America.
Over the last two decades, many of the governments in South America have worked hard to improve the availability of education in their respective countries. Included in these initiatives was a strong push to increase the number of opportunities for, and quality of, technology-based education.
They also began ad campaigns to let the countries of the world know that their doors were open for IT business. They presented their citizens as highly skilled and hardworking, ready and able to tackle whatever your IT needs might be. Recent history has proven those claims to be correct.
The technology industry in Latin America is booming. Its rapid growth can be traced directly back to the push for better education in technology and improvement in the infrastructure to allow for reliable internet.
The companies and individuals in Latin America who receive the outsourced IT work from countries like the United States are proving to be a great source of strength to these burgeoning economies. This only serves to incentivize governments, companies, and individuals to continue the push for more growth in the industry.
A rapidly growing tech industry means more choices and high skillsets for those businesses looking to outsource their IT work to South America.
The Cost of Hiring a Remote Developer in Latin America
It’s hard to put an exact dollar amount on how much your company can save by outsourcing its IT work to Latin America. There are simply too many factors to consider. But what can be safely said is that the cost of hiring remote software developers from South America will be significantly more cost-effective than hiring workers of the same skill level in the United States.
The pay scale for highly skilled and experienced workers from Latin America ranges from $20 to $50 per hour. Compare this to the median hourly rate for entry-level developers in the United States, which is $52.95, according to the Bureau of Labor Statistics (BLS).
Lower pay rates are only one of the ways that your company can save significantly by outsourcing to Latin America. For every full-time employee that you hire in-house, you must also foot the bill for benefits, paid time off, and other perks used to attract talent. When hiring an IT company or freelancer from South America, you pay only their salary. This can result in sizable savings and free up the budget to enhance your business in other ways.
The Reasons Companies Outsource
While saving money is one of the major reasons given for outsourcing IT work, it is far from the only one. Increased flexibility, the ability to rapidly adapt to and make use of new technology, and access to resources are also valid reasons to have work done remotely.
If you were to begin the process of hiring a new in-house team to meet your technology needs, it would likely take months to find the talent, hire them and get them ready to tackle the issues at hand. This can be a major drawback in a world where technological advances happen on a weekly basis. By the time you get one team in place and ready to roll, they may have already been made irrelevant.
Hiring remote workers allows you to seek specific skill sets and teams that are already complete and well versed on the issue to be tackled. With a bit of luck, you may be able to hire a preassembled team and have them working together to accomplish the task in a matter of days.
Let’s say you hired the above-mentioned team as in-house employees to handle your current software development needs. What happens when they finish the project you hired them to do and you really don’t have a need for their services any longer?
Do you lay them off and hope to reassemble them in a few months when a new project begins? That seems both unfair and unlikely.
It may be much more efficient to outsource the project. Outsourcing allows you to make use of the service of a remote employee or team when you’re in need of them, but there’s no need to keep them on your payroll when you don’t. Furthermore, when new projects or problems arise, you can quickly and easily acquire the talent you need on a temporary basis.
Access to Resources
It can be hard for small to mid-sized companies to stay competitive in today's digital world. Constantly keeping up with technological advances and finding people competent to use them may simply be beyond the budgets of any but the most profitable of businesses.
Finding remote workers to keep you and your employees up to date on all of the newest software is a low-cost way to level the playing field if your company is smaller.
Outsourcing can also allow companies with lower budgets to have software developed to meet their specific needs. This would be an unattainable luxury without the use of remote workers for the average small company. Doing this may further streamline the business and free up money for growth.
Nearshore vs. Offshore Software Outsourcing
Not all avenues of outsourcing will bring the same cost-effectiveness or results. When considering where to hire remote workers from, you should look at both nearshore and offshore opportunities.
Using the United States as a base of operations, nearshore outsourcers would be those in close geographical proximity to the country. This would largely include the countries of Central and South America.
Using the same parameters, offshore remote workers would be located in the countries of Eastern Europe and Asia. These countries are significantly further away from the United States.
Which Is Best?
When looking for countries to outsource work to, there wasn’t much of a choice for companies in the United States for most of the recent past. The countries of Eastern Europe and Asia got into the outsourcing game early and offered unbelievably low rates. But cultural differences, language barriers, and low-skilled workers unfortunately meant that, although money was saved, the outcome wasn’t always positive.
More recently, the countries of Latin America have been making a push to be seen as serious contenders in the world of IT outsourcing. These nearshore opportunities generally cost a bit more than offshore ones, but they offer some clear advantages. Because of their geographical proximity, the cultures of the United States and the countries of South America have merged in many ways. For instance, many people in Latin America are already fluent in English, both written and spoken.
Besides linguistic compatibilities, the two regions also share similar calendars and interests. Altogether, this increases the likelihood for the people of these regions to communicate and work together.
In addition to these advantages, the tech industry is rapidly growing in Latin America, and the IT professionals they’re producing are both highly skilled and experienced. So you can see why paying a bit more for remote software development services from South America may be the right choice.
Of course, each company has its own distinct needs and budgets. Whether to choose remote workers from offshore or nearshore locations will depend on your business's priorities and financial outlook.
Top Countries for Outsourcing in South America
Not all of the countries in South America have had the same interest or success in advancing the skills and accessibility of their IT workforce. Here are five of the countries that have done the most work to improve and offer the best overall value to those looking for outsourced IT professionals.
- Population - 209.3 million
- Predominant Language – Portuguese
- Hourly Rate Range for Outsourced IT Professionals - $20 to $50
- Best Known For – The Amazonian Rainforest, soccer (football is their term of choice), and Carnivale
Brazil has more Fortune 500 companies based than any other country in Central or South America. They’ve used the income generated by these large companies to reinvest in their education system, and extra attention has been given to the development of skilled technology professionals. The success of this venture can be seen by the fact that both HP and IBM have bases there that are already taking advantage of the quality IT workforce.
Brazil’s economy has been growing steadily since 2010, a part of which can be attributed to the massive growth of their success at becoming a major source center for outsourced IT professionals both for the United States and other countries around the globe.
The push for a better system of higher education and the fact that English fluency is a required skill for earning many of their technology degrees means that companies from the United States have a large pool of highly qualified and prepared IT professionals to choose from.
Brazil takes a lot of the income generated by outsourcing their native talent to the United States and other countries and puts it right back into further developing and improving the skills and accessibility of the workers. Should this trend continue, Brazil is likely to be a leader in providing skilled and reasonable IT outsourcing for the foreseeable future.
- Population – 44.27 million
- Predominant Language – Spanish
- Hourly Rate Range for Outsourced IT Professionals - $30 to $50
- Best Known For – Tango dancing, great steak, and fine wine
The people of Argentina have long known the value of a strong education. In recent years, they’ve taken that love of learning and put it into the development of the skills needed to become highly skilled IT professionals.
For more than 20 years, both the government and private sector have devoted funding and resources to the creation and further development of international IT outsourcing businesses. They’ve provided incentives to draw the global community to their native talent.
The government of Argentina has passed many laws and regulations to ensure that their IT professionals meet the internationally accepted standards of the use and sharing of intellectual property. They’ve also taken steps to ensure the privacy of their clients and the security of their data.
At this point, the bulk of the IT outsourcing companies are located in Buenos Aires. Plans are already underway to improve the infrastructure to broaden the areas where reliable internet is accessible. This should allow for more regions of the country to take advantage of the IT outsourcing goldmine.
Argentina’s economy has been steadily growing and the economic outlook is positive. These facts, in combination with the availability and cost-effectiveness of their skilled IT professionals, may make this country the right choice for North American companies seeking remote IT professionals.
- Population – 49.07 million
- Predominant Languages – Spanish, English
- Hourly Rate Range for Outsourced IT Professionals - $25 to $45
- Best Known For – their coffee, emeralds, fine food, and the myth of El Dorado
Thanks to a strong effort from both the government and the private sector, Colombia has come to be known as a hotspot for the outsourcing of software development. This achievement was brought about in part by investing benefits, tax breaks, and hiring incentives offered to attract the attention of major global IT companies.
The IT companies of Colombia are trying to set the stage for the next industrial revolution in the city of Medellín. They believe that the creation of innovative technologies and the development of clear, achievable goals for digital transformation can make this happen.
This drive to be seen as competitively progressive in the field of digital and technological advances has created a large pool of IT professionals eager to prove their worth to the whole world. They do this for pride in their country and for themselves.
To get this revolution started, a lot of work has been put into upgrading the country's infrastructure so that broadband is more readily accessible to a wider range of people. This, combined with the government’s push for more and better educational opportunities in technology-based areas, has led to a large jump in the number of qualified IT professionals.
Colombia’s genuine desire to become a part of the global marketplace through outsourcing companies — and their willingness to do the work needed to make that happen — should make it a contender in your search to meet your IT outsourcing needs. Add to those things the fact that English is already one of the official languages, and you can see why this country may be the right choice for North American companies seeking remote IT professionals.
- Population – 18.05 million
- Predominant Language – Spanish
- Hourly Rate Range for Outsourced IT professionals - $30 to $50
- Best Known For – Easter Island, fine wine, and poetry
Chile is a relative newcomer to the world of internationally outsourcing IT professionals, but they’re working hard to make up for the lost time. Though they lack large numbers of experienced IT workers, they make up for this with the high skill levels of the IT workforce they do have.
The software developers of Chile have made great leaps in the advancement of the technology and techniques used in security systems, data mining and processing, eco-friendly technology, general web design, and security systems. This success indicates that with a push to educate more Chileans in the areas of information technology, the potential for the country's success in international IT outsourcing may be limitless.
They do have some advantages that may make their rise to the top a bit easier. For example, they already boast the most complete broadband and mobile telephone coverage of any country in South America. At the moment, they just have to educate more of their people to take full advantage of these resources.
Like a small company just getting its reputation out to the world, Chile has focused on the small details to help them stand out. They hope this will give them a way to compete with wealthier and better-educated countries. While the ultimate goal is to attract the larger, wealthier companies to their outsourcing centers, they’re making a name for themselves by catering to the distinct needs of smaller companies for now.
Chile’s outsourcing companies understand that though small companies may have small budgets, that doesn’t mean their needs are small. By offering a focused approach to the little guy’s IT needs and the personal touch so frequently lacking from today’s business interactions, they hope to stand out from the somewhat crowded market of outsourcing options in South America.
- Population – 32.17 million
- Predominant Languages – Spanish, Aymara, and Quechua
- Hourly Rate Range for Outsourced IT Professionals - $20 to $50
- Best Known For – Machu Pichu, ceviche, and alpacas
According to Tholon’s Top 100 rankings for outsourcing, Peru has been steadily moving through the ranks of nations that are known for their international outsourcing prowess. Currently, they sit at number 57 — an incredible feat considering their relatively small population and economy.
One of the reasons for Peru’s success is the push the government has made to improve the education of their people, especially in the field of information technology. Most recently, the country created the University of Engineering and Technology (UTEC). This school of higher education is considered to be the most modern of its type in all of South America. It hopes to provide a strong foundation for the rapid turnout of people well-educated in the fields of engineering and technology.
While the IT professionals of Peru already work in a broad range of information technology niches, there’s the hope that by adding numbers to their ranks, the range of expertise will broaden even further.
Another reason for Peru’s rapid rise through the rankings is its cultural compatibility with the people of North America. Their understanding of the work culture of the United States eliminates many of the bumps that occur when peoples of two distinct cultures have to work together for a common goal.
The fact that the economy of Peru is currently on the rise may be attractive to some companies looking to get in on the ground floor of a good thing.
Where To Find South American Software Developers
So, you’ve decided that outsourcing your IT work to South America might be the right decision for your company. Now you just have to go about finding the IT professionals or outsourcing company that best meets your needs. Here are a few places to start your search.
These may be the easiest way to find and hire a team of remote IT workers, but you'll pay a little more for their service.
All you need to do is contact the outsourcing firm and tell them your specific needs, including the expected length of the project and ultimate goals. Once you’ve done this, they go about the tedious work of finding and hiring the right people for the job for you.
You can choose to get regular updates or go totally carefree. You’ll hear from them again only after the work is completed.
Staffing agencies help you by finding the candidates to meet your needs, but they don’t actually employ them.
In this case, you tell the staffing agency what you need from your potential employee and they go and find you candidates that match your needs. That’s where the agency's responsibility ends. It’s up to you to interview, hire, and train the best of the bunch.
Job boards are a great way to hire freelance individuals, but they won’t help you much if you’re in need of teams of IT professionals that are ready to work together.
In this case, you post a job opening on the board and wait for responses. Most allow you to narrow your search geographically so it’s easy to find remote workers from the regions you are interested in. Unlike outsourcing firms, once you have found a desirable candidate, it is up to your to make contact and negotiate the terms of the deal.
These work like job boards, only in reverse. Freelancer sites allow individuals interested in finding gigs to post their qualifications and interests, which then allows employers to go and search for them. The search is made easier by the use of filters that allow you to whittle down the number of potential freelancers to choose from.
Revelo is a talent platform that specializes in Latin American tech talent. You can source and hire LatAm-based remote developers, devops, data engineers and others all in one place. Book a meeting to learn more.
Which Companies Outsource to Latin America?
The list of companies outsourcing their IT work to Latin America is constantly growing as more and more businesses become aware of the advantages of nearshore outsourcing. In addition to geographical proximity, the Latin American outsourcing companies offer a large pool of highly skilled IT professionals for hire at reasonable rates. Some of the companies that have already made the switch to South American IT outsourcing companies include:
- Alfa Romero
- General Motors
- American Express
If you and your company are ready to join the list of those scaling their engineering teams with tech talent in Latin America, contact us at Revelo to find out how we can make that happen for you.