Nearshoring & Outsourcing in Latin America: IT and technology

Due to the spread of the internet in Latin America and better access to devices and cloud services, nearshoring and outsourcing opportunities tend to increase, as well as tech industry, which is a consequence of improving tech infrastructure.

Worldwide IT spending will top $4.1 trillion in 2021 as businesses bounce back from the pandemic with new digital ambitions, says Gartner.

Latin America is also undergoing increased digital transformation and is becoming critically important for business organizations.

What is the centerpiece of any tech revolution? Yes, you got it! It’s PEOPLE.

As Latin American workforces continue to become more sophisticated and tech-savvy, regional nearshoring opportunities will increase.

“Latin American countries will lead to the kind of general tech literacy that is so important for fostering enthusiasm and opportunity for tech education and training,” Forbes magazine.

In the blink of an eye, the world went remote. Digital Transformation and technology came with overwhelming force and took center stage in corporate strategies. The goal? Simple: adapting to the new reality.

The main advantages of outsourcing and nearshoring are cost reduction, logistics and cultural proximity as is the case with Latin America. And the main motivation is to scale processes, take projects out of the drawer and, of course, increase profit.

The Best Offshore Development Countries in Latin America

Latin America’s best offshore development countries are popular outsourcing destinations for North American tech companies. US companies primarily outsource software development due to considerably lower software developer rates in Latin America, high English proficiency, and negligible time zone difference.

Apart from a variety of outsourcing destinations in Latin America, like Colombia, Costa Rica, Chile, Panama, Peru, and others, the best offshore development countries in the region are: Argentina and Brazil.

Argentina’s Tech talent

European trends have a strong influence on Argentina’s IT market due to the country’s rich working experience with Western countries.

Argentina is the number two outsourcing country in the region with a well-developed economy and a vast tech talent pool. The country is a popular outsourcing destination for US companies due to their only one-hour time difference.

Software engineering skills in Argentina are first worldwide, according to Coursera’s 2019 Global Skills Index. In addition, Argentine developers have the strongest English skills in Latin America and a high literacy rate.

Given the rising developer salaries in the US, salaries in Argentina are comparatively affordable, while the quality of work is high. The average hourly rate of a senior developer can range from $20 to $50 depending on programming skills, languages, and seniority.

Brazil Leading offshore development country

Brazil ranks third out of 50 digital nations to outsource according to the Tholons Services Globalization Index 2020.

Brazil’s advantage is the large-scale establishment of outsourcing in the country. Brazil is the fifth largest country in the world and has had a historical presence in the IT industry. It has approximately 2 million staff currently working in the field, according to Wheelhouse (data from 2021).

Brazil is only 2 hours ahead of the US, Eastern Standard Time (EST) and is the biggest economy in Latin America.

Brazil shows an improving business environment, people skills, and availability scores, pointing to an increasingly experienced industry that can serve global firms.

Closer time Zone difference between the US and Latin America Key advantage for Outsourcing

One of the biggest disadvantages that firms in the USA experience while outsourcing the development work to India and China is the large time zone difference.

On the flip side, the time zone difference between the USA and Latin American countries is negligible. This allows lesser response times between the teams and highly synchronous communication, enabling the resolution of issues quickly. Despite the onslaught from the pandemic, several industries saw their profits grow and this trend is likely to continue even post-pandemic. Other struggling industries will also begin to flourish now as the pandemic crisis comes to a close, reported Global Trade, a by-weekly enewsletter (June 2021).

Peter Howard Wertheim & Dayse Abrantes - International Journalists

peter.howard@thebridge.social dayse.abrantes@thebridge.social International Journalists