As of 2024, the US has about 1 million unfilled positions in software engineering. As this number grows every year, outsourcing to Latin America has surged, nearly doubling in the last four years. Two nations, Colombia and Argentina, have emerged among the leading contenders in this nearshore trend. But which could be the golden ticket to accelerating your tech business in the showdown of Colombia vs Argentina for nearshore technology outsourcing?
I’m David Gomez, Lead LATAM IT Recruiter at Alcor, an all-in-one place R&D services provider that builds Valley-caliber teams from 0 to 100 software developers within a year for Western tech product companies. We offer end-to-end tech recruitment services across Latin America and Eastern Europe, a thorough Employer of Record service (EoR), and other operational support tailored to your needs.
In this article, I’ll uncover the key differences between these two countries in the tech outsourcing landscape, break down their pros and cons, and provide a handy guide to help you choose between Colombia vs Argentina for tech nearshoring. But here’s where it gets even more exciting—I’ll also introduce you to a game-changing alternative to traditional outsourcing, so stay tuned for the big reveal!
Tech Outsourcing Sector in Colombia vs Argentina
Tech market
With one of the most dynamic tech sectors, Colombia’s ICT market revenue has grown by 29% since 2021 and is expected to reach $11.2 billion in 2024. The overall tech services market is projected to hit $2 billion in 2024, and with an annual growth rate of 6.21%, it’s forecasted to reach $2.7 billion by 2029.
And what about Argentina? With a CAGR of 14.98%, the Argentine ICT market will grow from $22.5 billion in 2023 to $45.3 billion by 2028. This impressive growth is driven by increased demand for digital services and innovations in sectors such as Fintech, Edtech, and E-commerce, opening up opportunities for further development of these industries.
Government initiatives
This remarkable growth in the Colombian technology industry is primarily driven by government initiatives focused on tech development and modernization. Among them, the most prominent are:
- ICT Sector Modernization Law, introduced in 2019, aims to stimulate growth by enabling existing and new companies to innovate and adopt new technologies.
- The National Digital Strategy (NDS) for 2023-2026 promotes economic development, enhances tech skills among the population, builds secure data and IT infrastructure, and fosters digital security and AI adoption.
- The Colombia Bring IT On campaign creates a positive image of Colombia’s tech sector, attracting foreign investment, promoting Colombian tech services, and boosting digitalization efforts.
In Argentina, special government initiatives are driving the country’s strong push toward digital transformation and creating a business-friendly landscape:
- Law No. 27,506, which introduces a “Promotion Regime” for the tech sector with tax benefits and deductions, creates a favorable environment for tech businesses operating in the country.
- ConectAR aims to develop national satellite communications, expand broadband internet, and, most importantly, invest in the digital economy, create digital jobs, and support tech startups.
- Régimen de Incentivos para Grandes Inversiones (RIGI) or the Large Investment Incentive Regime is aimed at attracting significant foreign and domestic investment in strategic sectors of the economy through tax breaks and special economic incentives, offering an attractive environment for tech companies looking to set up R&D centers in the country.
Investments
But how can we tell if these initiatives are truly effective? It’s simple – the best indicator is the level of investment! In the last five years, Colombia has attracted nearly $5 billion in venture capital, with fintech startups driving 46% of 2023’s investments in the LATAM region.
This trend has also caught Argentina’s attention, with the top three funded startups in 2024 raising over $224 million, primarily in the booming Fintech sector. Leading foreign investors from 2017 to 2023 include the United States, Spain, the Netherlands, Germany, and the United Kingdom, showcasing Argentina’s appeal to global investors.
Tech sectors
With fast-growing fintech, e-commerce, cloud, cryptocurrency, and AI industries, both countries attract a significant amount of foreign business. In addition, the growing demand for payment systems, logistics platforms, order management systems, cybersecurity, and the development of international trade makes the trend of nearshore technology to Argentina and Colombia more popular and attractive.
And as a result, in both countries, the tech outsourcing market is expected to account for the largest share of total tech market revenue, amounting to $690.8 million in Colombia and $435.8 million in Argentina in 2024.
Business environment
Colombia has an A4 business climate and ranks 67th in the Ease of Doing Business index, creating a favorable ecosystem for foreign tech companies. As a result, the success of the country’s tech industry is evidenced by the presence of global companies such as Google, IBM, Microsoft, and Amazon, each operating their software development center in Colombia. Another impressive aspect is the country’s startup ecosystem with more than 1,356 startups and three unicorns, earning the country a solid 2nd place in the region. Most startups are concentrate on Transportation, FoodTech, Energy & Environment, and Fintech. So be sure to take note if your business operates in these areas!
Argentina has a B business climate, ranking 126th in the Ease of Doing Business index, creating challenges for starting a business in the country. However, tech giants like IBM, Microsoft, Google, and Cisco foster innovation and support local startups, enhancing the country’s appeal to foreign investors.
Colombia vs Argentina for Technology Nearshoring: Pros and Cons
Despite their dynamism and productivity, the tech markets of these countries still have their differences. To choose your top location, a comparison of Colombia vs Argentina for nearshore outsourcing is your best bet.
Benefits of Outsourcing to Colombia
Fast-growing talent pool
The country’s substantial talent bank, with over 150,000 developers and 13,000 new STEM graduates entering the workforce each year, paves the way for promising nearshoring prospects, making software development in Colombia a preferred choice over other LATAM countries.
Highly skilled developers
Another reason to hire software developers in Colombia and ensure high-quality product development is the substantial training of Colombian engineers in JavaScript, Python, C++, PHP, Java, and Ruby programming languages. In addition, the extensive expertise in operating systems and computer networking makes Colombia one of the top Latin American destinations for data science.
Curious about Mexican developers’ expertise? Explore it in our latest article on Colombia vs Mexico for nearshore technology outsourcing!
Moderate costs
The significant salary gap between engineers in the US and Colombia allows for cost-effective business growth, enabling you to save up to 40-50% on development teams in this location. For example, the average annual gross software engineer salary in Colombia is $54,800, whereas the counterparts in the US charge $118,600 a year.
| Gross Annual Salary for Senior Positions, USD | ||
| Position | Colombia | USA |
| Blockchain Developer | 62,400 | 132,000 |
| AI Engineer | 60,000 | 132,000 |
| Cloud Engineer | 54,000 | 174,000 |
| ML Engineer | 60,000 | 132,000 |
| Data Science Engineer | 48,000 | 126,000 |
Did you not find the stacks you are looking for? Use our calculator to find your team’s price in Colombia!
Geographical proximity
Colombia is in the GMT-3 time zone, which is just a one-hour time difference from New York, Washington D.C., Miami, and Atlanta. Just 5 hours and you can get from New York to Bogota to meet with your remote team and significantly optimize your outsourcing strategy for Colombia. This proximity distinguishes Colombia from other regional tech hubs, such as Chile, Argentina, and Peru, while offering competitive advantages in Colombia vs Brazil for nearshore technology outsourcing.
Disadvantages of Outsourcing to Colombia
Cyberattacks
In 2023, Colombia became the 3rd country in the region in terms of cyberattacks, which may be a concern for those considering entering this market. Moreover, the outsourcing model increases the likelihood of IP theft and data leakage.
So, what should you do? Building your own R&D center to keep core operations fully in-house may be your ideal solution! Keep reading to learn how to make it a reality!
Taxation system peculiarities
Another disadvantage of Colombia is its complex tax system, one of the most intricate in Latin America. For example, the country’s corporate income tax (CIT) rate is 35%, higher than many other countries in the region. In addition, companies making cross-border payments may face mandatory withholding taxes ranging from 15% to 33%, which complicates international trade and business.
However, even though this country has high tax ratings, low local salaries still reduce costs and provide an opportunity to save money. And don’t worry! With Alcor as your trusted partner, you’ll never face the complexities of taxes and legal matters on your own.
Explore the pros and cons of Colombia vs Uruguay for nearshore technology outsourcing.
Advantages of Outsourcing to Argentina
Skilled talent pool
Over 115,000 software engineers allow you to hire developers in Argentina right now and build a strategic talent pipeline for the future, as the country produces 27,000+ STEM graduates annually. Their vast expertise in Python, TensorFlow, Cloud APIs, SQL, and NLP not only enhances product quality but also ensures technological competitiveness.
English proficiency
Argentina is the #1 country among LATAM and #28 globally in terms of English language proficiency. This key factor simplifies communication in international teams, enhances productivity, and facilitates the seamless integration of new members into your company.
Startup heaven
With 758 startups, the majority of which operate in the Fintech, Edtech, and Ecommerce & Retail sectors, and Argentinian unicorns like Ualá, Aleph, Bitfarms, Mural, Tiendanube, Vercel, and Mercado Libre, the country fosters a solid local market and favorable conditions for startup growth and investment.
In 2020, Argentina concentrated about 45% of the startup ecosystem value of the entire Latin American region, while in 2024 the top three most funded startups Argentina-Pomelo, Digital House, and Avenida Compras – collectively raised over $224 million. Among these, Fintech is the most popular industry based on total funding.
Cost competitiveness
With a significant difference in salaries from the US, Argentina is increasingly becoming a hot destination for outsourcing. The average annual software developer salary in Argentina is $53,300, 45% lower than in American tech companies. But take a look for yourself! My team has compiled a salary comparison between Argentina and the United States, showcasing the most popular roles.
| Gross Annual Salary for Senior Positions, USD | ||
| Position | Argentina | USA |
| Blockchain Developer | 60,000 | 132,000 |
| AI Engineer | 60,000 | 132,000 |
| Cloud Engineer | 68,400 | 174,000 |
| ML Engineer | 56,400 | 132,000 |
| Data Science Engineer | 45,600 | 126,000 |
Disadvantages of Outsourcing to Argentina
Economic development
High inflation, the ongoing devaluation of the Argentine peso, and other financial problems can hinder the effective development of business in the country. In 2023, the country was ranked 145th out of 184 countries on the Index of Economic Freedom, emphasizing these difficulties. However, its rich natural resources, high level of education, and government economic reform efforts create opportunities to overcome these challenges and promote further development.
Complex labor law
Argentine labor law can be pretty tricky for companies. The working week may last 48 hours, and there are additional overtime payments: 150% of the salary or even 200% if it happens on a public holiday. In addition, employers must pay 25% of the salary for employee social insurance and obtain government approval for mass layoffs, which can complicate HR management.
Conclusion: Looking at the main differences between Colombia and Argentina, it is clear that each country offers unique advantages that may interest investors and business owners. Colombia has a larger talent pool and significant support for the tech sector, while Argentina has a higher number of STEM graduates and more robust English-speaking skills among developers. Moreover, both countries share a similar work culture with the US, making the complex process of integrating a new workforce into your company much more effortless.
In 2025, these hot tech hubs will remain among the top locations for technology outsourcing, providing opportunities to grow your business in Latin America and strengthen your position in the global market.
Outsourcing Tech to Colombia or Argentina? Top Pick for Your Business
When choosing the best location, you should always focus on the needs of your business. That’s why my team has created a small guide that will show you what you should consider before choosing Colombia vs Argentina for nearshore tech outsourcing.
1. Talent pool and specialization – always consider what technologies you need. If you are looking for specialists with specific programming languages, such as Python or Java, consider where these technologies are most popular and developed.
2. Time and geographic proximity – take this into account when selecting your next location for software outsourcing. If time and distance matter, Colombia may be your optimal choice due to its convenient time zone and geographic proximity to North America. However, if you opt for a fully remote model and these factors aren’t critical, Argentina is ready to handle your projects.
3. Economic and political stability – another crucial factor to consider. This is a common challenge across the region, so it’s essential to carefully assess the political situation before outsourcing software development in Argentina or Colombia. Colombia currently has a more stable economic outlook, but, with its vast potential, Argentina is also working to overcome challenges driven by inflation and political changes.
4. Collaboration model – this is also an important aspect, as outsourcing isn’t always the most effective or ideal option. With outsourcing, you won’t have direct access to or control over the development team, as you’ll be working through a provider, which can create additional communication barriers. This, in turn, leads to low motivation among specialists to deliver a high-quality product and a lack of interest in the long-term success of your project. There are also possible risks related to intellectual property leakage and data security that may arise. In this case, it’s better to choose a more reliable and long-term alternative that helps you take advantage of the benefits of Colombia and Argentina while ensuring a smooth integration into a new tech market.
So, would you like to find out what your magic wand could be?
Secret Tip to Ease the Process
If you’re drawn to rapid team expansion and want to bypass the drawbacks of outsourcing, then Alcor’s R&D alternative is at your service!
With the perfect all-in-one-shop solution, Alcor provides a wow service to its clients and helps them expand into the LATAM and Eastern European markets.
And here’s what you get:
- Top Talent Recruitment: We secure the top 10% of tech talent in the region, with 80% of candidates getting approved for interviews. We also fill 15% of roles from the first CV, leading to a 98% retention rate for clients like People.ai.
- Comprehensive EOR: Alcor manages all legal aspects and HR tasks, including onboarding, payroll, and benefits, allowing you to focus on scaling. We’ve successfully handled this for ThredUP.
- Complete Back-Office Support: From background checks to office leasing and hardware provisioning, we provide the full operational setup, as we did for BigCommerce.
And the cherry on top is that there is no need to register a legal entity and zero buy-out fees!
And that’s just a tiny part of what we can offer. The most important thing is the success our clients achieve.
Do you have specific requests or needs? Let’s schedule a call, where we will provide a clear timeline on how fast we can set up your own R&D center and ensure smooth, barrier-free integration into any of our focus locations!